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EXHIBIT 2
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement"), dated as of the 28th day of
August, 2001, by and among The Dial Corporation, a Delaware corporation
("Dial"), SMILLC Holding Co., Inc., a Delaware corporation ("Holdco" and
together with Dial, "Sellers") and FASMA, LLC, a Delaware limited liability
company ("Purchaser").
W I T N E S S E T H :
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WHEREAS, Dial owns all the issued and outstanding shares of capital stock
of Xxxxx Xxxxxxxx, Inc., a Delaware corporation (the "Company");
WHEREAS, Dial owns all the issued and outstanding shares of capital stock
of Holdco;
WHEREAS, the Company owns eighty percent (80%) of the issued and
outstanding membership interests of Xxxxx Xxxxxxxx, LLC, a Delaware limited
liability company (the "Subsidiary"), and Holdco owns twenty percent (20%) of
the issued and outstanding membership interests of the Subsidiary;
WHEREAS, Dial desires to sell all of the shares of capital stock of the
Company (the "Company Shares") owned by it to the Purchaser, and the Purchaser
desires to purchase such Company Shares from Dial, on the terms and subject to
the conditions herein;
WHEREAS, Holdco desires to sell all of the membership interests of the
Subsidiary (the "Subsidiary Units") owned by it to the Purchaser, and the
Purchaser desires to purchase such Subsidiary Units from Holdco, on the terms
and subject to the conditions herein;
WHEREAS, pursuant to the Reorganization (as defined herein), prior to or at
the
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Closing (as defined herein), the Subsidiary will transfer to the Company and
Holdco the Xxxxx Xxxxxxxx IP Assets (as defined herein) and the Xxxxx Xxxxxxxx
Intangibles (as defined herein) (collectively, the "Xxxxx Xxxxxxxx IP Assets and
Intangibles"), and the Company and Holdco will transfer the Xxxxx Xxxxxxxx IP
Assets and Intangibles to Dial;
WHEREAS, pursuant to the Reorganization, prior to or at the Closing, the
Company will transfer the Inventory (as defined herein) to Dial;
WHEREAS, Dial owns all of the issued and outstanding shares of capital
stock of The Xxxxxxx Cosmetic Corporation, a California corporation ("Xxxxxxx");
WHEREAS, Xxxxxxx has transferred the Xxxxxxx Intellectual Property (as
defined herein) to Dial;
WHEREAS, Xxxxxxx has transferred all of its accounts receivable, accounts
payable and other indebtedness for borrowed money to Dial and all of its
inventory to the Company, and the Company operates the Xxxxxxx Business (as
defined herein);
WHEREAS, Dial desires to sell, convey, transfer, assign and deliver to the
Purchaser, and the Purchaser desires to purchase and acquire from Dial, (i) all
of the Xxxxxxx Intellectual Property, the Xxxxx Xxxxxxxx IP Assets and
Intangibles and the Contracts (as defined herein) (collectively, the "Assets")
except for the Excluded Assets (as defined herein) and (ii) the Inventory, on
the terms and subject to the conditions herein; and
WHEREAS, pursuant to the Reorganization, prior to or at the Closing, the
Company and the Subsidiary will transfer to Dial all of the Accounts Receivable
(as defined herein), all of the Accounts Payable (as defined herein) (except for
the SMI Payable, as defined herein) and all of the Indebtedness for Borrowed
Money (as defined herein), all of which Dial shall retain after the Closing.
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NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
DEFINITIONS; PURCHASE PRICE; EXCHANGE OF OTHER DOCUMENTS
1.01 Defined Terms.
(a) For purposes of this Agreement, capitalized terms, not otherwise
defined herein, shall have the following meanings:
"Accounts Payable" shall mean the accounts or notes payable of the
Company and/or the Subsidiary (including intercompany accounts and notes payable
(except for the SMI Payable) and accounts or notes payable of the Xxxxxxx
Business) arising out of all transactions prior to the Closing Date, all of
which have been or shall be transferred to Dial pursuant to the Reorganization,
and all of which Dial shall be responsible for paying after the Closing.
"Accounts Receivable" shall mean the accounts or notes receivable of
the Company and/or the Subsidiary (including intercompany accounts and notes
receivable (except for the SMI Payable) and accounts or notes receivable of the
Xxxxxxx Business) arising out of all transactions prior to the Closing Date, all
of which have been or shall be transferred to Dial pursuant to the
Reorganization, and all of which Dial shall retain after the Closing.
"Allentown Lease" shall mean the Master Lease, dated May 23, 1997,
between Dial and Liberty Property Limited Partnership.
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"Code" shall mean the Internal Revenue Code of 1986, as amended and any
regulations promulgated or proposed thereunder.
"Contracts" shall mean the agreements related exclusively to the Xxxxx
Xxxxxxxx Business and/or the Xxxxxxx Business listed on Schedule 1.01(a)(i)
hereto between Dial or Xxxxxxx and the parties listed on such schedule.
"Dedham Lease" shall mean the Lease Agreement, dated December 22, 1997,
between the Subsidiary and Wellington Place Associates, LLC, as assigned by
Wellington to RSI-Newbury, LLC and Frossman 000 Xxxxxxx Xxxxxx, LLC on November
16, 1999.
"Employee" shall mean each employee, officer or director of the Company
or the Subsidiary.
"Environmental Law" shall mean any applicable federal, state or local
law pertaining to the protection of natural resources or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water
Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401
et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), and
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et
seq.), and the regulations promulgated pursuant thereto, as such laws have been
and may be amended or supplemented through the Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and any regulations promulgated or proposed thereunder.
"Excluded Assets" shall mean the Assets listed on Schedule 1.01(a)(ii).
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"Expenses" shall mean any and all judgments, damages of every kind and
nature, assessments, fines, interest, penalties, deficiencies, costs and
expenses which are incident to, or incurred as a result of, a legal proceeding
and the fees and expenses of attorneys, accountants or experts engaged by the
Indemnifying Party (as defined in Article X) in any legal proceeding.
"Xxxxxxx Business" shall mean the manufacture, sale and marketing of
bath, body, hair, skin and foot care products under the Xxxxxxx name as
conducted on the date hereof.
"GAAP" shall mean United States generally accepted accounting
principles applied on a consistent basis.
"Governmental Entity" shall mean any foreign or domestic (federal,
state or local) government, governmental instrumentality or governmental or
other regulatory or administrative authority, agency, commission or court of
competent jurisdiction.
"Hazardous Material" shall mean any substance, material or waste which
is regulated pursuant to any applicable Environmental Law, including, without
limitation, any material or substance which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "toxic waste" or "toxic substance"
under any provision of Environmental Law.
"Xxxxxxxx Lease" shall mean the Lease dated May 22, 1997 between
Riverside Properties, Inc. and the Subsidiary on 71,889 square feet of the
147,885 square foot business center located at 0-00 Xxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxxx.
"Income Tax" or "Income Taxes" shall mean any and all federal, state
and local income or franchise Taxes and any and all foreign income Taxes.
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"Indebtedness for Borrowed Money" shall mean the principal of, interest
on, and all fees, expenses and other obligations of the Company or the
Subsidiary in connection with, all loans under any agreement between the Company
or the Subsidiary (including agreements of the Xxxxxxx Business which were or
are transferred to the Company) and a bank or other lending institution or other
third party (excluding the SMI Payable), all as outstanding, accrued, owed or
for which the Company or the Subsidiary is liable on the Closing Date, all of
which has been or shall be transferred to Dial pursuant to the Reorganization.
Indebtedness for Borrowed Money shall not include letter of credit reimbursement
obligations unless such letters of credit have been drawn against by the
beneficiaries thereof.
"Independent Accountant" shall mean Deloitte & Touche.
"Intellectual Property" shall mean any and all patents, registered
trade names, registered trademarks, registered service marks, registered
copyrights, logos and registered domain names, and applications to register any
of the foregoing, as well as licenses or sublicenses with respect thereto, all
of the software listed on Schedule 2.08(a), trade secrets, know-how, methods of
doing business, formulas, and other similar items of intellectual property, in
each case to the extent used exclusively in the Xxxxx Xxxxxxxx Business and/or
the Xxxxxxx Business. Notwithstanding the foregoing, "Intellectual Property"
shall not include any name or logo of Sellers or their Affiliates (other than
those used primarily by Xxxxxxx, the Company or the Subsidiary) or any variant
or derivative thereof, including without limitation "Dial", whether or not such
logo, name, variant or derivative was used by the Xxxxx Xxxxxxxx Business or the
Xxxxxxx Business.
"International Inventory" shall mean all raw material, physical
packaging materials, components, work-in-process and finished product inventory
of the Xxxxx Xxxxxxxx Business or the Xxxxxxx Business existing as of the
Closing Date at (i) Dial's Mexico City, Mexico facility; (ii) Dial's
distributors' facilities in Puerto Rico, (iii) Dial's distribution centers
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in Canada and (iv) Dial's Compton, California facility (solely, in the case of
clause (iv), relating to purchase commitments from Beaucos/ Mandam).
"Inventory" shall mean all raw material, physical packaging materials,
components, work-in-process and finished product inventory of the Xxxxxxx
Business and the Xxxxx Xxxxxxxx Business (which will be transferred to Dial
pursuant to the Reorganization) and the International Inventory existing as of
the Closing Date.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to Dial, the actual knowledge of
Xxxx X. Xxxxx, Xxxx X. Xxxxxxxxxx, Xxxxx X. Xxxxxxxxx and Xxxxxxxxxxx X.
Xxxxxxxxxxx.
"Law" shall mean any foreign or domestic (federal, state or local) law,
statute, ordinance, rule or regulation or body of law or Order.
"Liabilities" shall mean any and all debts, indebtedness, claims,
judgments, damages, losses, liabilities or other obligations (whether due or
payable, whether absolute or contingent, whether accrued or unaccrued, and
whether liquidated or unliquidated), including, without limitation, Expenses and
any Liabilities for Taxes.
"Litigation" shall mean any notice, action, suit, proceeding,
mediation, arbitration, audit or hearing by or before any Governmental Entity or
private mediation or arbitration tribunal.
"Material Adverse Effect" shall mean a material adverse effect on the
business or financial condition, assets or Liabilities of the Company, the
Subsidiary, the Xxxxx Xxxxxxxx Business and the Xxxxxxx Business, taken as a
whole (other than changes or circumstances (i) resulting directly or indirectly
from the execution of this Agreement or consummation of the transactions
contemplated by this Agreement or (ii) affecting general
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market conditions or which are generally applicable to the industries in which
the Company, the Subsidiary, the Xxxxx Xxxxxxxx Business and/or the Xxxxxxx
Business engages).
"Order" shall mean any judgment, order, injunction, ruling, decree,
stipulation or award of any Governmental Entity or private mediation or
arbitration tribunal.
"Person" shall mean any individual, general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative, association, foreign trust, foreign business
organization, or any other entity, and the heirs, executors, administrators,
legal representatives, successors and assigns of such Person where the context
so permits.
"Post-Closing Period" shall mean all periods or portions of periods
beginning after the Closing Date.
"Pre-Closing Period" shall mean all periods or portions of periods
ending on or before the Closing Date.
"Release" shall mean any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment.
"Reorganization" shall mean the transactions consummated pursuant to
the terms of the documents attached as an exhibit to Schedule 1.01(a)(iii).
"Xxxxx Xxxxxxxx Business" shall mean the manufacture, sale and
marketing of bath and body, home and fragrance, aromatherapy and gift products
under the name Xxxxx Xxxxxxxx as conducted on the date hereof.
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"Xxxxx Xxxxxxxx IP Assets" shall mean the assets used exclusively in
the Xxxxx Xxxxxxxx Business set forth on Schedule 1.01(a)(iv) hereto.
"Xxxxx Xxxxxxxx Intangibles" shall mean the Subsidiary Intellectual
Property (as defined herein), goodwill and all other intangible assets used
exclusively in the Xxxxx Xxxxxxxx Business set forth on Schedule 1.01(a)(v)
hereto, all of which shall be transferred to Dial pursuant to the
Reorganization.
"SMI Payable" shall mean the intercompany account payable of the
Company in the principal amount of $10,000 payable to the Subsidiary.
"Subsidiary Intellectual Property" shall mean the Xxxxx Xxxxxxxx
Intellectual Property (as defined in Section 2.08(a)) used exclusively by the
Subsidiary in connection with its business as presently conducted.
"Tax" or "Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind imposed by any government or
taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes, including any interest, penalty or addition thereto.
"Tax Returns" shall mean all reports, elections, declarations, claims
for refund, estimates, information statements and returns (including any
schedules and attachments thereto) relating to, or required to be filed in
connection with, any Taxes pursuant to the statutes, rules and regulations of
any federal, state, local or foreign government taxing authority.
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"Transferred Massachusetts Employees" shall mean the Employees listed
on Schedule 1.01(vi) hereof.
(b) The following terms shall have the meanings defined for such terms
in the sections set forth below:
"AAA"......................................11.11(b)
"Agreement"................................Preamble
"Amenities Products".......................5.05
"Arbitrators"..............................11.11(b)
"Assets"...................................Preamble
"Basket"...................................10.03(a)
"Books and Records"........................5.06(a)
"Cap"......................................10.03(a)
"Claim"....................................10.04(a)
"Closing"..................................1.05
"Closing Date".............................1.05
"COBRA"....................................4.05
"Common Stock".............................2.02
"Company"..................................Preamble
"Company Shares"...........................Preamble
"Confidentiality Agreement"................11.13
"Contest"..................................9.05(b)
"Controversies"............................11.11(a)
"December Note"............................1.03(e)
"Deductions"...............................1.06
"Dial".....................................Preamble
"Disclosure Schedules".....................Article II
"Encumbrance"..............................2.03
"Xxxxxxx"..................................Preamble
"Xxxxxxx Intellectual Property"............2.16(a)
"Holdco"...................................Preamble
"Indemnified Party"........................10.04(a)
"Indemnifying Party".......................10.04(a)
"Inventory Calculation"....................1.04(b)
"Inventory Value"..........................1.04(a)
"January Note".............................1.03(e)
"Material".................................2.07
"Minimum Inventory Value"..................1.04(d)
"Notice of Claim"..........................10.04(a)
"Permitted Encumbrances"...................2.07
"Preferred Stock"..........................2.02
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"Purchase Price"...........................1.02
"Purchaser"................................Preamble
"Purchaser's Taxes"........................9.01(b)
"Retained Employees".......................5.02
"Xxxxx Xxxxxxxx IP Assets and Intangibles".Preamble
"Xxxxx Xxxxxxxx Intellectual Property" ....2.08(a)
"Sellers"..................................Preamble
"Straddle Return"..........................9.03(c)
"Subsidiary"...............................Preamble
"Subsidiary Units".........................Preamble
"Valuation Principles".....................1.04(a)
(c) Plurals, Etc. As used herein, the plural form of any noun shall
include the singular and the singular shall include the plural, unless the
context otherwise requires. Each of the masculine, neuter and feminine forms of
any pronoun shall include all such forms unless the context otherwise requires.
1.02 Purchase Price. The purchase price ("Purchase Price") in connection
with the consummation of the transactions described in Section 1.03 hereof shall
be the sum of: (i) $8.0 million ($8,000,000) in cash, (ii) $2.0 million
($2,000,000) in the form of the December Note (as defined below) and (iii) $2.0
million ($2,000,000) in the form of the January Note (as defined below), as
adjusted pursuant to Section 1.04. The Purchase Price shall be allocated as set
forth on Schedule 1.02 hereto.
1.03 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, at the Closing, the following transactions will take place
simultaneously:
(a) Dial shall deliver to the Purchaser stock certificates representing
the Company Shares, free and clear of all Encumbrances other than Encumbrances
created by the Purchaser, accompanied by stock assignments separate from such
certificates duly executed, in blank, by Dial.
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(b) Holdco shall deliver to the Purchaser documents evidencing transfer
of the Subsidiary Units to the Purchaser, free and clear of all Encumbrances
other than Encumbrances created by the Purchaser.
(c) Dial shall sell, convey, transfer, assign and deliver to the
Purchaser all of Dial's right, title and interest in and to the Assets and the
Inventory, accompanied by any necessary bills of sale, assignment agreements or
other instruments of transfer reasonably requested by Purchaser.
(d) Subject to Section 1.06, (i) the Sellers shall retain and be
responsible for all Expenses and Liabilities (including Indebtedness for
Borrowed Money and Accounts Payable other than the SMI Payable) relating to the
Xxxxxxx Business and the Xxxxx Xxxxxxxx Business arising from the conduct of the
Xxxxxxx Business and the Xxxxx Xxxxxxxx Business on or prior to the Closing Date
and (ii) the Purchaser shall assume and be responsible for the SMI Payable and
all Liabilities and Expenses relating to the Xxxxxxx Business and the Xxxxx
Xxxxxxxx Business arising from the conduct of the Xxxxxxx Business and the Xxxxx
Xxxxxxxx Business after the Closing Date including, without limitation, any
orders placed with suppliers set forth on Schedule 1.03(d) but not satisfied
prior to the Closing Date.
(e) The Purchaser shall deliver to the Sellers (i) by wire transfer of
immediately available funds to an account or accounts designated by Sellers,
cash in an aggregate amount equal to $8.0 million ($8,000,000) of the Purchase
Price, (ii) a promissory note from the Purchaser to Dial, in a form reasonably
acceptable to Dial, in the principal amount of $2.0 million ($2,000,000),
bearing interest at the rate of 10% per annum, due and payable in full on
December 28, 2001 (the "December Note") and (iii) a promissory note from the
Purchaser to Dial, in a form reasonably acceptable to Dial, in the principal
amount of $2.0 million ($2,000,000), bearing interest at the rate of 10% per
annum, due and payable in full on January 25, 2002 (the "January Note").
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(f) The Sellers, on the one hand, and the Purchaser, on the other hand,
shall make all deliveries required to be made by such party or parties pursuant
to this Agreement.
1.04 Inventory Adjustment.
(a) For purposes of this Agreement, the term "Inventory Value" shall be
determined in accordance with GAAP applied on a consistent basis with the
accounting principles and methodologies historically used by the Sellers, which
were used to prepare the statement of product contribution set forth on Schedule
2.06 (the "Valuation Principles"), determined as if the Closing Date were the
Company's normal year end.
(b) Sellers and Purchaser have jointly conducted a physical count of
the Inventory as of the Closing Date pursuant to the procedures set forth on
Exhibit 1.04(b) hereto. Such physical count was observed by the Independent
Accountant. All fees and expenses of the Independent Accountant incurred in this
capacity shall be billed to and shared equally by the Sellers and Purchaser.
Such physical inventory count occurred on August 25, 2001, August 26, 2001 and
August 27, 2001. Within five business days following the physical count, the
Sellers shall calculate in good faith and in accordance with the Valuation
Principles the Inventory Value for the Inventory as of the Closing Date and
deliver a certificate indicating such Inventory Value to the Purchaser (the
"Inventory Calculation"). For purposes of the Inventory Calculation, Inventory
in transit on the Closing Date shall not be included in the calculation of
Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such
Inventory in transit on the Closing Date. Sellers shall deliver such Inventory
to Purchaser upon receipt of payment from Purchaser.
(c) If the Purchaser disagrees in good faith with the Inventory
Calculation, the Purchaser shall provide a detailed objection to the Sellers in
writing within ten (10) business days after receipt of notice from Sellers of
the Inventory Calculation, and the
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parties shall in good faith attempt to consensually resolve any differences they
may have regarding the Inventory Calculation. If the Purchaser does not deliver
a notice of objection within ten (10) business days of receipt of such notice
from Sellers, the Inventory Calculation provided by the Sellers in the
certificate delivered to the Purchaser at least one day prior to the Closing
Date pursuant to Section 1.04(b) shall be binding and nonappealable on the
Sellers and the Purchaser. If the Sellers and the Purchaser are unable to
resolve their differences within ten (10) business days following the
Purchaser's delivery of notice of its objections pursuant to the preceding
sentence, the parties shall engage the services of the Independent Accountant to
determine the Inventory Calculation within thirty (30) days after such
engagement. As part of this process, the parties shall submit a statement of
their differences together with copies of their Inventory Calculations to the
Independent Accountant. The Independent Accountant's determination of the
Inventory Calculation shall be binding upon the parties and nonappealable. All
fees and expenses of the Independent Accountant incurred in this capacity shall
be billed to and shared by the Sellers, on the one hand, and the Purchaser, on
the other hand, equally.
(d) In the event that the Inventory Calculation for the Inventory shall
be less than $24.0 million ($24,000,000) (the "Minimum Inventory Value"), the
Sellers shall pay to the Purchaser the shortfall. In the event that the
Inventory Calculation for the Inventory shall be more than the Minimum Inventory
Value, the Purchaser shall retain the excess Inventory without further payment
to the Sellers for such excess. In the event of a shortfall, (i) any amounts
owed by the Sellers to the Purchaser as a result of the Sellers' Inventory
Calculation delivered pursuant to Section 1.04(b) shall be delivered to
Purchaser within two (2) business days of delivery by Sellers of such notice of
Inventory Calculation, and (ii) any amounts owed by the Sellers to the Purchaser
as a result of the determination of the Inventory Calculation pursuant to
Section 1.04(c) (whether through negotiations between the Sellers and the
Purchaser or through a determination of the Independent Accountant) shall be
made within two (2) business days of such determination. Any amounts owed
pursuant to clause (ii) of the immediately preceding sentence
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shall be reduced by the amount of any deduction to the Purchase Price pursuant
to clause (i) of the immediately preceding sentence.
(e) Amounts payable pursuant to this Section 1.04 shall be treated as
an adjustment to the Purchase Price for all purposes.
1.05 Closing. The consummation of the transactions contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 at 10:00 A.M. California time, on
August 28, 2001, or at such other place or at such other time or on such other
date as the Sellers and the Purchaser mutually agree upon in writing (the day on
which the Closing takes place being the "Closing Date").
1.06 Returns and Deductions. The Sellers shall bear the costs of (i) all
returns of products of the Xxxxxxx Business and the Xxxxx Xxxxxxxx Business
during the 45-day period immediately following the Closing Date, (ii) all
deductions ("Deductions") made by retailers during the 45-day period immediately
following the Closing Date with respect to the Xxxxxxx Business and the Xxxxx
Xxxxxxxx Business arising from events occurring prior to the Closing Date and
(iii) all deductions referenced on Schedule 1.06 hereto. In the event that it is
unclear as to whether a deduction by a retailer should be allocated as a
Deduction, the Purchaser shall (1) first consult with the Sellers and obtain
their comments and input as to whether such deduction is a Deduction and (2)
after having obtained the Sellers' comments and input, allocate the Deduction in
a good faith manner, taking into account all reasonable comments and input of
the Sellers. The Purchaser may also, at the request of the Sellers, contact the
retailer taking a deduction to obtain its comments and input. The parties
acknowledge and agree that any disputes arising out of this Section 1.06 shall
be resolved in accordance with the arbitration provisions of Section 11.11 of
this Agreement. Except as specifically set forth in this Section
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1.06, Purchaser shall bear all Liabilities and Expenses for all deductions and
returns of the Xxxxxxx Business and the Xxxxx Xxxxxxxx Business occurring after
the Closing Date.
1.07 Further Assurances. After the Closing Date, the Sellers and the
Purchaser shall cooperate to direct (i) to Sellers any customer inquiry
regarding a Liability or Expense retained or assumed by the Sellers under this
Agreement and (ii) to Purchaser any customer inquiry regarding a Liability or
Expense retained or assumed by the Purchaser under this Agreement. The Sellers,
on the one hand, and the Purchaser, on the other hand, agree that, after the
Closing Date, they shall hold and shall promptly transfer and deliver to the
other, from time to time as and when received by them and in the currency
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing Date which properly belongs to the other
party, including, without limitation, any payments of accounts receivable and
insurance proceeds, and shall account to the other for all such receipts. In the
event of a dispute between the parties regarding their respective obligations
hereunder, the parties shall cooperate and act in good faith to promptly resolve
such dispute and, in connection with such cooperation, allow each other
reasonable access to the records of the other relating to such disputed item. In
addition, each party agrees to enter into such additional transfer documents as
the other party shall reasonably request to further any of the transfers
contemplated by this Agreement. Promptly after Closing, Dial will send the
letter attached hereto as Exhibit 1.07 to the current customers of the Xxxxx
Xxxxxxxx Business and the Xxxxxxx Business.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DIAL
Dial hereby represents and warrants to the Purchaser that as of the date of
this Agreement and (unless otherwise provided herein) as of the Closing Date,
except as set forth in the disclosure schedules attached hereto (the "Disclosure
Schedules"):
2.01 Title to Company Shares. Dial has, and on the Closing Date shall
deliver to Purchaser, legal and beneficial ownership of, good and marketable
title to, and all rights to vote all of the Company Shares, free and clear of
all Encumbrances, other than those Encumbrances created by the Purchaser.
2.02 Capitalization of the Company. The authorized capital stock of the
Company consists of 880 shares of common stock, $0.01 par value per share (the
"Common Stock"), and 2,000 shares of Preferred Stock, $0.01 par value per share
(the "Preferred Stock"), of which 150 shares of Common Stock and 2,000 shares of
Preferred Stock are issued and outstanding as of the date hereof. All of the
issued and outstanding Company Shares are validly issued, fully paid and
non-assessable and owned of record by Dial. There are no outstanding securities
convertible into, exchangeable or exercisable for, or carrying the right to
acquire, or any voting agreements or voting trusts with respect to, any equity
securities of the Company, or subscriptions, warrants, options, rights or other
securities arrangements or commitments obligating the Company to issue or
acquire any of its equity securities or any ownership interest therein. There
are no shareholder or other agreements that restrict the transfer of Company
Shares.
2.03 Subsidiaries. Other than the Subsidiary, the Company does not have any
direct or indirect subsidiaries. Collectively, the Company and Holdco own all of
the membership interests in the Subsidiary free and clear of any mortgage,
pledge, lien, security interest or other
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encumbrance (each an "Encumbrance"). All of the issued and outstanding
membership interests in the Subsidiary are validly issued. There are outstanding
no securities convertible into, exchangeable or exercisable for, or carrying the
right to acquire, or any voting agreements with respect to, any equity
securities of the Subsidiary, or subscriptions, warrants, options, rights or
other securities arrangements or commitments obligating the Subsidiary to issue
or acquire any of its equity securities or any ownership interest therein. There
are no agreements that restrict the transfer of interests.
2.04 Organization. Each of Dial, the Company and the Subsidiary is an
entity duly organized and validly existing under the laws of the State of
Delaware and has all requisite corporate or limited liability company, as
applicable, power and authority to carry on its business as it is now being
conducted. Each of Dial, the Company and the Subsidiary is duly qualified to do
business and is in good standing as a foreign corporation in all jurisdictions
where the nature of the property owned or leased by it, or the nature of the
business conducted by it, makes such qualification necessary except where the
absence of such qualification would, individually or in the aggregate, not have
a Material Adverse Effect. True and complete copies of the Certificate of
Incorporation, By-Laws, Certificate of Formation, Limited Liability Company
Agreement or other formation documents of each of Dial, the Company and the
Subsidiary have previously been made available to Purchaser.
2.05 Power and Authority; Effect of Agreement.
(a) Dial has all requisite corporate power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Dial of this
Agreement and the consummation by Dial of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Dial. No other corporate
action on the part of Dial or its stockholders is necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and
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validly executed and delivered by Dial and, assuming the due authorization,
execution and delivery by Purchaser and Holdco, constitutes a valid and binding
obligation of Dial, enforceable against it in accordance with its terms, except
to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and (ii) is subject to general principles of equity.
(b) The execution, delivery and performance by Dial of this Agreement
and the consummation by it of the transactions contemplated hereby will not,
with or without the giving of notice or the lapse of time, or both, (i) violate
any provision of law, rule or regulation to which Dial, the Company or the
Subsidiary is subject, (ii) violate any Order applicable to Dial, the Company or
the Subsidiary or (iii) conflict with or result in a breach of the provisions
of, or constitute a default under, the formation documents of Dial, the Company
or the Subsidiary, except in the case of clause (i) or (ii) of this Section
2.05(b), for violations, conflicts, breaches or defaults which individually or
in the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby or have a Material Adverse Effect.
2.06 Product Contribution. Dial has delivered to Purchaser the unaudited
pro forma statement of product contribution of the Xxxxxxx Business and the
Xxxxx Xxxxxxxx Business for the year ended December 31, 2000 and the six month
period ended June 30, 2001, a copy of each of which is included in Schedule
2.06. Such statement of product contribution has been prepared from the books
and records of the Company and the Subsidiary and from Dial's internal reporting
system and present fairly, in all material respects, the product contribution of
the Xxxxxxx Business and the Xxxxx Xxxxxxxx Business for the respective periods
then ended, consistently applied.
2.07 Title to Assets. As of the date hereof, the Subsidiary or the Company
has, and after the Reorganization, Dial or the Company will have, good title to
or a valid leasehold or contractual right to use all of the assets and
properties used exclusively in the Xxxxx Xxxxxxxx
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Business and the Xxxxxxx Business and material to the business or financial
condition of the Xxxxx Xxxxxxxx Business and the Xxxxxxx Business, taken as a
whole, as presently conducted ("Material"), free and clear of Encumbrances
(subject to Section 4.08), except (a) liens for Taxes, assessments and other
governmental charges not yet due and payable or being contested in good faith by
appropriate proceedings and (b) Encumbrances that are not Material (clauses (a)
and (b), collectively, "Permitted Encumbrances"). The Assets are adequate in all
Material respects for the use for which such Assets are currently used or are
held for use and are in good operating condition in all Material respects,
normal wear and tear excepted. The Assets, together with the transition services
to be provided by Sellers pursuant to Section 4.04 and the assets used by
Sellers to provide such services, are sufficient to operate the Xxxxx Xxxxxxxx
Business and the Xxxxxxx Business substantially in the manner in which they are
currently conducted.
2.08 Xxxxx Xxxxxxxx Intellectual Property.
(a) All Intellectual Property that is being used exclusively as of the
date hereof by the Company or the Subsidiary in connection with the Xxxxx
Xxxxxxxx Business and that is Material is referred to herein collectively as the
"Xxxxx Xxxxxxxx Intellectual Property". Schedule 2.08(a) lists as of the date
hereof, all software used exclusively in the Xxxxx Xxxxxxxx Business and all
domain names, trademarks, patents, registrations, applications or the like
relating to or embodying the Xxxxx Xxxxxxxx Intellectual Property. Except as set
forth on Schedule 2.08(a), the Subsidiary or the Company has, as of the date
hereof, and after the Reorganization, Dial or the Company will have, the right
to use the Xxxxx Xxxxxxxx Intellectual Property in connection with the Xxxxx
Xxxxxxxx Business and after the Closing the Purchaser will have the right to use
the Xxxxx Xxxxxxxx Intellectual Property. The Xxxxx Xxxxxxxx Intellectual
Property will be sufficient to operate the Xxxxx Xxxxxxxx Business substantially
in the manner in which it is currently operated and, except as provided in
Schedule 2.08(a), without payment to Sellers or any third party.
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(b) Other than as set forth on Schedule 2.08(b), to the Knowledge of
Dial, all items of Xxxxx Xxxxxxxx Intellectual Property are in full force and
effect and will remain in full force and effect immediately following the
consummation of the transactions contemplated by this Agreement.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, neither Sellers, the Company nor the Subsidiary has
received any written notice, communication or claim that any item of Xxxxx
Xxxxxxxx Intellectual Property is invalid, unregistrable or unenforceable, in
whole or in part.
(d) Other than as set forth on Schedule 2.08(d), to the Knowledge of
Dial, the Xxxxx Xxxxxxxx Intellectual Property does not infringe or violate any
Intellectual Property rights of third parties except as would not, individually
or in the aggregate, have a Material Adverse Effect.
2.09 Environmental Matters. Except as would not, individually or in the
aggregate, have a Material Adverse Effect:
(a) To the Knowledge of Dial, the operations of the Company and the
Subsidiary and the Xxxxxxx Business currently are in compliance with all
Environmental Laws;
(b) The Company and the Subsidiary currently maintain in full force and
effect all permits, licenses, and approvals required under applicable
Environmental Laws for the operation of the Xxxxx Xxxxxxxx Business and the
Xxxxxxx Business as of the date hereof;
(c) With the exception of the permits, licenses, and approvals
referenced in Section 2.09(b), the Company and the Subsidiary are not subject to
any outstanding written Orders respecting the remediation of any Hazardous
Materials or any Release or threatened Release of a Hazardous Material;
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(d) None of Dial, the Company or the Subsidiary has received during the
past three years any written notice alleging that the Company or the Subsidiary
is in violation of any Environmental Law;
(e) There is no suit, action or proceeding pending or threatened in
writing against the Company or the Subsidiary arising under Environmental Laws;
(f) The Purchaser acknowledges that the representations and warranties
contained in this Section 2.09 are the only representations and warranties being
made with respect to environmental matters or Environmental Laws, and no other
representation or warranty contained in this Agreement shall apply to any
environmental matter or Environmental Laws and no other representation or
warranty, express or implied, is being made with respect thereto.
2.10 Litigation. Except as set forth in Schedule 2.10, there is no Material
Litigation currently pending (or threatened in writing) against the Company or
the Subsidiary or involving the Company, the Subsidiary, the Xxxxx Xxxxxxxx
Business or the Xxxxxxx Business or which seeks to prevent or challenge the
transactions contemplated hereby.
2.11 Compliance with Laws. Except as set forth in Schedule 2.11, each of
Dial, the Company and the Subsidiary is in compliance with all Laws in respect
of the conduct of the Xxxxx Xxxxxxxx Business and the Xxxxxxx Business, except
where such noncompliance would not, individually or in the aggregate, have a
Material Adverse Effect.
2.12 Taxes. Except as set forth on Schedule 2.12 or as would not
individually or in the aggregate have a Material Adverse Effect,
(a) All Tax Returns required to be filed with respect to the Company
and the Subsidiary have been duly filed in a timely manner (taking into account
all extensions of due
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dates) and all Taxes due with respect to such Tax Returns have been paid. The
Company and the Subsidiary have furnished or made available to Purchaser
complete and accurate copies of all income, franchise and gross receipt Tax
Returns, and any amendments thereto, filed by the Company and the Subsidiary for
the preceding three taxable years.
(b) Except as set forth in Schedule 2.12, neither the Company nor the
Subsidiary has received written notice of any audit or of any proposed
deficiencies from the IRS or any other taxing authority (other than routine
audits undertaken in the ordinary course). There are no agreements in effect to
extend the period of limitations for the assessment or collection of any Tax for
which the Company or the Subsidiary may be liable.
(c) Neither the Company nor the Subsidiary will be required to include
any amount in income in a period (or portion of a period) beginning after the
Closing Date attributable to any adjustments required under Section 481 of the
Code with respect to a period (or portion of a period) ending before the Closing
Date.
(d) No consent under Section 341(f) of the Code has been filed with
respect to the Company or the Subsidiary.
2.13 Labor and Employment Matters. The Company and the Subsidiary and Dial
as its activities related to the Xxxxx Xxxxxxxx or Xxxxxxx Businesses are in
compliance with all applicable federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees, except
for such non-compliance that would not, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor the Subsidiary nor the
Purchaser is or will be bound by any collective bargaining agreement or union
contract with respect to Transferred Massachusetts Employees and no such
agreement or contract is currently
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being negotiated by Dial or any of its affiliates. No work stoppage or labor
strike against the Company or the Subsidiary or Dial to the extent that it
relates to the Xxxxx Xxxxxxxx or the Xxxxxxx Businesses by Transferred
Massachusetts Employees is pending or threatened in writing, in each case that
would, individually or in the aggregate, have a Material Adverse Effect.
2.14 Inventory. The Company and/or the Subsidiary have/has good title to
the Inventory, free and clear of any Encumbrances (except for Permitted
Encumbrances). The Inventory has not been pledged as collateral, and is not held
by the Company and/or the Subsidiary on consignment from others.
2.15 Representations and Warranties Regarding Holdco.
(a) Title to Subsidiary Units. Holdco has, and on the Closing Date
shall deliver to Purchaser, legal and beneficial ownership of, good and
marketable title to, and all rights to vote all of the Subsidiary Units owned by
Holdco, free and clear of all Encumbrances, other than Encumbrances created by
Purchaser.
(b) Power and Authority; Effect of Agreement.
(i) Holdco has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Holdco of this
Agreement and the consummation by Holdco of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Holdco and by the sole
shareholder of Holdco. No other corporate action on the part of Holdco or its
stockholders is necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Holdco and, assuming the due authorization, execution and delivery
by Purchaser and Dial, constitutes a valid and binding obligation of Holdco,
enforceable against it in accordance with its terms, except to the extent that
such enforceability (i) may be limited by
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and (ii) is subject to general
principles of equity.
(ii) The execution, delivery and performance by Holdco of this
Agreement and the consummation by it of the transactions contemplated hereby
will not, with or without the giving of notice or the lapse of time, or both,
(i) violate any provision of law, rule or regulation to which Holdco is subject,
(ii) violate any Order applicable to Holdco or (iii) conflict with or result in
a breach of the provisions of, or constitute a default under, the formation
documents of Holdco, except in the case of clause (i) or (ii) of this Section
2.15(b), for violations, conflicts, breaches or defaults which individually or
in the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby or have a Material Adverse Effect.
(c) Organization. Holdco is an entity duly organized and validly
existing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its businesses as it is now being conducted.
Holdco is duly qualified to do business and is in good standing as a foreign
corporation in all jurisdictions where the nature of the property owned or
leased by it, or the nature of the business conducted by it, makes such
qualification necessary except where the absence of such qualification would
not, individually or in the aggregate, have a Material Adverse Effect. True and
complete copies of the Certificate of Incorporation and By-Laws of Holdco have
previously been made available to Purchaser.
2.16 Xxxxxxx Intellectual Property.
(a) All Intellectual Property that is being used exclusively as of the
date hereof by Dial or Xxxxxxx in connection with the Xxxxxxx Business and that
is Material is referred to herein collectively as the "Xxxxxxx Intellectual
Property". Schedule 2.16(a) lists as of the date hereof, all software used
exclusively in the Xxxxxxx Business and all domain names,
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trademarks, patents, registrations, applications or the like relating to or
embodying the Xxxxxxx Intellectual Property. Except as set forth on Schedule
2.16(a), Dial has the right to use the Xxxxxxx Intellectual Property in
connection with the Xxxxxxx Business and after the Closing the Purchaser will
have the right to use the Xxxxxxx Intellectual Property. The Xxxxxxx
Intellectual Property will be sufficient to operate the Xxxxxxx Business
substantially in the manner in which it is currently operated and, except as
provided in Schedule 2.16(a), without payment to Sellers or any third party.
(b) Other than as set forth on Schedule 2.16(b), to the Knowledge of
Dial, all items of Xxxxxxx Intellectual Property are in full force and effect
and will remain in full force and effect immediately following the consummation
of the transactions contemplated by this Agreement.
(c) Other than as set forth on Schedule 2.16(c) and except as would not
have Material Adverse Effect, neither Dial nor the Xxxxxxx Business has received
any written notice, communication or claim that any item of Xxxxxxx Intellectual
Property is invalid, unregistrable or unenforceable, in whole or in part.
(d) Except as set forth on Schedule 2.16(d), to the Knowledge of Dial,
the Xxxxxxx Business does not infringe or violate any Intellectual Property
rights of third parties except as would not, individually or in the aggregate,
have a Material Adverse Effect.
2.17 Purchase Orders. Schedule 2.17 sets forth the Sellers' purchase orders
on hand for orders to be filled by the Xxxxx Xxxxxxxx Business and the Xxxxxxx
Business. Each of the purchase orders was received from a customer. To the
Knowledge of Dial, the customers under the Purchase Orders intend to take
delivery on the terms set forth in the Purchase Orders. Historically, annualized
deductions for unsaleables and returns have approximated 9% of the annual gross
sales of the Xxxxx Xxxxxxxx Business and Xxxxxxx Business. Notwithstanding the
foregoing, nothing in this Section 2.17 shall be deemed or construed to be (a) a
guarantee of the Purchase Orders or (b) a representation, warranty or guarantee
that deductions and products
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returns experienced after the Closing Date will be consistent with the Sellers'
historical experience, particularly in light of the transactions contemplated by
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that, except as set
forth in the Disclosure Schedules as of the date of this Agreement and (unless
otherwise provided herein) as of the Closing Date:
3.01 Organization. Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware, and has all
requisite limited liability company power and authority to carry on its business
as it is now being conducted.
3.02 Power and Authority; Effect of Agreement.
(a) The Purchaser has all requisite limited liability company power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Purchaser, and no other limited liability company action on the part of
Purchaser or any of its members or affiliates is necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Purchaser and,
assuming the due authorization, execution and delivery thereof by the Sellers,
constitutes a valid and binding obligation of the Purchaser, enforceable against
it in accordance with its terms, except to the extent that such enforceability
(i) may be limited by bankruptcy, insolvency, reorganization,
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moratorium or other similar laws relating to creditors' rights generally and
(ii) is subject to general principles of equity.
(b) The execution, delivery and performance by the Purchaser
of this Agreement and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) violate any provision of law, rule or regulation to which the
Purchaser is subject, (ii) violate any Order applicable to the Purchaser or any
of its subsidiaries, or (iii) conflict with or result in a breach of the
provisions of, or constitute a default under (A) the Certificate of Formation or
the Limited Liability Company Agreement of the Purchaser, or (B) any agreements
reflecting obligations of the Purchaser for borrowed money, except, in the case
of clause (i), (ii), or (iii) (B) of this Section 3.02, for violations,
conflicts, breaches or defaults which individually or in the aggregate would not
materially hinder or impair the consummation of the transactions contemplated
hereby.
3.03 Litigation. There is no Litigation pending or threatened in writing
against Purchaser or any of its subsidiaries, (i) with respect to which there is
a reasonable likelihood of a determination which would, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
perform its obligations under this Agreement, or (ii) which seeks to enjoin or
obtain damages in respect of the consummation of the transactions contemplated
hereby. Neither the Purchaser nor any of its subsidiaries is subject to any
outstanding Orders which, individually or in the aggregate, would have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement.
3.04 Availability of Funds. The Purchaser has available sufficient funds to
enable it to consummate the transactions contemplated by this Agreement
including, without limitation, payment of the Purchase Price.
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3.05 Disclaimer. Purchaser acknowledges that, except as specifically set
forth in this Agreement, the Xxxxxxx Business, the Xxxxx Xxxxxxxx Business, the
Inventory and all of the Assets transferred hereunder are being delivered to
Purchaser on an "AS IS, WHERE IS" basis. Purchaser acknowledges that the Sellers
are not making any representation or warranty to Purchaser as to the condition
of the Xxxxx Xxxxxxxx Business or the Xxxxxxx Business, and that the Purchase
Price adequately compensates the Purchaser for assuming the risks associated
with those businesses. Purchaser acknowledges that neither Dial nor Holdco has
made and shall not be deemed to have made to Purchaser any representation or
warranty other than those expressly made by Sellers in Article II of this
Agreement. Except as otherwise expressly provided herein, Purchaser acknowledges
that, in any event, Sellers make no representation or warranty to Purchaser as
to merchantability, suitability or fitness for a particular purpose, or quality,
with respect to any of the tangible assets being transferred hereunder, or as to
the condition or workmanship thereof or the absence of any defects therein,
whether latent or patent (or any other representation or warranty referred to in
Section 2-312 of the New York Uniform Commercial Code or the Uniform Commercial
Code of any other applicable jurisdiction or in any statute applicable to real
property).
3.06 Operation of Business. The Purchaser currently intends to operate and
grow the Xxxxx Xxxxxxxx Business and the Xxxxxxx Business. The Purchaser shall
use best efforts to ship all customer orders received for the Xxxxx Xxxxxxxx
Business and the Xxxxxxx Business during the 2001 holiday season.
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ARTICLE IV
COVENANTS OF SELLERS
Sellers hereby covenant and agree with Purchaser as follows:
4.01 Cooperation by Sellers. From the date hereof and prior to the Closing,
the Sellers shall use commercially reasonable efforts to secure all necessary
governmental or third party consents, approvals, authorizations, exemptions and
waivers as shall be required in order to enable the Sellers to effect the
transactions contemplated hereby, and shall use commercially reasonable efforts
to cause the consummation of such transactions in accordance with the terms and
conditions hereof.
4.02 Accounts Payable and Liabilities. Dial shall be responsible for and
pay all of the Indebtedness for Borrowed Money, Accounts Payable (other than the
SMI Payable), Expenses and Liabilities retained by Sellers pursuant to 1.03(d)
hereof as the same shall become due.
4.03 Purchaser's Accounts Receivable. In the event that Post-Closing the
Sellers shall receive any payments with respect to any account receivable of the
Purchaser, the Sellers shall promptly remit all such payments to the Purchaser
with an accounting of the amount thereof collected from each customer.
4.04 Transition Services. For the period from the Closing Date through
January 31, 2002, Dial shall provide the Purchaser with such sales (excluding
all brokerage commissions) and marketing, manufacturing services, logistics,
administration and finance services for the Xxxxx Xxxxxxxx Business and the
Xxxxxxx Business as the Sellers perform at their Scottsdale, Arizona facility
and as the Purchaser shall reasonably request, with all such services being
performed under the direction of the Purchaser. In exchange for the full range
of such services, the Purchaser shall pay Dial a monthly fee of $200,000,
excluding all brokerage commissions,
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from the Closing Date through January 31, 2002. If the Purchaser wishes to
utilize a lesser level of services, the parties shall negotiate in good faith
about the price of such lesser level of services. In addition to such monthly
fee, for such period, the Purchaser shall pay Dial on a monthly basis a pro rata
portion of the rent for Dial's Allentown facility as specified in the Allentown
Lease, as adjusted for the amount and type of the square footage at the
Allentown facility used by the Purchaser. Prior to the Closing, the Sellers
shall cause each of the Dedham Lease and the Xxxxxxxx Lease to be assigned by
the Subsidiary to Dial. From the Closing Date through March 31, 2002, Purchaser
shall sublease each of Dial's Dedham facility and Dial's Xxxxxxxx facility and
pay Dial on a monthly basis the rent for such facilities as specified in the
Dedham Lease and the Xxxxxxxx Lease, respectively, plus 50% of the amount
required by the respective landlords to maintain such leases through March 2002
(Purchaser's half is currently estimated to be approximately $19,643 a month
through March 31, 2002); provided, however, that the sublease of the Xxxxxxxx
facility shall be cancelable prior to March 31, 2002 upon 30 days' prior written
notice. Purchaser's occupancy of the Allentown facility, the Dedham facility and
the Xxxxxxxx facility shall be governed by the terms and conditions of the
Allentown Lease, the Dedham Lease and the Holbrook Lease, respectively.
4.05 Transferred Massachusetts Employees and Retained Employees. The
Sellers and their affiliates shall bear and be responsible for all Expenses and
Liabilities with respect to (i) the Retained Employees (as defined in Section
5.02) and their dependents, whenever arising, including, without limitation,
severance pay and benefits, and (ii) the Transferred Massachusetts Employees and
their dependents arising prior to the Closing Date, including, with respect to
each of clauses (i) and (ii), without limitation, all Expenses and Liabilities
under ERISA, the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), the Code, the Occupational Safety and Health Act, the Equal Pay Act,
the Workers Adjustment and Retraining Notification Act, or any other state,
municipal or federal wage-hour, workers compensation, discrimination, health
care continuation, employment, Tax, benefit or
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labor law, statute, regulation, or rule or law. For purposes of this Section
4.05, a claim with respect to medical, health or other similar benefits shall be
deemed to arise upon the incurrence of a qualified expense for which
reimbursement or payment is sought. As to any Transferred Massachusetts Employee
who elects COBRA continuation coverage under any applicable employee benefit
plan of the Sellers, the Sellers shall bear the full cost of such COBRA
continuation coverage in respect of the period beginning on the Closing Date and
ending on the 30th day following the Closing Date.
4.06 International Inventory. After Closing, the Sellers shall, at the
Purchaser's cost (and paid for in advance by Purchaser), transfer the
International Inventory F.O.B. the facilities where such International Inventory
is located to the locations designated by the Purchaser in a written notice
delivered to the Sellers within ninety (90) days after the Closing Date (except,
in the case of International Inventory located in Puerto Rico, within thirty
(30) days after the Closing Date). Sellers shall charge Purchaser a storage fee
for the period of time after ninety (90) days after the Closing Date (or, in the
case of International Inventory located in Puerto Rico, within thirty (30) days
after the Closing Date) that any International Inventory remains at the
facilities where it is currently located due to Purchaser's failure to pay for
the transfer costs in advance or to designate a location where such
International Inventory is to be shipped.
4.07 Intellectual Property Transfers. The Sellers shall prepare, file and
record such agreements or other transfer documentation required to transfer the
Xxxxx Xxxxxxxx Intellectual Property to Dial pursuant to the Reorganization. The
Sellers shall also prepare, but the Purchaser shall be responsible for filing
and recording, all necessary transfer documentation required to transfer the
Xxxxx Xxxxxxxx Intellectual Property and the Xxxxxxx Intellectual Property to
the Purchaser.
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4.08 Removal of Encumbrances. Sellers shall use commercially reasonable
efforts to have all Encumbrances removed from the Assets promptly after Closing.
Sellers shall indemnify the Purchaser under Article X hereof for any Expenses
and Liabilities arising from Sellers' failure to have such Encumbrances removed.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees with Sellers as follows:
5.01 Cooperation by Purchaser. From the date hereof and prior to the
Closing, the Purchaser shall use commercially reasonable efforts to secure all
necessary governmental consents, approvals, authorizations, exemptions and
waivers as shall be required in order to enable the Purchaser to effect the
transactions contemplated hereby, and will use commercially reasonable efforts
to cause the consummation of such transactions in accordance with the terms and
conditions hereof.
5.02 Certain Employees. The Purchaser hereby acknowledges and agrees that,
prior to the Closing, the Sellers shall at their expense take all actions
necessary such that the only employees of the Company and/or the Subsidiary are
the Transferred Massachusetts Employees. All employees other than the
Transferred Massachusetts Employees shall be referred to herein as "Retained
Employees".
5.03 Accounts Receivable. In the event that Post-Closing, the Purchaser,
the Subsidiary or the Company shall receive any payment with respect to an
Account Receivable, the party receiving such payment shall promptly remit any
such payment to Dial, together with an accounting of the amount thereof
collected from each customer.
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5.04 Continuation of the Subsidiary's Partnership Status. The Purchaser
agrees that, for the period from the Closing through and including December 31,
2001, it will not cause or permit the Subsidiary to liquidate, dissolve or
become a limited liability company with less than two members and will not cause
or permit the Subsidiary to elect to be taxed other than as a partnership; it
being understood that this Agreement shall not restrict in any way, after the
Closing, transfers of interests in the Subsidiary or entities owning interests
in the Subsidiary, including transfers which result in a deemed termination of
the Subsidiary under Section 708(b)(1)(B) of the Code, as long as the Subsidiary
thereafter remains an entity with at least two members.
5.05 License. Effective at Closing, the Purchaser hereby grants to Dial and
its subsidiaries an irrevocable, non-assignable, non-sublicensable (except as
necessary to manufacture, market, sell or distribute the Amenities Products (as
defined herein)), non-transferable, fully paid-up, world-wide, exclusive license
in and to the Xxxxxxx Intellectual Property and the Xxxxx Xxxxxxxx Intellectual
Property in connection with the manufacture, marketing, sale and distribution of
bath and body, fragrance, aromatherapy, gift and other amenities products
(including, without limitation, soaps, body washes, shampoos and conditioners)
by or on behalf of Dial and its subsidiaries to motels, hotels and other similar
lodging customers ("Amenities Products") for a period not to exceed eighteen
months, but only for so long as Dial ensures that the quality of such Amenities
Products which bear any of the registrations or applications for trademarks or
service marks listed on Schedule 2.08(a) or Schedule 2.16(a) are maintained at a
level of quality no less than the level at which Dial has maintained such
Amenities Products up until the date of this Agreement. The license shall be
renewable, at Dial's sole discretion, for one additional 18-month term, provided
that Dial pays Purchaser a royalty of 1% of the gross sales of the Amenities
Products over such period, such royalty to be paid in arrears on a quarterly
basis.
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5.06 Books and Records; Personnel. For a period of seven years from the
Closing Date:
(a) The Purchaser shall not dispose of or destroy any of the books and
records of the Company, the Subsidiary or the Xxxxxxx Business relating to
pre-Closing periods ("Books and Records") without first offering to turn over
possession thereof to the Sellers by written notice to the Sellers at least 30
days prior to the proposed date of such disposition or destruction.
(b) Upon reasonable notice, the Purchaser shall allow the Sellers and
their agents access to all Books and Records during normal working hours at the
Purchaser's principal place of business or at any location where any Books and
Records are stored, and the Sellers shall have the right, at their own expense,
to make copies of any Books and Records; provided, however, that any such access
or copying shall be had or done in such a manner so as not to interfere with the
normal conduct of the Purchaser's business.
(c) The Purchaser shall make available to the Sellers upon written
request (i) copies of any Books and Records, (ii) the Purchaser's personnel to
assist the Sellers in locating and obtaining any Books and Records, and (iii)
any of the Purchaser's personnel whose assistance or participation is reasonably
required by the Sellers or any of their affiliates in anticipation of, or
preparation for, existing or future Litigation, Tax Returns or other matters in
which the Sellers or any of their affiliates are involved. The Sellers shall
reimburse the Purchaser for the reasonable out-of-pocket expenses incurred by
the Purchaser in performing the covenants contained in this Section 5.06(c).
(d) The foregoing provisions of this Section 5.06 shall be in addition
to the obligations of the Purchaser under Articles IX and X.
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(e) Notwithstanding anything herein, the Sellers shall be permitted to
retain original Books and Records to the extent they relate to the Accounts
Payable, Accounts Receivable or Indebtedness for Borrowed Money; provided,
however, that the Sellers shall provide reasonable access to such Books and
Records during normal working hours at Dial's principal place of business or at
any location where any such Books and Records are stored, and the Purchaser
shall have the right, at its own expense, to make copies of any such Books and
Records, provided that any such access or copying shall be had or done in such a
manner so as not to interfere with the normal conduct of Sellers' business.
5.07 Retention of Transferred Massachusetts Employees. (a) As of the
Closing, all Transferred Massachusetts Employees shall cease active
participation in the employee benefit plans, programs and arrangements sponsored
or maintained by the Sellers or any of their affiliates (other than the Xxxxx
Xxxxxxxx LLC Capital Accumulation Plan) and shall commence active participation
in the employee benefit plans, programs and arrangements, if any, sponsored and
maintained by Purchaser or its affiliates (including the Company and the
Subsidiary).
(b) The Purchaser and its affiliates (including the Company and the
Subsidiary) shall bear and be responsible for all Expenses and Liabilities (i)
arising from or pertaining to a breach of Purchaser's obligations under this
Section 5.07, (ii) arising from or pertaining to the Company's employment of the
Transferred Massachusetts Employees on or after the Closing Date or (iii)
arising from or pertaining to any termination of a Transferred Massachusetts
Employee following the Closing, including, with respect to each of clauses (i),
(ii) and (iii), without limitation, all Expenses and Liabilities under ERISA,
COBRA, the Code, the Occupational Safety and Health Act, the Equal Pay Act, the
Workers Adjustment and Retraining Notification Act, or any other state,
municipal or federal wage-hour, workers compensation, discrimination, health
care continuation, employment, Tax, benefit or labor law, statute, regulation,
or rule or law. For purposes of this Section 5.07(b), a claim with respect to
medical,
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health or other similar benefits shall be deemed to arise upon the incurrence of
a qualified expense for which reimbursement or payment is sought.
(c) Except for Transferred Massachusetts Employees terminated for cause
by the Purchaser, the Company or the Subsidiary after the Closing, for the
period beginning on the Closing Date and ending on the date that is sixty (60)
days following the Closing Date, the Purchaser shall cause the Company or the
Subsidiary to continue to employ each Transferred Massachusetts Employee who
wants to continue to be so employed after the Closing at the same salary or
wages and on substantially comparable terms and conditions, with comparable
benefits of equivalent value, as those in effect immediately prior to the
Closing (excluding any pension plan or retiree medical benefits). For purposes
of any employee benefit plan, program or arrangement of the Purchaser or any of
its affiliates (including the Company and the Subsidiary) in which Transferred
Massachusetts Employees participate following the Closing, the Purchaser shall,
and shall cause its affiliates to, grant all Transferred Massachusetts Employees
credit for all service with Sellers and their affiliates (including the Company
and the Subsidiary) and their respective predecessors prior to the Closing Date
for all purposes (other than for purposes of determining benefit accruals under
any defined benefit plan) for which such service was recognized by Sellers and
their affiliates and the Purchaser shall, and shall cause its affiliates to,
waive any pre-existing condition exclusions and actively-at-work requirements
and provide that any expenses incurred on or before the Closing Date by a
Transferred Massachusetts Employee or a covered dependent of a Transferred
Massachusetts Employee shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out of pocket provisions.
Purchaser shall credit each Transferred Massachusetts Employee with the amount
of vacation accrued by such Transferred Massachusetts Employee prior to the
Closing; provided, however, that promptly after the Closing Date, Sellers shall
pay to Purchaser the aggregate value of the accrued vacation for all such
Transferred Massachusetts Employees as set forth on Schedule
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5.07(c), and provided further that Sellers shall retain all deferred
compensation obligations (excluding the deferred compensation obligations
arising from the Xxxxx Xxxxxxxx LLC Capital Accumulation Plan) to the extent
that they relate to services provided before the Closing.
5.08 Restrictions on Post-Closing Transfer of Assets. From the Closing and
for a period of three years following the Closing, neither the Purchaser nor any
of its affiliates shall contribute or otherwise transfer all or any portion of
the Inventory or the Assets to the Company, the Subsidiary or any subsidiary of
either of them. From the Closing and for a period ending on the first
anniversary of the Closing, neither the Purchaser nor any of its affiliates
shall (i) liquidate the Company or transfer any assets from the Company to the
Purchaser or any affiliate of the Purchaser, provided that the Company may
transfer assets to a wholly-owned subsidiary, (ii) transfer substantially all of
the assets of the Company or the Subsidiary or (iii) cause any of the current
employees of the Company or the Subsidiary ("Current Employees") to be employed
by the Purchaser or any of the affiliates of Purchaser (other than the Company
or the Subsidiary) in a manner that will cause less than substantially all of
the Current Employees to continue to be employed by the Company or the
Subsidiary.
5.09 Transition Services. The Purchaser shall comply with Section 4.04
above.
5.10 Representations of Sellers Modified by Purchaser's Knowledge.
Purchaser hereby agrees that to the extent any representation or warranty of
Dial or Holdco made herein or in any document delivered pursuant to this
Agreement is, to the knowledge of Purchaser acquired prior to the date hereof,
untrue or incorrect, (i) Purchaser shall have no rights hereunder or thereunder
by reason of such untruth or inaccuracy, and (ii) any such representation or
warranty by Dial or Holdco shall be deemed to be amended to the extent necessary
to render it consistent with such knowledge of Purchaser.
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5.11 Liabilities. The Purchaser shall be responsible for and pay all of the
Expenses and Liabilities assumed by the Purchaser pursuant to Section 1.03(d)
hereof as the same shall become due.
5.12 Holiday Orders. The Purchaser shall use best efforts to ship all
customer orders received for the Xxxxx Xxxxxxxx Business and the Xxxxxxx
Business during the 2001 holiday season.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the following
conditions:
6.01 No Prohibition. No statute, rule or regulation or temporary
restraining order, preliminary or permanent injunction or other Order of any
court of competent jurisdiction or other legal restraint or prohibition shall be
in effect which prohibits Purchaser from consummating the transactions
contemplated hereby.
6.02 Consents. All material consents, approvals, authorizations, exemptions
and waivers from Governmental Entities that shall be required in order to enable
Purchaser to consummate the transactions contemplated hereby shall have been
obtained (except for such consents, approvals, authorizations, exemptions and
waivers, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal).
6.03 Stock Certificates and Evidence of Ownership of Subsidiary Units.
Purchaser shall have received stock certificates representing all of the Company
Shares, duly
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endorsed in blank or accompanied by stock powers executed in blank, in proper
form for transfer. Purchaser shall have received from Sellers evidence of
ownership of all of the Subsidiary Units.
6.04 Reorganization. The Reorganization contemplated by this Agreement
shall occur simultaneously with or before the Closing.
6.05 Resignations. Dial shall have received and delivered to the Purchaser
the resignations of the directors and officers of the Company and the Subsidiary
or written evidence that such persons have been removed from such offices in a
lawful manner.
6.06 Purchase Orders. Dial shall have delivered evidence reasonably
acceptable to the Purchaser that at least $16.5 million ($16,500,000) of pending
customer purchase orders for the Xxxxx Xxxxxxxx Business and the Xxxxxxx
Business are outstanding as of the Closing Date.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLERS
The obligation of the Sellers to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction (or waiver, where
permissible) at or prior to the Closing of all of the following conditions:
7.01 No Prohibition. No statute, rule or regulation or temporary
restraining order, preliminary or permanent injunction or other Order of any
court of competent jurisdiction or other legal restraint or prohibition shall be
in effect which prohibits Dial or Holdco from consummating the transactions
contemplated hereby.
7.02 Consents. All material consents, approvals, authorizations, exemptions
and waivers from Governmental Entities that shall be required in order to enable
Sellers to consummate the transactions contemplated hereby shall have been
obtained (except for such
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consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
7.03 Purchase Price. Purchaser shall have paid $8.0 million ($8,000,000) of
the Purchase Price to Sellers in immediately available funds in accordance with
Article I of this Agreement and shall have delivered the executed December Note,
the executed January Note and related security agreement to Dial.
7.04 Delivery of Power of Attorney for Tax Contests. The Purchaser shall
have provided to the Sellers all powers of attorney and any other documentation
required to be provided prior to Closing pursuant to Section 9.05(b).
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated prior to the Closing:
(a) by mutual consent of the Sellers, on the one hand, and the
Purchaser on the other; or
(b) by either the Purchaser on the one hand, or the Sellers on the
other:
(i) if a Governmental Entity shall have issued an Order or taken
any other action (which Order the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such Order or other action
shall have become final and nonappealable; or
(ii) if the Closing shall not have occurred before August 31,
2001; provided, however, that the right to terminate this Agreement under this
clause shall not be
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available to any party whose material breach of this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date.
Notwithstanding anything in the foregoing to the contrary, neither party
that is in material breach of this Agreement shall be entitled to terminate this
Agreement except with the consent of the other party hereto.
8.02 Effect on Obligations. Termination of this Agreement pursuant to this
Article VIII shall terminate all rights and obligations of the parties hereunder
and none of the parties shall have any liability to the other parties hereunder,
except that Sections 11.09, 11.10, 11.11, 11.12, 11.13, this Section 8.02 and
the Confidentiality Agreement shall remain in effect, and provided that nothing
herein shall relieve any party from liability for any breach of any covenant or
agreement in this Agreement prior to such termination.
ARTICLE IX
TAX MATTERS
9.01 Sellers' Responsibility for Taxes.
(a) The Sellers shall be responsible for and indemnify and hold
harmless Purchaser, the Company, and the Subsidiary (after the Closing Date)
from (i) any liability that exists after the Closing Date for Taxes of the
Company including, without limitation, any Taxes resulting from the
Reorganization (other than Purchaser's Taxes) with respect to the Pre-Closing
Period and (ii) any Taxes of Dial or Holdco or any member (other than the
Company with respect to any period after Closing) of an affiliated group with
which the Sellers file a consolidated or combined Tax Return with respect to any
taxable period that ends on or before the Closing Date or includes the Closing
Date by reason of the Company being
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severally liable for such Tax pursuant to Regulations Section 1.1502-6 or any
analogous provision of state or local law.
(b) The Sellers shall not be responsible for or indemnify for any Taxes
of the Company arising out of or resulting from any transaction or event
occurring after the Closing on the Closing Date that is not in the ordinary
course of business, including, without limitation, any deemed sale of assets
resulting from the making of any election or deemed election under Section 338
of the Code (or any analogous provisions of state or local Tax law) with respect
to the Company or resulting from any breach of any obligation or covenant of
Purchaser under this Agreement ("Purchaser's Taxes").
(c) For purposes of this Agreement, the amount of Taxes payable for a
portion of a period shall be the amount which would have been payable if that
portion of a period constituted a separate taxable period (and a separate
taxable period for the Subsidiary) beginning on the date such portion of a
period began and ending on the date such portion of a period ended.
9.02 Refunds and Tax Benefits.
(a) Any refunds of Taxes in respect of periods and Taxes for which the
Sellers are responsible pursuant to Section 9.01 shall be for the account of the
Sellers and if received by (or credited for the benefit of) Purchaser or the
Company shall be promptly paid over to the Sellers (together with any interest
paid or credited with respect thereto), net of any Tax cost to the Purchaser or
the Company of the receipt of such refund.
(b) Allocation of Benefits. If any adjustments shall be made to any Tax
Returns relating to the Company, Holdco, Dial or the Subsidiary for the
Pre-Closing Period as a result of or in settlement of any audit, other
administrative proceeding or judicial proceeding or as the result of the filing
of an amended return to reflect the consequences of any
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determination made in connection with any such audit or proceeding or as
required by an intervening change of law, and if such adjustment results in any
tax detriment to the Sellers or any affiliate of the Sellers (including the
Company) with respect to such period and any tax benefit to the Company, the
Purchaser or any affiliate of the Purchaser for any taxable period (or portion
thereof) beginning after the Closing Date, the Sellers shall be entitled to the
benefit of such Tax benefit, and the Purchaser shall pay to the Sellers the
amount of such Tax benefit at such time or times as and to the extent that the
Purchaser or any affiliate of the Purchaser (including the Company) realizes
such benefit through a refund of tax or reduction in the amount of taxes which
the Purchaser or any affiliate of the Purchaser (including the Company) would
otherwise have had to pay if such adjustment had not been made; provided,
however, that no payment by the Purchaser to the Sellers shall exceed the amount
of tax detriment suffered by the Sellers or the affiliate, as the case may be.
If any adjustments shall be made to any Tax Returns relating to the
Company, the Purchaser, or any affiliate of the Purchaser for any taxable period
(or portion thereof) beginning after the Closing Date as a result of or in
settlement of any audit, other administrative proceeding or judicial proceeding
or as the result of the filing of an amended return to reflect the consequences
of any determination made in connection with any such audit or proceeding or as
required by an intervening change of law, and if such adjustment results in any
tax detriment to the Purchaser or any affiliate of the Purchaser (including the
Company and the Subsidiary) with respect to such period and any tax benefit to
the Company, Holdco, Dial or any affiliate of the Sellers for the Pre-Closing
Period, the Purchaser shall be entitled to the benefit of such tax benefit, and
Dial shall pay to the Purchaser the amount of such tax benefit at such time or
times as and to the extent that the Sellers or any affiliate of the Sellers
(including the Company) realize such benefit through a refund of Tax or
reduction in the amount of Taxes which the Sellers or
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any affiliate of the Sellers (including the Company) would otherwise have had to
pay if such adjustment had not been made; provided, however, that no payment by
the Sellers to the Purchaser shall exceed the amount of tax detriment suffered
by the Purchaser or the affiliate, as the case may be.
The term "tax detriment" shall include, but not be limited to, any payment
of Taxes, the utilization of any net operating loss or capital loss or the
utilization of any tax credits or other tax attributes, any decrease in the
basis of an asset, and the reduction, termination or expiration of net operating
loss or capital loss.
The term "affiliate" for purposes of this Section 9.02(b) shall include,
but not be limited to, any partner in a partnership, any shareholder of a
corporation and any member of a limited liability company.
9.03 Preparation of Tax Returns.
(a) The Sellers shall cause the Company to join, for any period ending
on or before the Closing Date for which the Company is required or eligible to
do so, in all consolidated combined or unitary Tax Returns of the Sellers'
filing group. The Sellers shall prepare and timely file all such Tax Returns and
shall timely pay all Taxes with respect to such Tax Returns.
(b) The Sellers shall prepare (or caused to be prepared) and the
Purchaser shall timely file (or cause to be timely filed) any Tax Return
relating to the Company or the Subsidiary for any period ending on or before the
Closing Date that is required to be filed after the Closing Date other than
those required to be filed by Dial or Holdco pursuant to the preceding sentence.
Purchaser shall not be responsible to pay any Taxes with respect to such Tax
Return. Instead, the Sellers shall pay to the Purchaser two days prior to the
filing of such Tax Return the amount due on such Tax Return, and Purchaser shall
timely pay such amount to the Governmental Entity imposing the Tax.
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(c) The Purchaser shall prepare and file any Tax Return relating to the
Company or the Subsidiary for any period that begins before and ends after the
Closing Date (a "Straddle Return"). The Purchaser shall provide a copy of each
Straddle Return and any supporting schedules to Sellers at least 30 days before
the date such Return is to be filed by the Purchaser for Dial's and Holdco's
review and approval. The Purchaser shall pay all Taxes with respect to such Tax
Return, except that Sellers shall pay to the Purchaser two days prior to the
filing of a Straddle Return the amount due on such Straddle Return that is
properly allocable to the Sellers (in accordance with the principle of Section
9.01(c)).
(d) All returns and schedules prepared pursuant to this Section 9.03
shall be prepared on a basis consistent with those prepared for prior Tax years
unless a different treatment of any item is required by an intervening change in
law.
(e) The Purchaser shall not file any amended Tax Returns with respect
to the Company or the Subsidiary for any periods or portions of periods ending
prior to the Closing Date without Sellers' consent, and the Purchaser shall not
make any election or deemed election under Section 338 of the Code (or any
analogous provision of state or local tax law).
9.04 Cooperation and Exchange of Information. The Sellers, on the one hand,
and the Purchaser, on the other will provide each other with such cooperation
and information as either of them reasonably may request of the other in (i)
filing any Tax Return, amended return or claim for refund, (ii) determining a
liability for Taxes or a right to a refund of Taxes or (iii) participating in or
conducting any audit or other proceeding in respect of Taxes. Such cooperation
and information shall include providing copies of relevant Tax Returns or
portions thereof, together with accompanying schedules and related work papers
and documents relating to rulings or other determinations by taxing authorities.
Each party shall make its employees available on a mutually convenient basis to
provide explanations of any documents or information provided hereunder. Any
information obtained under this Section 9.04 shall be kept
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confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
9.05 Contests.
(a) After the Closing Date, the Purchaser shall promptly notify the
Sellers in writing of the commencement of any Tax audit or administrative or
judicial proceeding or of any demand or claim on the Purchaser, the Company or
the Subsidiary which may affect the Tax Liability of the Sellers or any
affiliate of the Sellers (including the Company). Such notice shall contain
factual information (to the extent known to the Purchaser, the Company or the
Subsidiary) describing the asserted Tax liability in reasonable detail and shall
include copies of any notice or other document received from any taxing
authority in respect of any such asserted Tax liability. The Purchaser's failure
to give notice to the Sellers as provided hereunder shall not affect the
Sellers' liabilities under this section except to the extent the Sellers are
prejudiced thereby.
(b) The Sellers may elect to direct, through counsel of their own
choosing and at its own expense, any audit, claim for refund and administrative
or judicial proceeding to the extent involving any asserted liability arising
with respect to the Pre-Closing Period (any such audit, claim for refund or
proceeding relating to an asserted Tax liability is referred to herein as a
"Contest"). If the Sellers elect to direct a Contest, they shall, within 30
calendar days of receipt of the notice of asserted Tax liability pursuant to
paragraph (a) of this Section 9.05, notify the Purchaser of their intent to do
so, and the Purchaser shall cooperate and shall cause the Company and the
Subsidiary to cooperate, at the expense of the Sellers, in each phase of such
Contest. In any event, prior to Closing, the Purchaser and the Sellers shall
take all steps to empower and cause the Company and the Subsidiary to promptly
empower (by power of attorney and such other documentation as may be necessary
and appropriate) such representatives of the Sellers as the Sellers may
designate to represent the Company and the Subsidiary for any
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audit, claim for refund and administrative or judicial proceeding for the years
1997, 1998, 1999 and 2000. If the Sellers elect not to direct the Contest or
fail to notify the Purchaser of their election as herein provided, the
Purchaser, the Company and/or the Subsidiary may pay, compromise or Contest, at
the Seller's expense, such asserted Tax liability. However, in each such case,
none of the Purchaser, the Company, or the Subsidiary may settle or compromise
any asserted Tax liability without the express written consent of the Sellers;
provided, however, that such consent to settlement or compromise shall not be
unreasonably withheld; and provided, further, that any settlement or compromise
in violation of the preceding sentence shall release the Sellers of their
obligation pay such Taxes pursuant to Section 9.01 hereof. In any event, the
Sellers may participate, at their own expense, in the Contest. If the Sellers
choose to direct the Contest, the Purchaser shall promptly empower and shall
cause the Company and the Subsidiary to promptly empower (by power of attorney
and such other documentation as may be necessary and appropriate) such
representatives of the Sellers as it may designate to represent the Purchaser or
the Company and the Subsidiary in the Contest. If any Contest that is directed
by the Sellers includes an issue the resolution of which would have a Material
Adverse Effect on the Company or the Subsidiary in a period or portion thereof
ending after the Closing Date the Sellers shall consult with the Purchaser and
consider in good faith all comments made with respect thereto.
(c) Purchaser shall have the sole right to control any Contest arising
with respect to a period (or portion of a period) beginning after the Closing
Date, provided however, that if a potential adjustment resulting from such
Contest would give rise to a tax liability to the Sellers or any affiliate of
the Sellers with respect to the Pre-Closing Period, the Sellers shall have the
right to participate in such Contest. Additionally, in each such case, neither
the Purchaser nor the Company may settle or compromise any asserted Tax
liability without the express written consent of the Sellers; provided, however,
that such consent to settlement or compromise shall not be unreasonably
withheld.
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9.06 NOL Reattribution. Dial and the Company shall make timely and
irrevocable elections under Treasury Regulation Section 1.1502-20(g)(1) of the
Code to reattribute to Dial net operating loss carryovers and net capital loss
carryovers attributable to the Company, and, if permissible, shall make all
similar elections under any applicable state or local Tax laws. The Company does
not warrant that the Purchaser will receive any NOLs following the transactions
contemplated by this Agreement and shall not indemnify the Purchaser for any
failure to receive any NOLs under any circumstances.
9.07 Tax Sharing Agreements. Any Tax sharing Agreement to which the Company
is a party shall be terminated as to the Company as of the Closing Date, and
neither the Sellers nor the Company shall have any further obligations
thereunder.
9.08 Allocation of Purchase Price. The Purchase Price and other relevant
items shall be allocated among and within the Company Shares, the Subsidiary
Units, the Inventory and the Assets in accordance with Schedule 1.02. The
Sellers, on the one hand, and the Purchaser, on the other hand, agree to, and to
cause their affiliates (including the Company) to, (i) report the sale and
purchase of the Company Shares, the Subsidiary Units, the Inventory and the
Assets for all federal, state, local and foreign Tax purposes, including the
filing of IRS Form 8594 (or any substitute thereof), in a manner consistent with
such allocation and (ii) take no position inconsistent with such allocation.
9.09 Miscellaneous.
(a) Except as otherwise required by law, the parties agree to treat all
payments made under this Article IX (other than pursuant to Section 9.05), under
any other indemnity provision contained in this Agreement, and for any
misrepresentations or breach of warranties or covenants as adjustments to the
Purchase Price for Tax purposes.
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(b) Except as expressly provided otherwise, this Article IX shall be
the sole provision governing reimbursement and indemnification of Taxes.
(c) For purposes of this Article IX, all references to Purchaser, Dial,
the Company, Holdco or the Subsidiary include the successors and assigns of
each.
9.10 Conveyance Taxes. The Sellers shall assume and be responsible for all
sales, transfer, stamp, stock transfer, real property transfer or gains and
similar Taxes incurred as a result of the sale of the Company Shares, the
Subsidiary Units, the Inventory and the Assets contemplated hereby.
ARTICLE X
INDEMNIFICATION OBLIGATIONS
10.01 Indemnification by Purchaser and the Company. Except for Taxes, where
Article IX shall be the sole provision governing reimbursement and
indemnification between the parties, from and after the Closing Date, the
Purchaser and the Company shall indemnify, defend and hold harmless the Sellers
and their shareholders, subsidiaries, affiliates, officers, directors,
successors, successors-in-interest and assigns from and against any and all
Liabilities and Expenses arising from, in connection with, or incident to: (i)
any breach of the representations or warranties made by Purchaser in this
Agreement or any document delivered by Purchaser pursuant to this Agreement,
(ii) non-compliance with or breach by Purchaser of any of the covenants or
agreements of Purchaser contained in the Agreement or any document delivered by
Purchaser pursuant to this Agreement to be performed by Purchaser or the Company
(after the Closing Date) and (iii) non-payment on the December Note or the
January Note when due or any Expenses, Liabilities or obligations assumed by the
Purchaser pursuant to Section 1.03(d) hereof or otherwise assumed explicitly by
the Purchaser pursuant to this Agreement.
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10.02 Indemnification by Sellers. Except for Taxes, where Article IX shall
be the sole provision governing reimbursement and indemnification between the
parties, from and after the Closing Date, the Sellers shall, subject to the
limitations herein, indemnify, defend and hold harmless Purchaser and the
Company (after the Closing Date), without duplication, and their respective
shareholders, subsidiaries, affiliates, officers, directors, successors,
successors-in-interest and assigns from and against any and all Liabilities and
Expenses or arising from, in connection with, or incident to: (i) a breach of
any of the representations or warranties made by either of Sellers in this
Agreement or any document delivered by either of Sellers pursuant to this
Agreement, (ii) any non-compliance with or breach by either of Sellers of any of
the covenants or agreements of either Seller contained in this Agreement or any
document delivered by either Seller pursuant to this Agreement to be performed
by either of Sellers or the Company (prior to the Closing Date) including,
without limitation, Seller's obligations pursuant to Section 1.04 and (iii)
non-payment of any Liabilities (including the Accounts Payable (other than the
SMI Payable) and the Indebtedness for Borrowed Money), Expenses or obligations
retained or assumed by the Sellers pursuant to Section 1.03(d) hereof or Section
4.08 hereof or otherwise assumed explicitly by the Sellers pursuant to this
Agreement.
10.03 Limitations.
(a) The Sellers shall be liable for indemnification payments under Sections
10.02(i) and (iii) only in the event, and only to the extent, that the aggregate
amount of such Liabilities and Expenses described in Sections 10.02(i) and (iii)
exceeds $500,000 (the "Basket"); and the aggregate liability of the Sellers
hereunder for such Liabilities and Expenses shall in no event exceed the
Purchase Price (to the extent delivered to the Sellers) (the "Cap").
(b) Notwithstanding anything to the contrary in this Article X, in no event
shall Sellers or Purchaser be liable to any Indemnified Party (as defined in
Section 10.04(a) below) for any consequential, lost profits, punitive, special
or indirect damages suffered by any
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Indemnified Party under any provision of this Agreement or document delivered
pursuant to this Agreement, even if advised of the possibility of such damages.
(c) Except to the extent any Liabilities and Expenses are incurred by
an Indemnified Party resulting from any fraudulent or intentional
misrepresentation by the Purchaser or the Sellers, the sole and exclusive
monetary remedy of any Indemnified Party with respect to any and all claims
arising from, in connection with, or incident to this Agreement shall be
pursuant to the indemnification provisions set forth in this Article X. In
furtherance of the foregoing, each Indemnified Party hereby waives, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action it may have against the other party arising under or based upon
any Law (including, without limitation, any such rights, claims or causes of
action arising under or based upon common law or otherwise).
10.04 Claims.
(a) Notice of Claim. Once the party seeking indemnification (the
"Indemnified Party") becomes aware of a claim or facts or circumstances which
would reasonably be expected to give rise to a claim (a "Claim"), such
Indemnified Party shall give written notice of such Claim or such facts or
circumstances to the party from which indemnification is sought (the
"Indemnifying Party") within ten (10) days or within such shorter period of time
so as not to prejudice the Indemnifying Party (the "Notice of Claim"). Each
Notice of Claim shall specify in reasonable detail the basis of the Claim,
including, but not limited to, the amount of the Liability and Expense due or
allegedly due, the due date, if applicable, and the payee. The failure of the
Indemnified Party to timely give a Notice of Claim or to give any Notice of
Claim shall not relieve the Indemnifying Party of its indemnification
obligations hereunder; provided, however, that, in such instance, the
Indemnifying Party shall not be responsible for any Expenses or other
Liabilities to the extent that they result from such failure to timely remit a
Claim to the Indemnifying Party.
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(b) Non-Third Party Claims. Subject to the provisions of Section 10.03,
the Indemnifying Party shall reimburse the Indemnified Party for Liabilities and
Expenses incurred by the Indemnified Party within thirty (30) days after the
Indemnified Party delivers written notice to the Indemnifying Party of the
Indemnified Party's claim for indemnification stating in reasonable detail the
basis therefore, unless within such thirty (30) days the Indemnifying Party
disputes such claim and so advises the Indemnified Party by written notice.
(c) Defense of Claims. In case any action is brought against any
Indemnified Party, and such Indemnified Party seeks or intends to seek indemnity
from an Indemnifying Party, the Indemnifying Party will be entitled to
participate in, and, to the extent that it may wish, assume the defense thereof
with counsel reasonably satisfactory to such Indemnified Party. Upon receipt of
notice from the Indemnifying Party to such Indemnified Party of its election so
to assume the defense of such action and approval by the Indemnified Party of
counsel, the Indemnifying Party will not be liable to such Indemnified Party
under this Article X for any Expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof unless the Indemnifying Party shall
not have employed counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and Expenses of
counsel shall be at the expense of the Indemnifying Party. The Indemnifying
Party shall not settle any such action (except under circumstances involving no
payment by or injunction or other adverse monetary consequences against the
Indemnified Party and where the person bringing such action provides a general
release in favor of the Indemnified Party) without the consent of the
Indemnified Party, which shall not be unreasonably withheld.
ARTICLE XI
MISCELLANEOUS
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11.01 Survival. With the exception of representations relating to title of
Assets, Taxes and common law fraud which shall survive for the applicable
statute of limitations, the representations and warranties made in this
Agreement or in any agreement, certificate or other document executed in
connection herewith shall terminate on July 1, 2002, provided that to the extent
that a Notice of Claim has been filed prior to July 1, 2002, the items covered
by the Notice of Claim will survive until they are fully resolved. The covenants
and agreements contained herein to be performed or complied with prior to the
Closing shall not survive the Closing. The covenants and agreements contained
herein to be performed or complied with, at or after the Closing shall survive
the Closing until the expiration of the applicable statute of limitations.
11.02 Entire Agreement. This Agreement (including the Disclosure Schedules
and all Exhibits hereto), and the Confidentiality Agreement (as defined in
Section 11.13 below) constitute the sole understanding of the parties with
respect to the subject matter hereof. The disclosure of any matter in any of the
Disclosure Schedules shall be deemed to be a disclosure for all purposes as to
which such disclosure is reasonably apparent. Any such disclosure shall
expressly not be deemed to constitute an admission by either of Sellers to
Purchaser or to otherwise imply that any such matter is material for purposes of
this Agreement.
11.03 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto; provided, however, that this Agreement may not be
assigned by the Purchaser without the prior written consent of the Sellers,
except that the Purchaser may, at its election, (i) assign the rights of the
Purchaser under this Agreement to a direct or indirect wholly-owned subsidiary
so long as (a) the representations and warranties of the Purchaser made herein
are equally true of such assignee and (b) such assignment does not have any
adverse consequences to the Sellers and (ii) assign the rights of the Purchaser
under this Agreement as collateral to secure its obligations to GB Retail
Funding, L.L.C. and Xxxxxx Xxxxxxxx Retail Partners, L.L.C., but no such
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assignment under clause (i) or (ii) of this Agreement or any of the rights or
obligations hereunder shall relieve the Purchaser of any of its obligations
under this Agreement. Such assignee shall execute a counterpart of this
Agreement agreeing to be bound by the provisions hereof as the "Purchaser," and
agreeing to be jointly and severally liable with the assignor for all of the
obligations of the assignor hereunder.
11.04 Parties in Interest. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
11.05 Headings. The headings of the articles, sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
11.06 Amendment. This Agreement may be amended by the parties hereto at any
time by an instrument in writing signed by or on behalf of each of the parties
hereto.
11.07 Waivers. The waiver by either party hereto of a breach of any
provision hereunder shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder. Any waiver
must be in writing and signed each of the parties hereto.
11.08 Expenses. Sellers shall pay all costs and Expenses incurred by
Sellers or the Company (prior to the Closing) or on their behalf (prior to the
Closing in the case of the Company) in connection with this Agreement and the
transactions contemplated hereby (including, without limiting the generality of
the foregoing, fees and Expenses of its financial consultants, accountants and
counsel). Purchaser shall pay all costs and Expenses incurred by it or on its
behalf in connection with this Agreement and the transactions contemplated
hereby
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(including, without limiting the generality of the foregoing, fees and Expenses
of its financial consultants, if any, accountants and counsel).
11.09 Notices. Any notice, request, instruction or other document to
be given hereunder by either party hereto to any other party shall be in writing
and shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid:
If to the Sellers, to:
The Dial Corporation
00000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attn: Sr. Vice President and General Counsel
Fax: (000) 000-0000
If to the Purchaser, to:
FASMA, LLC
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
[ ]
or at such other address for a party as shall be specified by like notice.
11.10 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction.
11.11 Alternative Dispute Resolution; Consent to Jurisdiction and Service
of Process.
(a) The parties hereto mutually consent to the resolution by
arbitration of all claims and controversies (the "Controversies") arising out of
this Agreement, all
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documents delivered pursuant to this Agreement (other than the December Note,
the January Note and any related security agreement) and the transactions
contemplated hereby and thereby, which either party may have against the other,
except for claims for injunctive or other equitable relief, including, without
limitation, claims for breach of the Confidentiality Agreement, as to which each
party understands and agrees that other parties may seek and obtain relief from
a court of competent jurisdiction.
(b) The parties hereto mutually agree that except as provided in this
Agreement, any arbitration shall be in accordance with the then-current rules of
the American Arbitration Association ("AAA") and the procedures to be mutually
agreed upon by the parties hereto, before three arbitrators, one of whom shall
be appointed by Sellers, one of whom shall be appointed by Purchaser, and one of
whom shall be selected by the first two Arbitrators (the "Arbitrators"). Unless
otherwise agreed to in writing by the parties hereto, Persons eligible to be
selected as arbitrators shall be limited to attorneys who have been in practice
at least ten (10) years specializing in an area related to the subject of the
Controversy, who have had both training and experience as arbitrators. The
arbitration shall take place in the City of New York, New York.
(c) The Arbitrators shall apply the substantive law (and the law of
remedies, if applicable) of the State of New York in deciding the issues to be
heard. Notice of any motions before the Arbitrators shall be given to the
Arbitrators. The Arbitrators, and not any federal, state or local court or
agency, shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including, without limitation, any claim that all or any part of this Agreement
is void or voidable. Any party may cause to be prepared at its expense a written
transcription or electronic recordation of such arbitration. The award of the
Arbitrators shall be supported by written
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findings of fact and conclusions of law. The arbitration shall be final and
binding upon the parties.
(d) With respect to each matter which is not subject to the mandatory
arbitration provisions of this section, each of the parties hereby irrevocably
and unconditionally consents to submit to the jurisdiction of the federal courts
of the United States of America (located in the City of New York) or, if such
federal courts do not have jurisdiction, to the courts of the State of New York
(located in the City of New York) for any litigation arising out of or relating
to this Agreement, the documents delivered pursuant to this Agreement (other
than the December Note, the January Note and any related security agreement) and
the transactions contemplated hereby and thereby, and further agrees that
service of any process, summons, notice or document by U.S. registered mail to
his, her or its respective address set forth in this Agreement shall be
effective service of process for any litigation brought against him, her or it
in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any litigation
arising out of this Agreement, the documents delivered pursuant to this
Agreement (other than the December Note, the January Note and any related
security agreement) and the transactions contemplated herein and therein in the
federal courts of the United States of America or the State of New York, in each
case, located in the City of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.
(e) Each of the parties hereto irrevocably agrees and acknowledges that
any judgment (whether issued by a court, arbitrator or other person) which one
party may have against any other party, and all other monetary claims which one
party may have against any other party, may be enforced in any jurisdiction in
which the party subject to the monetary obligation has assets.
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(f) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY CLAIM, ACTION, SUIT OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.12 Public Announcements. Sellers and Purchaser will consult with each
other before issuing any press release or otherwise making any public statement
relating to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement without the consent of the other
party (which consent shall not be unreasonably withheld or delayed) except as
may be required by law. Notwithstanding the foregoing, Purchaser acknowledges
that Sellers (i) may issue one or more press releases announcing the execution
of, or consummation of the transactions contemplated by, this Agreement and (ii)
intend to disclose the terms of the transactions contemplated by this Agreement
to securities analysts who cover Dial, who report on Dial, or both, and in
filings to be made by Dial with the Securities and Exchange Commission, and
Purchaser hereby consents to such disclosure.
11.13 Confidentiality. Sellers and Purchaser have entered into a
confidentiality agreement (the "Confidentiality Agreement") dated May 16, 2001.
Notwithstanding any provision herein to the contrary, such Confidentiality
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
11.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
THE DIAL CORPORATION
By:
-----------------------------------------
Name
Title:
SMILLC HOLDING CO., INC.
By:
-----------------------------------------
Name
Title:
FASMA, LLC
By:
-----------------------------------------
Name
Title:
61
Schedules
---------
1.01(a)(i) Contracts
1.01(a)(ii) Excluded Assets
1.01(a)(iii) Reorganization
1.01(a)(iv) Xxxxx Xxxxxxxx IP Assets
1.01(a)(v) Xxxxx Xxxxxxxx Intangibles
1.01(a)(vi) Transferred Massachusetts Employees
1.02 Purchase Price Allocation
1.03(d) Supplier Purchase Orders
1.06 Credit Deductions
2.06 Product Contribution
2.08(a), (b), (d) Xxxxx Xxxxxxxx Intellectual Property
2.10 Litigation
2.11 Compliance with Laws
2.12 Taxes
2.16(a)-(d) Xxxxxxx Intellectual Property
2.17 Purchase Orders
5.07(c) Accrued Vacation
Exhibits
--------
1.04(b) Physical Inventory Count Procedures
1.07 Customer Letter
