EXECUTION COPY
MASTER AGREEMENT
DATED DECEMBER 7, 2000
BETWEEN
ECOLAB INC.
AND
▇▇▇▇▇▇ KGaA
TABLE OF CONTENTS
1. DEFINITIONS................................................................1
1.1. DEFINED TERMS.......................................................1
1.2. OTHER DEFINED TERMS.................................................7
2. EXECUTION AND TERMINATION OF AGREEMENTS....................................8
2.1. AMENDED AND RESTATED STOCKHOLDER'S AGREEMENT........................8
2.2. INTELLECTUAL PROPERTY AGREEMENTS....................................8
2.3. SERVICES AGREEMENTS.................................................8
2.4. UMBRELLA AGREEMENT..................................................8
2.5. JOINT VENTURE AGREEMENT.............................................8
2.6. TOLL MANUFACTURING AGREEMENTS.......................................8
2.7. ENVIRONMENTAL AGREEMENT.............................................8
2.8. LOCAL JURISDICTION AGREEMENTS.......................................8
2.9. LEASE AGREEMENT.....................................................8
3. TRANSFER OF JV INTERESTS...................................................8
3.1. TRANSFER............................................................9
3.2. STRUCTURING PLAN....................................................9
3.3. LOCAL JURISDICTION AGREEMENTS.......................................9
4. CONSIDERATION............................................................9
4.1. PURCHASE PRICE......................................................9
4.2. ELECTION AS TO FORM OF CONSIDERATION...............................11
4.3. CONSIDERATION PAID WITH ECOLAB SHARES..............................12
4.4. COLLAR ON NUMBER OF ECOLAB SHARES..................................12
5. CLOSING...................................................................12
5.1. CLOSING DATE AND CONDITIONS........................................12
5.2. DELIVERIES BY HENKEL...............................................12
5.3. DELIVERIES BY ECOLAB...............................................14
5.4. FURTHER ASSURANCES.................................................15
6. REPRESENTATIONS AND WARRANTIES OF HENKEL..................................15
6.1. CORPORATE ORGANIZATION, ETC........................................15
6.2. AUTHORIZATION, ETC.................................................15
6.3. NO VIOLATION; NO CONSENT...........................................16
6.4. CAPITALIZATION; OWNERSHIP..........................................16
6.5. COMPLIANCE WITH LAWS, ETC..........................................17
6.6. FINANCIAL STATEMENTS...............................................17
6.7. UNDISCLOSED LIABILITIES............................................17
6.8. NO MATERIAL ADVERSE CHANGE, ETC....................................17
6.9. JV ENTITIES' ASSETS................................................17
6.10. TRANSACTIONS WITH AFFILIATES.......................................18
6.11. INVESTMENT REPRESENTATION..........................................18
6.12. DISCLOSURE.........................................................18
7. REPRESENTATIONS AND WARRANTIES OF ECOLAB..................................18
7.1. CORPORATE ORGANIZATION, ETC........................................18
7.2. AUTHORIZATION, ETC.................................................19
7.3. NO VIOLATION; NO CONSENT...........................................20
7.4. COMPLIANCE WITH LAWS, ETC..........................................20
7.5. CAPITAL STOCK......................................................20
7.6. SEC FILINGS........................................................21
7.7. INVESTMENT REPRESENTATION..........................................22
7.8. DISCLOSURE.........................................................22
8. COVENANTS OF ECOLAB AND HENKEL............................................22
8.1. NONASSIGNABILITY; CONSENTS AND APPROVALS...........................22
8.2. CONFIDENTIALITY AND ANNOUNCEMENTS..................................25
8.3. STRUCTURING PLAN...................................................26
8.4. COOPERATION........................................................26
8.5. TAX MATTERS........................................................26
8.6. REGULATORY MATTERS.................................................28
8.7. EMPLOYEE MATTERS...................................................30
8.8. TREASURY MATTERS...................................................30
9. COVENANTS OF HENKEL.......................................................32
9.1. PRESERVATION OF AND ACCESS TO BOOKS AND RECORDS......................
9.2. DISCLOSURE SCHEDULE................................................33
9.3. AMENDMENTS TO DISCLOSURE SCHEDULE..................................34
9.4. RESIGNATION OF OFFICERS AND DIRECTORS..............................34
9.5. NONCOMPETITION.....................................................34
9.6. GENERAL............................................................34
10. COVENANTS OF ECOLAB.......................................................35
10.1. BOOKS AND RECORDS..................................................35
11. CONDITIONS TO ▇▇▇▇▇▇'▇ OBLIGATION.........................................35
11.1. REPRESENTATIONS AND WARRANTIES TRUE................................36
11.2. PERFORMANCE........................................................36
11.3. DELIVERIES.........................................................36
11.4. CONSENTS OBTAINED..................................................36
11.5. NO GOVERNMENT PROCEEDING OR LITIGATION.............................36
11.6. NO INJUNCTION......................................................36
11.7. MATERIAL ADVERSE EFFECT............................................37
12. CONDITIONS TO ECOLAB'S OBLIGATION.........................................37
12.1. REPRESENTATIONS AND WARRANTIES TRUE................................37
12.2. PERFORMANCE........................................................37
12.3. DELIVERIES.........................................................37
12.4. CONSENTS OBTAINED..................................................38
12.5. NO GOVERNMENT PROCEEDING OR LITIGATION.............................38
12.6. NO INJUNCTION......................................................38
12.7. UPDATED DISCLOSURE SCHEDULE........................................38
12.8. NO MATERIAL ADVERSE EFFECT.........................................38
13. TERMINATION...............................................................38
13.1. TERMINATION PRIOR TO CLOSING.......................................38
13.2. EFFECT OF TERMINATION..............................................39
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...............40
14.1. SURVIVAL...........................................................40
14.2. HENKEL INDEMNIFICATION OF ECOLAB...................................40
14.3. LIMITATION ON ▇▇▇▇▇▇'▇ INDEMNIFICATION OBLIGATION..................40
14.4. ECOLAB INDEMNIFICATION OF HENKEL...................................40
14.5. METHOD OF ASSERTING CLAIMS, ETC....................................41
14.6. REMEDIES CUMULATIVE................................................42
15. SETTLEMENT OF DISPUTES....................................................42
15.1. INFORMAL DISPUTE RESOLUTION........................................42
15.2. ARBITRATION........................................................43
15.3. COMMENCEMENT OF ARBITRATION AND SELECTION OF ARBITRATORS...........43
15.4. CONFLICTS WITH I.C.C. RULES; SEAT AND LANGUAGE OF ARBITRATION......43
15.5. BASIS FOR ARBITRATION DECISIONS AND GOVERNING LAW..................43
15.6. FINALITY OF ARBITRAL AWARD; ARBITRATION EXPENSES...................43
15.7. CONSOLIDATION OF CLAIMS............................................44
15.8. JUDGMENT ON THE ARBITRAL AWARD.....................................44
16. MISCELLANEOUS.............................................................44
16.1. AMENDMENTS.........................................................44
16.2. WAIVERS............................................................44
16.3. ASSIGNABILITY......................................................44
16.4. SEVERABILITY.......................................................45
16.5. NOTICES............................................................45
16.6. GOVERNING LAW......................................................46
16.7. ASSURANCE OF FURTHER ACTION........................................46
16.8. COSTS..............................................................46
16.9. ENTIRE AGREEMENT...................................................46
16.10. HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES...........47
16.11. COUNTERPARTS.......................................................47
16.12. THIRD PARTIES......................................................48
MASTER AGREEMENT
THIS MASTER AGREEMENT dated as of this 7th day of December,
2000 (this "Agreement"), is between ▇▇▇▇▇▇ Kommanditgesellschaft auf Aktien,
organized under the laws of the Federal Republic of Germany ("Henkel"), and
Ecolab Inc., a corporation incorporated under the laws of the State of Delaware
("Ecolab").
WHEREAS, Henkel, directly or indirectly, owns the joint
venture interests (the "JV Interests") in the joint venture entities (such
entities, together with all Subsidiaries of such entities, the "JV Entities")
formed pursuant to that certain Amended and Restated Umbrella Agreement, dated
as of June 26, 1991 (the "Umbrella Agreement"), between Henkel and Ecolab, or
thereafter, all as listed on Schedule 1.1, in the amounts set forth opposite
each JV Entity on Schedule 1.1;
WHEREAS, Ecolab desires to acquire from Henkel, and Henkel
desires to transfer to Ecolab or its Affiliates, all of the JV Interests, upon
the terms and conditions hereinafter set forth;
WHEREAS, Henkel and Ecolab have agreed that the transactions
contemplated by this Agreement should be carried out in accordance with the
terms of a Structuring Plan, substantially in the form set forth as Exhibit A
attached hereto;
WHEREAS, Henkel and Ecolab have agreed to enter into the
Amended and Restated Stockholder's Agreement (as hereinafter defined), in the
form set forth as Exhibit B attached hereto; and
WHEREAS, Henkel and Ecolab have agreed to terminate their
joint venture relationship, which was established pursuant to the Umbrella
Agreement and the Joint Venture Agreement (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
1. DEFINITIONS
1.1. Defined Terms. The following terms shall have the meanings set forth
below:
"Affiliate" shall mean a Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common
control with the Person specified. For purposes of this definition, the term
"control" (including, without limitation, the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to (a) vote more than 50% of the voting securities of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise. For purposes of this Agreement and the
other Transaction Documents, the parties acknowledge that Ecolab and Henkel will
not be considered Affiliates of each other.
"Amended and Restated Stockholder's Agreement" shall mean that
certain Second Amended and Restated Stockholder's Agreement, dated as of the
Closing Date, between Ecolab and Henkel, in the form of Exhibit B attached
hereto.
"Antitrust Laws" shall mean all Applicable Laws that are
designed or intended to prohibit, restrict or regulate actions including,
without limitation, joint ventures, mergers and acquisitions, that may create,
strengthen or abuse a dominant position, substantially lessen competition,
monopolize or attempt to monopolize, or otherwise have the purpose or effect of
restraining, lessening or affecting competition or trade.
"Applicable Laws" shall mean all federal, state, local and
foreign statutes, laws, ordinances, regulations, rules, permits, orders,
judgments, decrees, injunctions, and writs of any Governmental Entity having
jurisdiction over the parties, their Affiliates or the JV Entities, as may be in
effect on or prior to the Closing.
"Audited Financial Statements" shall mean the audited combined
balance sheets of the JV Entities at November 30, 1999, and the related combined
statements of income and comprehensive income, of equity and of cash flows for
the fiscal year ended on that date, together with the reports thereon of
PricewaterhouseCoopers Gesellschaft mit beschrankter Haftung
Wirtschaftsprufungsgesellschaft and KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellchaft.
"Cleaning and Sanitizing Field" shall mean the business of the
JV Entities, as conducted from time to time from inception through the Closing
Date including, without limitation, the manufacture, marketing and sale of
textile, kitchen, surface, food processing, agricultural, brewery, beverage,
dairy, Hospital Hygiene, quick-serve restaurant, effluent, process, waste and
other water treatment or recycling, pest elimination, on-premise laundry,
housekeeping, professional hygiene, pharmaceutical, cosmetic and critical
environment cleaning, conditioning, rinsing agent, detergent, disinfecting and
sanitizing products, systems (including, without limitation, dispensing systems
and related applications parts and equipment), services and related equipment,
all destined for the institutional and industrial markets exclusively.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Communications Plan" shall mean that certain communications
plan attached as Exhibit C hereto regarding external and internal communications
including, without limitation, press release, as well as any employee Q&A and
workers council notification matters.
"Damages" shall mean all Liabilities, damages, penalties,
deficiencies, expenses, professionals' fees, losses or judgments suffered by any
party, in each case after the application of any amounts recovered under
insurance contracts or similar arrangements, other than amounts recovered under
such contracts or arrangements the premiums of which are adjusted by an amount
equal to any proceeds paid, and from third parties by the damaged party.
"Ecolab Common Stock" shall mean common stock of Ecolab, par
value $1.00 per share, together with the associated rights to purchase shares of
Series A Junior Participating Preferred Stock of Ecolab issued pursuant to the
Rights Agreement dated February 24, 1996 between Ecolab and First Chicago Trust
Company of New York, as rights agent.
"Ecolab Entities" shall mean certain Persons that may be
designated by Ecolab from time to time prior to the Closing Date.
"Encumbrance" shall mean any lien, mortgage, charge, security
interest, pledge, voting agreement, claim, option or encumbrance or any kind,
character or description whatsoever, whether or not recorded.
"Environmental Agreement" shall mean that certain
Environmental Agreement dated as of the Closing Date, between Ecolab and Henkel,
in the form of Exhibit D attached hereto.
"GAAP" shall mean United States Generally Accepted Accounting
Principles as in effect on the date or for the period with respect to which such
principles are applied.
"Governmental Entity" shall mean any supranational, federal,
state, local or foreign court, administrative agency or governmental or
regulatory authority or body.
"Henkel Entities" shall mean those Subsidiaries and Affiliates
of Henkel that have a relationship with the JV Entities as set forth in the
Structuring Plan and on Schedule 1.2.
"Hospital Hygiene" means the sale and distribution of
antiseptic, disinfectant, cleaning and personal care products, services and
equipment to hospitals, nursing homes, sanatoria and private medial and dental
practices.
"Imposed" means for purposes of Section 8.5, Taxes which have
not been paid, accrued or reserved.
"Indemnified Party" means a party making a claim under Article
XIV hereof.
"Indemnifying Party" means a party against whom a claim is
made under Article XIV hereof.
"Intellectual Property" shall mean Patents, including shop
rights, Trademarks, Technology, copyrights, trade secrets, registered designs,
utility models and all other intellectual property rights whether registered or
not, in each case wherever such rights exist throughout the world, and including
the right to recover for any past infringements.
"Intellectual Property Agreements" shall mean those documents
including, without limitation, technology, know-how, patent and trademark
licenses, transfers, assignments and agreements dated as of the Closing Date
between Ecolab (and its Affiliates) and Henkel (and its Affiliates) necessary to
accomplish the transactions contemplated by the Intellectual Property Plan.
"Intellectual Property Plan" shall mean that certain
intellectual property plan attached hereto as Exhibit E.
"Joint Venture Agreement" shall mean that certain Amended and
Restated Joint Venture Agreement, dated as of June 26, 1991, between Henkel and
Ecolab.
"Lease Agreement" shall mean that certain lease agreement
dated as of the Closing Date between Ecolab and Henkel providing for
continuation of Ecolab's lease of ▇▇▇▇▇▇'▇ training center and laundry
facilities, designated L34 and L19 and currently used by the JV Entities, for a
period of two (2) years after the Closing Date on the terms and conditions
existing on the date hereof.
"Liability" means any debt, obligation, commitment,
responsibility or liability, whether accrued or fixed, known or unknown,
contingent, absolute or otherwise, determined or undetermined and whenever
arising.
"Local Jurisdiction Agreements" shall mean those documents
necessary to accomplish the transactions contemplated by the Transaction
Documents in compliance with any local jurisdiction requirements and the
Structuring Plan.
"Material Adverse Effect" shall mean any event or occurrence
that has had or may reasonably be expected to have a material adverse effect on
the condition, financial or otherwise, business, operations, affairs,
properties, assets or Liabilities of the relevant entity or business.
"Patents" shall mean patents (including, without limitation,
all reissues, divisions, continuations, continuations in part and extensions
thereof), utility patents, patent applications, patent disclosures docketed and
related patent rights.
"Person" shall mean an individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or any department or agency thereof or any other entity.
"Plans" shall mean all pension and employee benefit plans,
profit sharing plans, bonus, deferred compensation, supplemental executive
retirement plans, excess benefit plans, phantom stock, stock options, stock
appreciation or other forms of incentive or other compensation plans or
arrangements, and all welfare, severance, vacation and other employee fringe
benefit plans maintained by Henkel or the JV Entities relating to the employees
of the JV Entities.
"Post-Signing Audited Financial Statements" shall mean the
audited Post-Signing Financial Statements for the fiscal years ended on November
30, 2000 and 2001, together with the reports thereon of PricewaterhouseCoopers
Gesellschaft mit beschrankter Haftung Wirtschaftsprufungsgesellschaft and KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft.
"Post-Signing Financial Statements" shall mean the combined
balance sheets of the JV Entities, and the related combined statements of income
and comprehensive income, of equity and of cash flows for the periods then
ended, to be delivered pursuant to Section 8.10 hereof, prepared in accordance
with GAAP consistently applied and the past practice of the JV Entities.
"Services Agreements" shall mean those documents including,
without limitation, services agreements dated as of the Closing Date between
Ecolab and Henkel, providing for continuation, for a period of two (2) years
after the Closing Date and, thereafter, on a year-to-year basis unless
terminated on one (1) year's prior notice of all services arrangements
(including, without limitation, those services listed on Exhibit G attached
hereto but excluding third-party liability insurance coverage) between Henkel
(and its Affiliates) and the JV Entities, on the terms and conditions existing
on the date hereof.
"Structuring Plan" shall mean that certain Structuring Plan
dated as of the Closing Date between Ecolab and Henkel, substantially in the
form of Exhibit A attached hereto.
"Subsidiary" shall mean in relation to an entity, any other
entity with respect to which the first mentioned entity, directly or indirectly:
(a) has the power to exercise more than half of the voting rights;
or
(b) has the power to appoint more than half the members of the
supervisory board, the board of directors, the administrative
board or other body or organ statutorily empowered to
represent such undertaking.
For purposes of this Agreement and the other Transaction Documents, the parties
acknowledge that the JV Entities will not be considered Subsidiaries of either
Ecolab or Henkel.
"Taxes" shall mean any tax (including, without limitation,
income, capital, gains, value added, customs, duties, salary and wage
withholdings, social security contributions and stamp taxes) or fee (including,
without limitation, registration fees), whether collected by way of withholding
or otherwise, together with any related Liability, penalties, fines, additions
to tax or interest thereon, howsoever due and owing, to any Governmental Entity
irrespective of whether the Liability is primary or secondary (and including
taxes of any other person for which Liability is imposed as a result of filing
tax returns on a combined, affiliated, unitary, consolidated or similar basis).
"Technology" means all technical information and know-how,
confidential and non-confidential, including, without limitation, all computer
software, research data, trade secrets and other proprietary know-how, formulas,
operating manuals, copyright registrations and rights of ownership and
authorship in documents and other artistic works, equipment and parts lists,
product packaging instructions, product and production specifications,
analytical and evaluation methods, sources and specifications for raw materials,
efficacy, toxicity and general health and safety information and data,
environmental compliance and regulatory information and data, research and
development records, and manufacturing and product application know-how.
"Toll Manufacturing Agreements" shall mean those documents
including, without limitation, toll manufacturing agreements dated as of the
Closing Date between Ecolab and Henkel (and its Subsidiaries), providing for
continuation, for a period of two (2) years after the Closing Date and,
thereafter, on a year-to-year basis unless terminated on one (1) year's prior
notice, of all toll manufacturing and supply arrangements (including, without
limitation, those set forth on Exhibit F attached hereto) between Henkel (and
its Subsidiaries) and the JV Entities, on the terms and conditions existing on
the date hereof.
"Trademarks" shall mean all registered and unregistered
trademarks, service marks, trade dress and trade names and related rights, logos
and designs.
"Transaction Documents" shall mean this Agreement, the
Structuring Plan, the Intellectual Property Plan and Agreements, the Services
Agreements, the Toll Manufacturing Agreements, the Local Jurisdiction
Agreements, the Environmental Agreement, the Lease Agreement and all other
documents and agreements executed in connection with the Closing, except for the
Amended and Restated Stockholder's Agreement.
"Transfer" shall mean any sale, transfer, offer for sale,
exchange, pledge, mortgage, assignment or other disposition or conveyance.
"Unaudited Financial Statements" shall mean the unaudited
combined balance sheet of the JV Entities as of August 31, 2000, and the related
combined statements of income and comprehensive income, of equity and of cash
flows for the nine-month period then ended.
1.2. Other Defined Terms. The following terms shall have the meanings set
forth in the sections referred to below:
DEFINED TERM SECTION
------------ -------
"2001 Estimated Adjusted EBIT" 4.3
"Actual 2001 Adjusted EBIT" 4.3
"Adjusted EBIT" 4.2
"Adjusted EBIT Valuation" 4.1
"Agreement" Recitals
"Auditor" 4.3
"Claim Notice" 14.5(a)
"Claimant" 15.2
"Closing" 5.1
"Closing Date" 5.1
"Competing Business" 9.5
"Direct Claim" 14.5(a)
"Disclosure Schedule" 9.2
"Dispute" 15.1
"EBIT" 4.2
"Ecolab" Recitals
"Ecolab SEC Reports" 7.6
"Estimated Purchase Price" 4.3
"Exchange Act" 7.6
"Exchange Rate Average" 4.8
"Final Purchase Price" 4.3
"First Election Date" 4.5
"First Interim Period" 8.5(a)(i)
"German Partnership" 8.5(a)(i)(D)
"Governmental Antitrust Entity" 8.1(b)(ii)
"Henkel" Recitals
"HSR Act" 8.1(b)(i)
"I.C.C." 15.2
"JV Entities" Recitals
"JV Interests" Recitals
"Measurement Date" 4.6
"Multiple" 4.1
"Post-Closing Period" 8.5(b)
"Pre-Closing Periods" 8.5(a)(i)
"Purchase Price" 4.1
"Respondent" 15.3
"SEC" 7.6
"Stipulated 2000 Adjusted EBIT" 4.3
"Straddle Period" 8.5(a)(i)
"Third Party Claim" 14.5(a)
"Umbrella Agreement" Recitals
"Updated Disclosure Schedule" 9.3
ARTICLE II
2. EXECUTION AND TERMINATION OF AGREEMENTS
2.1. Amended and Restated Stockholder's Agreement. On the Closing Date,
Ecolab and Henkel shall execute the Amended and Restated Stockholder's
Agreement, which shall govern the rights and obligations of Henkel with
respect to the ownership by Henkel and its Affiliates of shares of
Ecolab Common Stock.
2.2. Intellectual Property Agreements. On the Closing Date, Ecolab and
Henkel shall execute the Intellectual Property Agreements, which shall
govern the rights and obligations of Ecolab, Henkel and the JV Entities
with respect to certain Intellectual Property of Ecolab, Henkel and the
JV Entities.
2.3. Services Agreements. On the Closing Date, Ecolab and Henkel shall
execute the Services Agreements related to certain services to be
provided by Henkel to the JV Entities following the Closing Date.
2.4. Umbrella Agreement. Effective on the Closing Date, the Umbrella
Agreement shall terminate and be of no further force or effect, except
with respect to claims made by the parties thereunder which are pending
on the Closing Date which claims shall continue to be governed by the
Umbrella Agreement.
2.5. Joint Venture Agreement. Effective on the Closing Date, the Joint
Venture Agreement shall terminate and be of no further force or effect,
except with respect to claims made by the parties thereunder which are
pending on the Closing Date which claims shall continue to be governed
by the Joint Venture Agreement.
2.6. Toll Manufacturing Agreements. On the Closing Date, Ecolab and Henkel
shall execute the Toll Manufacturing Agreements related to certain
manufacturing arrangements to exist between Henkel (and its
Subsidiaries) and the JV Entities following the Closing Date.
2.7. Environmental Agreement. On the Closing Date, Ecolab and Henkel shall
execute the Environmental Agreement.
2.8. Local Jurisdiction Agreements. On the Closing Date and/or as promptly
as practicable thereafter, as applicable, Ecolab and Henkel shall, in
accordance with Section 3.3 hereof, execute the Local Jurisdiction
Agreements.
2.9. Lease Agreement. On the Closing Date, Ecolab and Henkel shall execute
the Lease Agreement.
ARTICLE III
3. TRANSFER OF JV INTERESTS
3.1. Transfer. Upon the terms and provisions of this Agreement and in
accordance with the Structuring Plan, Ecolab agrees to (or shall cause
the applicable Ecolab Entity to) acquire and accept delivery (from
Henkel or the applicable Henkel Entity) of, and Henkel agrees to (or
shall cause the applicable Henkel Entity to) assign, transfer and
deliver to Ecolab or the applicable Ecolab Entity, at the Closing, the
JV Interests, free and clear of all Encumbrances, other than
restrictions on Transfer pursuant to applicable securities laws.
3.2. Structuring Plan. Ecolab and Henkel hereby agree that the transactions
contemplated by the Transaction Documents and the Amended and Restated
Stockholder's Agreement will be completed in accordance with the timing
and other provisions of the Structuring Plan.
3.3. Local Jurisdiction Agreements. Ecolab and Henkel hereby agree to
cooperate and undertake all actions necessary or appropriate to
consummate the transactions contemplated by the Transaction Documents
and the Amended and Restated Stockholder's Agreement in compliance with
the requirements of the local jurisdictions where the businesses of the
JV Entities are conducted and in accordance with the timing and other
provisions of the Structuring Plan.
ARTICLE IV
4. CONSIDERATION
4.1. Purchase Price. Subject to the terms and conditions of this Agreement,
the consideration to be paid by Ecolab (or its Affiliates) to Henkel
(or its Affiliates) for the JV Interests (and the intellectual property
(as described in the Intellectual Property Plan)) shall be calculated
in accordance with this Article IV and shall be equal to the Adjusted
EBIT Valuation (expressed in Euro) of the JV Entities ("Purchase
Price"). The "Adjusted EBIT Valuation" shall be calculated by
multiplying the average of the Stipulated 2000 Adjusted EBIT (as
hereinafter defined) and the Adjusted EBIT of the JV Entities (taken as
a whole) for the fiscal year ended November 30, 2001 by 5.498
("Multiple").
4.2 Adjusted EBIT. "Adjusted EBIT" shall mean the operating income (that
is, earnings before interest and taxes and other expenses/income, net)
of the JV Entities (taken as a whole) for the fiscal year ended
November 30, 2001 as reflected in the Post-Signing Audited Financial
Statements for such year prepared in accordance with GAAP consistently
applied ("EBIT"), provided that the following adjustments shall be made
to the actual EBIT of the JV Entities:
(i) the amount of all expenses of the JV Entities for royalties
paid to Henkel and to Ecolab by any of the JV Entities
during fiscal year 2001, as reflected in the operating
income in the Post-Signing Audited Financial Statements for
such period, shall be added back to the actual EBIT of the
JV Entities;
(ii) exclude the impact in the income statement in the
Post-Signing Audited Financial Statements for fiscal year
2001 of non-recurring, unusual items (if agreed to by the
parties);
(iii) the parties agree to exclude in the income statement in the
Post-Signing Audited Financial Statements for fiscal year
2001 the impact of Germany early retirement and related
costs and the results of over-funded pensions in Sweden and
The Netherlands; and
(iv) all earnings adjustments attributable to changes in
accounting principles permitted or required under GAAP or
other applicable accounting principles which are first
implemented for the JV Entities in the 2001 fiscal year
shall be excluded (subtracted or added back, as the case may
be) from the actual EBIT of the JV Entities.
For purposes of this Article IV, the parties agree that,
notwithstanding any other provision to the contrary, the Adjusted EBIT
for the fiscal year ended November 30, 2000 is Euro 94.23 million (the
"Stipulated 2000 Adjusted EBIT").
4.3 Determination of Purchase Price. In the event that the Post-Signing
Audited Financial Statements of the JV Entities for the fiscal year
ended November 30, 2001 are not available prior to the Measurement Date
(as hereinafter defined), then the parties shall estimate the Adjusted
EBIT for the fiscal year ended November 30, 2001 based on the internal
unaudited management accounts of the JV Entities available as of the
third business day prior to the Measurement Date (the "2001 Estimated
Adjusted EBIT") as presented to the parties by the chief financial
officer of the JV Entities and the Purchase Price payable at the
Closing shall be based on such 2001 Estimated Adjusted EBIT (as well as
the Stipulated 2000 Adjusted EBIT) (the "Estimated Purchase Price"). In
such event, the JV Entities shall, within ninety (90) days after the
Closing, deliver to Henkel and Ecolab Post-Signing Audited Financial
Statements of the JV Entities (taken as a whole) for the fiscal year
ended November 30, 2001, prepared in the same manner as is consistent
with the past practice of the JV Entities and in accordance with GAAP
consistently applied, and the actual Adjusted EBIT for the fiscal year
ended November 30, 2001 shall be derived from such statements (the
"Actual 2001 Adjusted EBIT"). The Adjusted EBIT Valuation and final
Purchase Price shall then be calculated based on the Stipulated 2000
Adjusted EBIT and the Actual 2001 Adjusted EBIT (the "Final Purchase
Price"). In the event the Final Purchase Price exceeds the Estimated
Purchase Price, Ecolab shall, within ten (10) days after the final
determination of the Final Purchase Agreement, pay to Henkel the amount
of such difference payable in the form of consideration elected by
Henkel pursuant to Section 4.5. In the event such election shall have
been for Ecolab Common Stock, Ecolab shall issue that number of shares
of Ecolab Common Stock with a value equal to such difference, with such
valuation determined pursuant to the procedures set forth in Section
4.6 (and subject to Section 4.7 hereof). In the event the Estimated
Purchase Price exceeds the Final Purchase Price, Henkel shall within
ten (10) days after the final determination of the Final Purchase
Agreement pay to Ecolab the amount of such difference in the form of
consideration elected by Henkel pursuant to Section 4.5. In the event
such election shall have been for Ecolab Common Stock, Henkel shall
surrender for cancellation that number of shares of Ecolab Common Stock
with a value equal to such difference, with such valuation determined
pursuant to the procedures set forth in Section 4.6; provided, however,
that Henkel may elect to pay to Ecolab the amount of such difference in
cash (in U.S. dollars) but, in this event, the amount of cash to be
paid to Ecolab shall be determined by multiplying (x) the number of
shares that would have been surrendered in accordance with this
sentence by (y) the average closing price of Ecolab Common Stock on the
New York Stock Exchange over the fifteen consecutive trading days
ending on the business day immediately preceding the date of such
payment. The Final Purchase Price shall be deemed to be the Purchase
Price for purposes of this Agreement, except, in this Article IV, as
the context otherwise requires. Any disputes regarding the Post-Signing
Audited Financial Statements of the JV Entities (taken as a whole) for
the fiscal year ended November 30, 2001, or the calculation of the
Final Purchase Price, shall be resolved in accordance with Section 4.4.
4.4 Disagreement. Notwithstanding Article XV hereof, if Ecolab and Henkel
disagree as to the amount of the Actual 2001 Adjusted EBIT, Ecolab and
Henkel shall promptly consult with each other in an effort to resolve
such dispute. If the disagreement is not resolved within fifteen (15)
days after the date of consultation, Ecolab and Henkel shall, within
ten (10) days after such 15-day period, jointly engage a neutral "Big
Five" accounting firm (the "Auditor") to act as an arbitrator to
resolve all points of disagreement concerning such Adjusted EBIT
number. All fees and expenses relating to the work performed by any
Auditor or arbitrator in accordance with this Section 4.4 shall be
borne equally by Ecolab and Henkel, unless otherwise ordered by the
Auditor or arbitrator.
4.5 Election as to Form of Consideration. At ▇▇▇▇▇▇'▇ option, Henkel shall
irrevocably elect to have the Purchase Price paid in its entirety in
cash (in Euro) or in shares of Ecolab Common Stock. Henkel shall notify
Ecolab of its election at least 45 business days prior to Closing (the
"First Election Date") so that Ecolab has sufficient time to arrange
financing. Henkel may make its election as to the form of consideration
after the First Election Date, but in any case not later than the
Measurement Date (defined in Section 4.6 below) provided that, in such
event, if cash is the form of consideration so elected by Henkel, then
Ecolab will have the option to make such payment by delivering an
unsecured, non-negotiable promissory note in the principal amount equal
to the Purchase Price payable to Henkel in Euro with a maturity 60 days
after Closing and bearing interest at the two-month LIBOR rate plus
thirty (30) basis points, as quoted on Telerate page number 3750 as of
11:00 a.m. London time, per annum. Once Henkel notifies Ecolab of its
election pursuant to this Section, the election may not be revoked or
changed.
4.6 Consideration Paid With Ecolab Shares. If Henkel elects to have the
Purchase Price paid by Ecolab in shares of Ecolab Common Stock, then
the Purchase Price shall be converted into U.S. Dollars at the average
of the Dollar/Euro reference exchange rates as announced by the
European Central Bank (the "Exchange Rate Average") for the 15 business
days immediately prior to the date that is 5 business days before
Closing (such date, the "Measurement Date"). Subject to Section 4.7
below, after giving effect to such currency exchange rate calculation,
the U.S. Dollar equivalent of the Purchase Price shall then be divided
by $41.0625 per share to yield a number of shares of Ecolab Common
Stock that will be delivered to Henkel as the Purchase Price.
4.7 Collar on Number of Ecolab Shares. Notwithstanding anything in this
Agreement to the contrary, the number of shares of Ecolab Common Stock
to be issued by Ecolab and delivered to Henkel at Closing shall not be
greater than 13,203,672 or less than 9,270,664; so in the event that
the number of shares to be issued pursuant to Section 4.6 is greater
than 13,203,672 then 13,203,672 shall be the number of shares issued
pursuant to this Agreement, and in the event the number of shares is
less than 9,270,664, then 9,270,664 shall be the number of the shares
issued pursuant to this Agreement, and, in any such case, no further
Purchase Price shall be due. Notwithstanding the foregoing or any other
provision of this Agreement, in no case shall shares of Ecolab Common
Stock be issued hereunder which would cause Henkel to exceed the
Permitted Percentage (as defined in the Amended and Restated
Stockholder's Agreement) and the shares issued pursuant to this
Agreement shall be capped accordingly.
ARTICLE V
5. CLOSING
5.1. Closing Date and Conditions. Subject to Articles XI and XII hereof, the
closing of the transactions provided for in the Transaction Documents
(the "Closing") shall take place at ▇▇▇▇▇▇'▇ offices in Dusseldorf, at
11:00 a.m., local time, on the later of (a) January 2, 2002, or (b) the
fifth (5th) business day following the satisfaction of or waiver of all
of the closing conditions set forth in Articles XI and XII hereof, or
at such other location or time as the parties hereto may agree (the
"Closing Date").
5.2. Deliveries by Henkel. At the Closing, Henkel will, or will cause the
Henkel Entities or the JV Entities to, take all necessary action to
convey, transfer and assign the JV Interests to Ecolab or the Ecolab
Entities, and to enter into such agreements and take such other actions
as may be reasonably required, in the respective jurisdictions where
the JV Entities are located, for the consummation of the transactions
contemplated by the Transaction Documents and the Amended and Restated
Stockholder's Agreement, all in accordance with the Transaction
Documents, the Amended and Restated Stockholder's Agreement and the
Structuring Plan. In furtherance of and without limiting the generality
of the foregoing, Henkel will, or will cause the Henkel Entities or the
JV Entities to, deliver or cause to be delivered to Ecolab:
(a) stock certificates, partnership certificates, limited liability
company certificates and other similar instruments representing
the JV Interests, free and clear of Encumbrances, other than
restrictions on Transfer pursuant to applicable securities laws,
which certificates shall be duly endorsed to Ecolab or the Ecolab
Entities, as set forth in the Structuring Plan, or accompanied by
duly executed stock powers, notarial deeds or other applicable
transfer documents in form reasonably satisfactory to Ecolab,
along with the originals of any of the stock ledgers, minute
books and other corporate, partnership, limited liability company
and similar records of the JV Entities held by Henkel;
(b) a certificate of Henkel, in form reasonably satisfactory to
Ecolab, certifying (i) as to the accuracy of ▇▇▇▇▇▇'▇
representations and warranties under this Agreement and the other
Transaction Documents at and as of the Closing, (ii) that Henkel
has performed and complied with all of the terms, provisions and
conditions to be performed and complied with by Henkel under this
Agreement at or before the Closing, and (iii) that the conditions
precedent set forth in Article XI have been satisfied or waived;
(c) resignations (effective as of the Closing Date) of the members of
the Shareholders Committees and of the Boards of Directors of the
JV Entities appointed by Henkel;
(d) an executed original of each relevant Transaction Document and
the Amended and Restated Stockholder's Agreement;
(e) (i) a certified copy of a recent excerpt from the Commercial
Register at the Lower Court of Dusseldorf regarding the
registration of Henkel from a day dated less than 30 days prior
to the Closing Date, and (ii) an excerpt signed by the Secretary
of the committee of the minutes of a stockholders' committee
(Gesellschafterausschuss) meeting in which the committee members
have with the requisite majority approved the execution, delivery
and performance of this Agreement and the other Transaction
Documents and the Amended and Restated Stockholder's Agreement
and consummation of all of the transactions contemplated by such
agreements;
(f) a written legal opinion of ▇▇▇▇▇▇'▇ General Counsel in a form
agreed to by the parties reasonably in advance of the Closing and
covering customary matters; and
(g) such other documents in form and substance reasonably
satisfactory to Ecolab, as may be reasonably requested by Ecolab
in order to effect the Closing or complete the transactions
contemplated by the Transaction Documents and the Amended and
Restated Stockholder's Agreement.
5.3. Deliveries by Ecolab. At the Closing, Ecolab will, or will cause its
Subsidiaries to, take all necessary actions and enter into such
agreements as may be reasonably required, in the respective
jurisdictions where the JV Entities are located, for the consummation
of the transactions contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement, all in accordance with
the Transaction Documents, the Amended and Restated Stockholder's
Agreement and the Structuring Plan. In furtherance of and without
limiting the generality of the foregoing, Ecolab will, or will cause
its Subsidiaries to, deliver or cause to be delivered to Henkel:
(a) the Purchase Price consideration to be paid to Henkel;
(b) a certificate of Ecolab, in form reasonably satisfactory to
Henkel, certifying (i) as to the accuracy of Ecolab's
representations and warranties at and as of the Closing, (ii)
that Ecolab has performed and complied with all of the terms,
provisions and conditions to be performed and complied with by
Ecolab under this Agreement at or before the Closing, and (iii)
that the conditions precedent set forth in Article XII have been
satisfied or waived;
(c) an executed original of each relevant Transaction Document and
the Amended and Restated Stockholder's Agreement;
(d) a copy of each of (i) the text of the resolutions adopted by the
Board of Directors of Ecolab authorizing the execution, delivery
and performance of this Agreement, the other Transaction
Documents and the Amended and Restated Stockholder's Agreement
and the consummation of all of the transactions contemplated by
this Agreement, the other Transaction Documents and the Amended
and Restated Stockholder's Agreement, (ii) the Bylaws of Ecolab,
along with certificates executed on behalf of Ecolab by its
corporate secretary certifying to Ecolab that such copies are
true, correct and complete copies of such resolutions and Bylaws,
respectively, and that such resolutions and Bylaws were duly
adopted and have not been amended or rescinded; and (iii) a good
standing certificate with respect to Ecolab certified by the
Secretary of State of the State of Delaware as of a date not more
than thirty (30) days prior to Closing;
(e) a written legal opinion of Ecolab's General Counsel in a form
agreed to by the parties reasonably in advance of the Closing and
covering customary matters and
(f) such other documents in form and substance reasonably
satisfactory to Henkel, as may be reasonably requested by Henkel
in order to effect the Closing or complete the transactions
contemplated by the Transaction Documents and the Amended and
Restated Stockholder's Agreement.
5.4. Further Assurances. After the Closing Date, each party hereto shall, or
shall cause its respective Affiliates to, from time to time, at the
request of the other party and without further cost or expense to the
party making the request, execute and deliver (and, if appropriate,
file) or cause to be executed and delivered (and, if appropriate,
filed) such other instruments of conveyance and transfer as the other
party may reasonably request and continue to use reasonable efforts to
obtain any consents, approvals, authorizations and waivers necessary in
order to more effectively consummate the transactions contemplated
herein, in the other Transaction Documents and in the Amended and
Restated Stockholder's Agreement.
ARTICLE VI
6. REPRESENTATIONS AND WARRANTIES OF HENKEL
Henkel hereby represents and warrants to Ecolab that:
6.1 Corporate Organization, etc. Henkel and each of the Henkel Entities is
a corporation or partnership duly organized, validly existing and, if
relevant, in good standing under the laws of the jurisdiction of its
incorporation or formation, and each has all requisite corporate or
partnership power and authority to own, operate and lease its
respective properties and assets and to conduct its respective
businesses as now conducted and is qualified to do business in each
jurisdiction where the nature of its properties, assets or businesses
requires such qualification other than where the failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Henkel and the Henkel Entities, taken as a whole.
6.2 Authorization, etc. Henkel and each of the Henkel Entities has the full
power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents and the Amended and Restated
Stockholder's Agreement to be executed, delivered and carried out by it
and to consummate the transactions contemplated thereby. Henkel has,
and prior to the Closing Date all Henkel Entities shall have, taken all
necessary corporate or partnership action to authorize the execution,
delivery and performance of this Agreement. Henkel and the Henkel
Entities shall have, prior to the Closing Date, taken all necessary
corporate or partnership action to authorize the execution, delivery
and performance of the other Transaction Documents and the Amended and
Restated Stockholder's Agreement. This Agreement is, and the other
Transaction Documents and the Amended and Restated Stockholder's
Agreement will be, when executed and delivered, legal, valid and
binding agreements of Henkel and the appropriate Henkel Entities,
enforceable against them in accordance with their terms, except to the
extent that (a) such enforceability may be limited by laws of public
policy or bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting creditors, rights
generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceedings therefor may be brought.
6.3 No Violation; No Consent. Except as set forth in Schedule 6.3, the
execution and delivery of the Transaction Documents and the Amended and
Restated Stockholder's Agreement and the consummation of the
transactions contemplated thereby will not conflict with, result in the
breach of any of the terms or conditions of, constitute a default under
or violate, accelerate or permit the acceleration of any other similar
right of any other party or result in the creation or imposition of any
Encumbrance on any of the assets or properties of Henkel under the
Charter (Satzung) of Henkel or the constituent documents of any Henkel
Entity or any JV Entity, any Applicable Laws or any agreement, lease,
mortgage, note, bond, indenture, license or other document or
undertaking, to which Henkel, any Henkel Entity or any JV Entity is a
party or by which Henkel, any Henkel Entity, any JV Entity or any of
its or their properties may be bound, nor will such execution, delivery
and consummation violate any order, writ, injunction or decree of any
Governmental Entity to which Henkel, any Henkel Entity, any JV Entity
or any of its or their properties is subject, the effect of any of
which, either individually or in the aggregate, would impair the
ability of Henkel or any Henkel Entity to perform its obligations under
the Transaction Documents and the Amended and Restated Stockholder's
Agreement, have a Material Adverse Effect on Henkel and its
Subsidiaries, taken as a whole, or the JV Entities, taken as a whole,
or materially diminish the benefits intended to be afforded to Ecolab
under any of the Transaction Documents or the Amended and Restated
Stockholder's Agreement. The execution, delivery and performance by
Henkel or any Henkel Entity of this Agreement, the other Transaction
Documents and the Amended and Restated Stockholder's Agreement will not
require any notice to, filing with, or the consent, approval or
authorization of any Person or Governmental Entity, except as
contemplated in Section 8.1(b), filings under the Exchange Act (as
hereinafter defined), and except for such consents, approvals or
authorizations the failure of which to obtain or make, individually or
in the aggregate, would not be reasonably expected to have a Material
Adverse Effect on the JV Entities, taken as a whole, or materially
diminish the benefits intended to be afforded to Ecolab under any of
the Transaction Documents or the Amended and Restated Stockholder's
Agreement
6.4 Capitalization; Ownership. Henkel and the Henkel Entities, as
appropriate, own, beneficially and of record, the JV Interests, free
and clear of all Encumbrances other than restrictions on Transfer
pursuant to applicable securities laws, and have, subject to compliance
with such securities laws, full power and legal right to sell, assign,
transfer and deliver the same to Ecolab. Upon consummation of the
transactions contemplated by the Transaction Documents, Ecolab shall
acquire in accordance with the Structuring Plan all issued and
outstanding shares of each class of capital stock and all partnership
interests or other equity interests of the JV Entities free and clear
of all Encumbrances other than restrictions on Transfer pursuant to
applicable securities laws.
6.5 Compliance with Laws, etc. Henkel, each Henkel Entity and the JV
Entities have obtained and maintain in full force and effect all
permits, licenses, consents, approvals, registrations, memberships,
authorizations and qualifications under all federal, state, local and
foreign laws and regulations, and with all Governmental Entities,
required for the conduct by them of their businesses and the ownership
or possession by them of their properties and assets other than where
the failure to obtain or maintain such permits, licenses, consents,
approvals, registrations, memberships, authorizations or qualifications
would not, individually or in the aggregate, have a Material Adverse
Effect on the JV Entities, taken as a whole. The business of each of
Henkel, the Henkel Entities and the JV Entities has each been conducted
in compliance with all Applicable Laws (excepting environmental matters
which are set forth in the Environmental Agreement), other than where
the failure so to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the JV Entities, taken as a whole.
6.6 Financial Statements. Except as set forth in the notes thereto, the
Audited Financial Statements were, and the Post-Signing Audited
Financial Statements will be, prepared from the books and records of
the JV Entities and present fairly, and the Post-Signing Audited
Financial Statements will present fairly, in all material respects, the
financial position of the JV Entities as of the respective dates of
said balance sheets and the results of their operations and their cash
flows for the periods then ended in conformity with GAAP consistently
applied.
6.7 Undisclosed Liabilities. The JV Entities have no Liabilities, except
Liabilities (a) adequately provided for in the balance sheet which is
part of the Unaudited Financial Statements as of August 31, 2000, or
(b) which would not, individually or in the aggregate, have a Material
Adverse Effect on the JV Entities, taken as a whole.
6.8 No Material Adverse Change, etc. Since August 31, 2000, the business of
each of the JV Entities has been conducted only in the ordinary and
usual course consistent with past practice, except for matters jointly
approved by Henkel and Ecolab at a meeting of the Board of Directors of
a JV Entity. Since August 31, 2000 the JV Entities, taken as whole,
have not suffered a Material Adverse Effect.
6.9 JV Entities' Assets. The properties and assets owned, leased or
licensed by the JV Entities, together with the Lease Agreement, the
properties transferred or licensed to JV Entities by Henkel under the
Intellectual Property Plan and the services provided JV Entities by
Henkel under the Services Agreements and the Toll Manufacturing
Agreements, shall permit Ecolab immediately after the Closing to
continue to conduct the business of the JV Entities substantially as it
has heretofore been conducted. Except for ▇▇▇▇▇▇'▇ manufacturing
facilities, the properties covered by the Lease Agreement, and certain
of ▇▇▇▇▇▇'▇ facilities used to render the services set forth on Exhibit
G hereto, there is no material real or personal property owned by
Henkel or by any of its Affiliates (other than the JV Entities) which
is used or held for use primarily in the operation of the JV Entities.
Except as would not have a Material Adverse Effect on the JV Entities,
taken as a whole, neither Henkel nor any Henkel Entity has received,
written notice of any proceedings, claims or disputes affecting any
material real or leased property which is used or held for use in
connection with the business of the JV Entities that might curtail or
interfere with the use of any such real or leased property. Except as
would not have a Material Adverse Effect on the JV Entities, taken as a
whole, there is no condemnation proceeding, expropriation or other
exercise of power of eminent domain pending or, to the knowledge of
Henkel, threatened which would impair or preclude the use of any
material real or personal property (whether owned, leased or licensed)
by the JV Entities.
6.10 Transactions with Affiliates. The services agreements listed on Exhibit
G the toll manufacturing and supply agreements listed on Exhibit F, and
the lease for ▇▇▇▇▇▇'▇ training center and laundry facilities
constitute all material agreements or arrangements between Henkel or
any of its Affiliates (other than the JV Entities), on the one hand,
and any JV Entity, on the other hand, in effect as of the date hereof
and, as of the Closing Date, no further such affiliated arrangement
shall exist which has not been approved in writing by Ecolab.
6.11 Investment Representation. Any shares of Ecolab Common Stock delivered
pursuant to this Agreement will be subject to the Amended and Restated
Stockholder's Agreement and are being acquired by Henkel for its own
account and not with a view to the public distribution thereof. Henkel
acknowledges that the sale of the Ecolab Common Stock pursuant to this
Agreement has not been registered under Applicable Laws (including,
without limitation, the Securities Act of 1933, as amended, and any
state, local or foreign securities law) and that the Ecolab Common
Stock may not be Transferred without registration under, pursuant to an
exemption from or in a transaction not subject to, all Applicable Laws.
6.12 Disclosure. Henkel does not make any representation or warranty
regarding the transactions contemplated by this Agreement, except as
set forth in this Agreement, the other Transaction Documents and the
Amended and Restated Stockholder's Agreement.
ARTICLE VII
7. REPRESENTATIONS AND WARRANTIES OF ECOLAB
Ecolab represents and warrants to Henkel as follows:
7.1. Corporate Organization, etc. Ecolab and each Ecolab Entity existing on
the date hereof is, and each Ecolab Entity organized after the date
hereof will be prior to the Closing Date, a corporation or partnership
duly organized, validly existing and, if relevant, in good standing
under the laws of the jurisdiction of its incorporation or formation,
and each has, and each Ecolab Entity organized after the date hereof
will have prior to the Closing Date, all requisite corporate or
partnership power and authority to own, operate and lease its
respective properties and assets and to conduct its respective
businesses as now conducted and is, and each Ecolab Entity organized
after the date hereof will be prior to the Closing Date, qualified to
do business in each state or other jurisdiction where the nature of its
properties, assets or businesses requires such qualification other than
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Ecolab and its
Subsidiaries, taken as a whole.
7.2. Authorization, etc.
(a) Ecolab and each of the Ecolab Entities existing on the date
hereof has, and each Ecolab Entity organized after the date
hereof will have prior to the Closing Date, the full power and
authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents and the Amended and
Restated Stockholder's Agreement to be executed, delivered and
carried out by it and to consummate the transactions contemplated
by the Transaction Documents and the Amended and Restated
Stockholder's Agreement. Ecolab has, and prior to the Closing
Date all Ecolab Entities shall have, taken all necessary
corporate or partnership action to authorize the execution,
delivery and performance of this Agreement. Ecolab and the Ecolab
Entities shall have, prior to the Closing Date, taken all
necessary corporate or partnership action to authorize the
execution, delivery and performance of the other Transaction
Documents and the Amended and Restated Stockholder's Agreement.
This Agreement is, and the other Transaction Documents and the
Amended and Restated Stockholder's Agreement will be, when
executed and delivered, legal, valid and binding agreements of
Ecolab and the appropriate Ecolab Entities, enforceable against
them in accordance with their terms, except to the extent that
(i) such enforceability may be limited by laws of public policy
or bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting creditors'
rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
(b) The Board of Directors of Ecolab has taken all steps necessary to
authorize the acquisition by Henkel of Ecolab Common Stock
pursuant to the Transaction Documents and as permitted by the
Amended and Restated Stockholder's Agreement under Section 203 of
the Delaware General Corporation Law and neither the execution of
the Transaction Documents and the Amended and Restated
Stockholder's Agreement nor the acquisition of such Ecolab Common
Stock by Henkel shall create any rights for other stockholders or
impair ▇▇▇▇▇▇'▇ rights as a stockholder under the Rights
Agreement, dated February 24, 1996, between Ecolab and First
Chicago Trust Company of New York, as rights agent.
7.3. No Violation; No Consent. The execution and delivery of the Transaction
Documents and the Amended and Restated Stockholder's Agreement and the
consummation of the transactions contemplated thereby will not conflict
with, result in the breach of any of the terms or conditions of,
constitute a default under or violate, accelerate or permit the
acceleration of any other similar right of any other party or result in
the creation or imposition of any Encumbrance on any of the assets or
properties of Ecolab under the Restated Certificate of Incorporation or
Bylaws of Ecolab or the constituent documents of any Ecolab Entity, any
Applicable Laws or any agreement, lease, mortgage, note, bond,
indenture, license or other document or undertaking, to which Ecolab or
any Ecolab Entity is a party or by which Ecolab, any Ecolab Entity or
any of its or their properties may be bound, nor will such execution,
delivery and consummation violate any order, writ, injunction or decree
of any Governmental Entity to which Ecolab, any Ecolab Entity or any of
its properties is subject, the effect of any of which, either
individually or in the aggregate, would impair the ability of Ecolab or
any Ecolab Entity to perform its obligations under the Transaction
Documents and the Amended and Restated Stockholder's Agreement, have a
Material Adverse Effect on Ecolab and its Subsidiaries, taken as a
whole, or materially diminish the benefits intended to be afforded to
Henkel under any of the Transaction Documents or the Amended and
Restated Stockholder's Agreement. The execution, delivery and
performance by Ecolab of this Agreement, the other Transaction
Documents and the Amended and Restated Stockholder's Agreement will not
require any notice to, filing with, or the consent, approval or
authorization of any Person or Governmental Entity, except as
contemplated in Section 8.1(b) and except for such consents, approvals
or authorizations the failure of which to obtain or make, individually
or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect on Ecolab and its Subsidiaries, taken as a
whole, or materially diminish the benefits intended to be afforded to
Henkel under any of the Transaction Documents or the Amended and
Restated Stockholder's Agreement.
7.4. Compliance with Laws, etc. Ecolab and each Ecolab Entity has obtained
and maintains in full force and effect all permits, licenses, consents,
approvals, registrations, memberships, authorizations and
qualifications under all federal, state, local and foreign laws and
regulations, and with all Governmental Entities, required for the
conduct by them of their businesses and the ownership or possession by
them of their properties and assets other than where the failure to
obtain or maintain such permits, licenses, consents, approvals,
registrations, memberships, authorizations or qualifications would not,
individually or in the aggregate, have a Material Adverse Effect on
Ecolab and the Ecolab Entities, taken as a whole. The business of
Ecolab and the Ecolab Entities has each been conducted in compliance
with all Applicable Laws, other than where the failure so to comply
would not, individually or in the aggregate, have a Material Adverse
Effect on Ecolab and the Ecolab Entities, taken as a whole.
7.5. Capital Stock.
(a) The shares of Ecolab Common Stock acquired by Henkel pursuant to
the Transaction Documents and the Amended and Restated
Stockholder's Agreement, when issued and delivered by Ecolab
pursuant to the Transaction Documents and the Amended and
Restated Stockholder's Agreement, will be in due and proper form,
will have been duly authorized by all necessary corporate action
on the part of Ecolab, and will be validly issued, fully paid and
non-assessable. Henkel, or its designee in accordance with the
Structuring Plan, will acquire valid and marketable title to such
shares of Ecolab Common Stock issued on the Closing Date, free
and clear of any Encumbrances except as contemplated by this
Agreement, the Amended and Restated Stockholder's Agreement or as
the result of actions taken by Henkel or pursuant to applicable
securities laws.
(b) As of the date hereof, the authorized capital stock of Ecolab
consists of 200,000,000 shares of Ecolab Common Stock, of which
127,014,480 shares were issued and outstanding as of October 31,
2000 (excluding approximately 20,368,740 shares held in treasury
as of such date), and 15,000,000 shares of preferred stock,
without par value, of which no shares are issued and outstanding.
All of the issued and outstanding shares of Ecolab Common Stock
have been validly issued and are fully paid and non-assessable.
(c) On the date hereof, there are not authorized or outstanding any
subscriptions, options, conversion rights, warrants or other
agreements, securities or commitments of any nature whatsoever
(whether oral or written and whether firm or conditional)
obligating Ecolab or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, to any person any
shares of Ecolab Common Stock or any other shares of the capital
stock of Ecolab or any shares of the capital stock of any Ecolab
Entity, other than the organization of certain Ecolab companies
as contemplated by the Transaction Documents and the Amended and
Restated Stockholder's Agreement, or any securities convertible
into or exchangeable for any such shares, or obligating any such
person to grant, extend or enter into any such agreement or
commitment, except (i) as contemplated by the Amended and
Restated Stockholder's Agreement dated June 26, 1991 between
Henkel and Ecolab, the Transaction Documents and the Amended and
Restated Stockholder's Agreement, (ii) 1,000,000 shares of Series
A Junior Participating Preferred Stock reserved for issuance
pursuant to the Rights Agreement dated February 24, 1996 between
Ecolab and First Chicago Trust Company of New York as rights
agent, and (iii) 16,405,502 shares of Common Stock reserved
pursuant to Ecolab's employee and director benefit, incentive and
compensation plans as of October 31, 2000. No class of capital
stock of Ecolab is entitled to preemptive rights.
7.6. SEC Filings. Ecolab has filed with the Securities and Exchange
Commission (the "SEC") all proxy statements and periodic reports
required to be filed by it since January 1, 2000 (collectively, the
"Ecolab SEC Reports") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Henkel acknowledges that it has received
copies of the Ecolab SEC Reports filed with the SEC. Each Ecolab SEC
Report was in compliance in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC thereunder
and did not on the date of its filing contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
7.7. Financial Statements. Except as set forth in the notes thereto, the
audited financial statements included in the Ecolab SEC Reports were
prepared from the books and record of Ecolab and present fairly, in all
material respects, the financial position of Ecolab and its
consolidated Subsidiaries as of the date of such financial statements
and the results of their operations and their cash flows for the
periods then ended in conformity with GAAP consistently applied.
7.8. Investment Representation. Ecolab (including any relevant Affiliate) is
acquiring the JV Interests for its own account for the purpose of
investment and not with a view to the distribution thereof or dividing
all or any part of its interest therein with any other Person. Ecolab
acknowledges that the sale of the JV Interests has not been registered
under Applicable Laws (including, without limitation, the Securities
Act of 1933, as amended, and any state, local or foreign securities
law) and that the JV Interests may not be Transferred without
registration under, pursuant to an exemption from or in a transaction
not subject to, all Applicable Laws.
7.9. Disclosure. Ecolab does not make any representation or warranty
regarding the transactions contemplated by this Agreement except as set
forth in this Agreement, the other Transaction Documents and the
Amended and Restated Stockholder's Agreement.
ARTICLE VIII
8. COVENANTS OF ECOLAB AND HENKEL
8.1. Nonassignability; Consents and Approvals.
(a) Ecolab and Henkel shall each use its reasonable efforts to ensure
that the approvals, authorizations, orders, rulings and consents
of and filings and registrations required under Applicable Laws
with Governmental Entities including, without limitation, filings
under any Antitrust Laws and other approvals and consents of
other Persons necessary for the transactions contemplated by the
Transaction Documents and the Amended and Restated Stockholder's
Agreement to be consummated are obtained or made at the earliest
possible times.
(b) Without limiting the generality of the undertakings pursuant to
this Section 8.1, Ecolab and Henkel agree to take or cause to be
taken the following actions:
(i) File any Notification and Report Form and related
materials required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the regulations
promulgated thereunder (the "HSR Act") as soon as
practicable and in any event not later than thirty (30)
days after the later of the date hereof and the date on
which such filing becomes necessary;
(ii) Provide promptly to Governmental Entities with regulatory
jurisdiction over enforcement of any Antitrust Laws
("Governmental Antitrust Entity") filings, notifications,
information and documents required or requested by any
Governmental Antitrust Entity or necessary, proper or
advisable to permit consummation of the transactions
contemplated by the Transaction Documents and the Amended
and Restated Stockholder's Agreement; Ecolab takes the
lead in these filings in Europe; Henkel will cooperate and
furnish all information and material pertaining to it or
its Subsidiaries requested by Ecolab or any Governmental
Antitrust Entity and Ecolab shall be entitled to rely on
the accuracy of such information and material. If any
party hereto receives such a request for additional
information or documents, then such party shall promptly
provide to the other copies of such request and endeavor
in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the
other party, an appropriate response in compliance with
such request, and thereafter use its reasonable efforts to
certify as soon as practicable its substantial compliance
with any such request; and
(iii) In the event of any pending or threatened preliminary
injunction or other order, decree, ruling, executive order
or Applicable Laws that would make unlawful, prevent,
delay or otherwise adversely affect the ability of the
parties hereto to consummate the transactions contemplated
hereby, each party shall promptly use its reasonable
efforts to take any and all steps (including, without
limitation, the posting of a bond) necessary to lift,
rescind, vacate, modify or suspend such action so as to
permit such consummation (including, without limitation,
negotiating in good faith mutually satisfactory remedial
commitments with any and all Governmental Antitrust
Entities and litigating, contesting or otherwise
challenging in good faith any such actions).
Notwithstanding the foregoing sentence, neither party
shall be obligated to appeal the decision of an agency or
a court of competent jurisdiction which enters a final or
preliminary order or injunction enjoining the consummation
of the transactions contemplated by the Transaction
Documents and the Amended and Restated Stockholder's
Agreement.
(c) Each party hereto shall promptly inform the other of any material
communication from any Governmental Antitrust Entity regarding
any of the transactions contemplated hereby. Ecolab and Henkel
agree that all meetings, and to the extent reasonably practicable
all telephonic calls, with a Governmental Antitrust Entity
regarding the transactions contemplated hereby or any of the
matters described in this Section 8.1(c) shall include
representatives of each of Ecolab and Henkel.
(d) Without prejudice to Articles XI and XII hereof, in the event
that any such approvals, authorizations, orders, rulings and
consents of Governmental Entities cannot be obtained or can only
be obtained under certain conditions, (i) Ecolab and Henkel shall
use their reasonable efforts to negotiate in good faith suitable
substitute arrangements that will permit the Closing Date to
occur with the least onerous consequences possible and without
material adverse consequences to the respective benefits to be
derived therefrom by the parties and (ii) the burdens of any such
arrangements shall be shared equitably, including through
possible reduction of the Purchase Price.
(e) To the extent that any agreement or any license, permit or
approval used in or associated with the business of the JV
Entities (excluding, in each case, agreements, licenses, permits
and approvals relating to Patents, Technology and Trademarks) and
otherwise contemplated to be assigned or transferred by the
Transaction Documents is not capable of being assigned or
transferred without the consent or waiver of the issuer thereof
or the other party thereto or any third party, or if such
assignment or transfer would constitute a breach thereof or a
violation of any legal requirement, the Transaction Documents
shall not constitute an assignment or transfer thereof or an
attempted assignment or transfer thereof, unless and until such
consent or waiver of such issuer or other party or parties has
been duly obtained or such assignment or transfer has otherwise
become lawful.
(f) To the extent that any of the consents or waivers referred to in
Section 8.1(e) hereof are not obtained by Henkel, or until the
difficulties of transfer referred to therein are resolved, Henkel
shall use its reasonable efforts to (i) provide or cause to be
provided to the JV Entities the benefits of any permit, approval,
contract or license referred to in Section 8.1(e) hereof, (ii)
cooperate in any arrangement, reasonable and lawful as to Henkel
designed to provide such benefits to the JV Entities, and (iii)
enforce for the account and at the expense and direction of the
JV Entities and Ecolab any rights of any of the JV Entities
arising from any such licenses, permits, approvals and contracts
against such issuer or the other party or parties referred to in
Section 8.1(e) hereof, including, without limitation, the right
to elect to terminate in accordance with the terms thereof on the
advice of Ecolab.
8.2. Confidentiality and Announcements.
(a) Henkel undertakes to Ecolab on behalf of itself and its
Subsidiaries, that it shall keep confidential and shall not,
without the prior written consent of Ecolab, disclose to any
person, nor use or exploit commercially for its own purposes, any
information relating to the Transaction Documents and the Amended
and Restated Stockholder's Agreement or the customers, business
or affairs of the JV Entities or of Ecolab or its respective
Subsidiaries which it has, or which it may have received or in
the future acquire, (i) as a result of the negotiating or
entering into of the Transaction Documents and the Amended and
Restated Stockholder's Agreement, (ii) through the holding of
Ecolab Common Stock, or (iii) through the previous ownership or
operation by it or one of its Subsidiaries of assets of the JV
Entities, otherwise than as permitted or contemplated under said
agreements; provided, however, that Henkel may disclose such
information (A) to its Subsidiaries for any purposes reasonably
incidental to the purposes of the Agreement, (B) to its advisors
for use in connection with rendering advice with respect to the
transactions contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement and (C) as is
required to be disclosed by operation of law or any stock
exchange regulations or any binding judgment or order, or by any
requirement of any competent Governmental Entity. In performing
its obligations under this Section 8.2(a), Henkel shall apply
such standards of confidentiality as it applies generally in
relation to its own confidential information. Henkel shall use
all reasonable efforts to ensure that its employees and agents
and those of its Subsidiaries observe such confidentiality.
(b) Ecolab undertakes to Henkel on behalf of itself and its
Subsidiaries, that it shall keep confidential and shall not,
without the prior written consent of Henkel, disclose to any
person, nor use or exploit commercially for its own purposes, any
confidential and proprietary information of Henkel, except as
contemplated by this Agreement or as permitted by the Transaction
Documents.
(c) Section 8.2(a) and (b) shall not apply to information:
(i) acquired from a third party with the right to divulge the
same;
(ii) which, prior to the Closing, Ecolab and Henkel have
jointly decided to disclose; or
(iii) which is or becomes within the public domain (otherwise
than through the fault of the recipient party).
(d) No announcement in connection with the subject matter of the
Transaction Documents and the Amended and Restated Stockholder's
Agreement shall be made or issued by or on behalf of any of the
parties hereto (or any of their Subsidiaries) prior to or upon
the Closing without the prior written approval of both Ecolab and
Henkel (such approval not to be unreasonably withheld or
delayed), except as permitted by the Communications Plan or as
may be required by law, by any stock exchange or by any
Governmental Authority.
8.3. Structuring Plan. Attached hereto as Exhibit A is the Structuring Plan
developed for the transactions contemplated by the Transaction
Documents. The parties shall take the actions contemplated by the
Structuring Plan prior to Closing.
8.4. Cooperation. Prior to the Closing, the parties shall cooperate to
fulfill all conditions specified herein and to do all things necessary
to consummate the transactions contemplated by the Transaction
Documents and the Amended and Restated Stockholder's Agreement. The
parties shall make all joint filings as are required or agreed upon by
the parties and shall make such individual filings as are required or
appropriate, but only upon consultation with the other party and after
giving reasonable consideration to such party's comments, if any. On
and after the Closing Date, the parties will take all appropriate
action and execute all documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of
the provisions of the Transaction Documents and the Amended and
Restated Stockholder's Agreement including, without limitation, putting
Ecolab in possession and operating control of the JV Interest and the
business of the JV Entities.
8.5. Tax Matters.
(a) ▇▇▇▇▇▇'▇ Tax Indemnity.
(i) Notwithstanding any other provisions of this Agreement
(other than and subject to Section 8.5(b)(ii)), from and
after the Closing Date, Henkel shall be liable to, and
shall indemnify and hold harmless, Ecolab, each of the JV
Entities, and their respective officers, directors and
Affiliates (with such indemnification payment to be made
to the individual or entity determined by Ecolab) against
the following amounts:
(A) 100% of any and all Taxes Imposed on Henkel or any
Affiliate of Henkel (other than a JV Entity) in any period,
whether or not incurred in connection with the transactions
contemplated by this Agreement;
(B) 50% of any and all Taxes Imposed on any JV Entity with
respect to taxable years or periods ending on or before the
Closing Date;
(C) with respect to taxable years or periods beginning
before the Closing Date and ending after the Closing Date (a
"Straddle Period"), 50% of any and all Taxes Imposed on any JV
Entity which is allocable, pursuant to Section 8.5(a)(ii), to the
portion of such Straddle Period ending on the Closing Date (the
"First Interim Period") (the First Interim Period and any taxable
years or periods that end on or prior to the Closing Date being
referred to collectively hereinafter as "Pre-Closing Periods");
and
(D) 100% of any and all German trade income tax Imposed
on Henkel Ecolab GmbH OHG & Co. (the "German Partnership") as a
result of the capital gain realized by Henkel upon the sale of
its partnership interest in the German Partnership.
(ii) In any case where the Closing Date is not treated as the
last day of the taxable year or period of a JV Entity with
respect to Taxes that are payable in respect of the First
Interim Period, the portion of any such Tax that is
allocable to the First Interim Period shall be:
(A) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) Imposed in connection with
any sale or other transfer or assignment of property (real or
personal, tangible or intangible), deemed equal to the amount
which would be payable if the taxable year or period ended on the
Closing Date (except that exemptions, allowances and deductions
such as depreciation deductions calculated on an annual basis
shall be prorated between the First Interim Period and the
remainder of the Straddle Period and ignoring any Tax loss
carryback from a subsequent period); and
(B) in the case of Taxes not described in clause (A) above
(such as Taxes on capital) that are Imposed on a period basis and
measured by the level of any item, deemed to be the amount of
such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the First
Interim Period ending on the Closing Date and the denominator of
which is the number of calendar days in the entire relevant
period.
(b) Ecolab's Tax Indemnity. Ecolab shall be liable for, and shall
indemnify and hold Henkel harmless against:
(i) any and all Taxes Imposed on any JV Entity relating or
apportioned to any taxable year or portion thereof ending after
the Closing Date (a "Post-Closing Period"), including Taxes for
the Straddle Period not allocable to the First Interim Period;
and
(ii) all transfer, real estate transfer, recording, deed or stamp
taxes resulting from the transfers described in the Structuring
Plan.
(c) Mutual Cooperation. As soon as practicable, but in any event
within thirty (30) days after either ▇▇▇▇▇▇'▇ or Ecolab's
request, Ecolab shall, or shall cause JV Entities to, deliver to
Henkel or Henkel shall deliver to Ecolab, as the case may be,
such information and other data relating to the Tax Returns and
Taxes of Ecolab or any JV Entity and shall provide such other
assistance as may reasonably be requested, to cause the
completion and filing of all Tax Returns or to respond to audits
by any taxing authorities with respect to any Tax Returns or
taxable periods or to otherwise enable Henkel, Ecolab or the JV
Entities to satisfy their accounting or Tax requirements. For a
period of five (5) years from and after the Closing, Ecolab and
Henkel shall, and shall cause their Affiliates to, maintain and
make available to the other party, on such other party's
reasonable request, copies of any and all information, books and
records referred to in this Section 8.5(c). After such five-year
period, Ecolab or the Henkel may dispose of such information,
books and records, provided that prior to such disposition,
Ecolab or Henkel shall give the other party the opportunity to
take possession of such information, books and records. Henkel
shall maintain, and provide to Ecolab on a timely basis, such
records as are requested by Ecolab to comply with its obligations
pursuant to Section 6038A of the Code.
(d) Resolution of Disagreements between Ecolab and Henkel.
Notwithstanding Article XV hereof, if Ecolab and Henkel disagree
as to the amount of Taxes for which Ecolab and Henkel are liable
under this Agreement, Ecolab and Henkel shall promptly consult
with each other in an effort to resolve such dispute. If any such
point of disagreement cannot be resolved within fifteen (15) days
after the date of consultation, Ecolab and Henkel shall within
ten (10) days after such 15-day period jointly engage an Auditor
(as defined in Section 4.3) to act as an arbitrator to resolve
all points of disagreement concerning tax accounting matters with
respect to this Agreement. All fees and expenses relating to the
work performed by any Auditor or arbitrator in accordance with
this Section 8.5(d) shall be borne equally by Ecolab and Henkel,
unless otherwise ordered by the Auditor or arbitrator.
(e) Obligations Absolute. Notwithstanding any other provision of this
Agreement, the covenants contained in Section 8.5 shall be
unconditional and absolute and shall survive until the date that
is ninety (90) days after the expiration of the applicable
statute of limitations.
8.6. Regulatory Matters.
(a) Henkel and Ecolab agree, from the date hereof and prior to
Closing, to cause the JV Entities to prepare and make available a
more detailed Schedule 9.2(c) with information broken down on a
country-by-country basis and containing the input of additional
JV Entity employees, in local jurisdictions and with applicable
expertise, who were not, as of the date hereof, involved in the
preparation of this Agreement. Without limiting the generality of
the foregoing, such detailed Schedule 9.1(c) shall contain the
following information:
(i) the status and nature of each significant current, pending
or lapsed product or equipment registration or approval
including, identification of the agency, registration or
approval identification number and the registered or
approved use category;
(ii) the name of the JV Entity in which such registration or
approval is held (and, if held in ▇▇▇▇▇▇'▇ name, such
registrations or approvals shall be transferred to Ecolab
or a JV Entity, at Ecolab's option and at Ecolab's cost);
(iii) a summary of the environmental, health, safety and other
data which underlies or supports such registration and the
owner and location of such data;
(iv) a risk assessment regarding contemplated or pending
legislative or regulatory proposals or scrutiny which
might adversely impact product formulations or sales, such
as restrictions on the use of certain ingredients like
EDTA, NTA, chlorine, boric acids, surfactants, biocides
and so forth; and identification of the specific product
formulations and the sales which might be adversely
impacted;
(v) a list of the various industry consortia or other groups
to which Henkel or the JV Entities belong regarding the
foregoing matters, including a summary of the current
activities; and
(vi) a detailed list of the services, such as packaging
certification, provided by Henkel to the JV Entities and
the costs and other material terms and conditions
therefor.
(b) Following the Closing, Ecolab shall have continuing rights to
copy, access, cite and otherwise use environmental, health,
safety and other information or data owned or held by Henkel and
needed to:
(i) maintain or obtain existing, pending or future product and
equipment registrations and approvals, supplemental
registrations and approvals or registration and approval
amendments;
(ii) maintain or obtain customer relationships; or
(iii) respond to governmental or regulatory or public interest
inquiries.
8.7. Employee Matters.
(a) The parties acknowledge that various amendments or changes to the
Plans will need to be made (including, without limitation, the
termination of some of the Plans) in connection with the
transactions contemplated by this Agreement due to the provisions
of such Plans or Applicable Laws, and that such amendments or
changes could affect the employees of the JV Entities.
Accordingly, the parties agree to cooperate as to the timing,
nature, scope and terms of such amendments or changes so as to
reduce the effect of such amendments or changes on the employees
of the JV Entities.
(b) The parties agree that (i) all assets directly or indirectly held
by Henkel, an Affiliate of Henkel or an agent of Henkel to
provide benefits to employees of the JV Entities will be
transferred to Ecolab, Ecolab's Affiliates or the JV Entities, as
Ecolab directs, and (ii) any assets that are held to provide
benefits for both employees of Henkel or an Affiliate of Henkel,
on the one hand, and employees of the JV Entities, on the other
hand, will be (aa) divided pro-rata between Henkel or an
Affiliate of Henkel (as the case may be) and the JV Entities in
the same proportion as the Liability for such benefits is divided
between them and (bb) transferred to Ecolab, Ecolab's Affiliates
or the JV Entities, as Ecolab directs.
(c) The parties also acknowledge that the Applicable Laws of various
of the local jurisdictions contain requirements as to
notification requirements relating to work councils associated
with the JV Entities in such jurisdiction. The parties agree to
comply with such requirements in accordance with such Applicable
Laws and reasonably cooperate with each other as to the timing,
delivery and content of such notifications in accordance with the
terms of the Communications Plan.
8.8. Treasury Matters. Henkel and Ecolab agree, from the date hereof and
prior to Closing, to cause the JV Entities to make available detailed
information and documents concerning the treasury function and treasury
matters of the JV Entities. Without limiting the generality of the
foregoing, such information and documents shall include cash
investments, short- and long-term financing arrangements, related party
financings, transactional banking structure, derivative positions and
investments of benefit plan assets.
8.9 Conduct of the Business of the JV Entities Pending Closing.
(a) From the date hereof until the Closing, except as otherwise
contemplated by this Agreement, the parties shall cause the JV
Entities to conduct their business only in the ordinary course as
conducted on the date hereof, and the parties shall use, and
shall cause the JV Entities to use, their reasonable efforts (i)
to preserve in all material respects their respective present
business organizations, assets, operations, goodwill and
relationships with third parties, (ii) to keep available the
services of the present officers and employees except as may be
otherwise agreed by Henkel and Ecolab, (iii) to confer and
consult with each of the parties concerning operational matters
of the JV Entities, and (iv) to otherwise report periodically to
the parties as requested by the parties concerning the status of
the business, operations, and finances of such JV Entities.
(b) Without limiting the generality of the foregoing, from the date
hereof until the Closing, except as otherwise contemplated by
this Agreement, the parties shall:
(i) cause each of the JV Entities to use all reasonable
efforts to carry on its business and operations
substantially in the manner carried on as of the date
hereof, and will not permit the JV Entities to engage in
any activity or transaction or make any commitment to
purchase or spend money other than in the ordinary course
of its business and in accordance with its year 2001 plan
and budget; and
(ii) not permit any JV Entity to materially increase any
compensation, commission, bonus or employee benefit to any
director, officer, employee or independent contractor as
such.
8.10 Post-Signing Financial Statements. Henkel and Ecolab agree, from the
date hereof until the Closing, to cause the JV Entities to prepare and
make available to each of them the Post-Signing Audited Financial
Statements, as well as interim financial statements, prepared for the
same periods and in the same manner as is consistent with the past
practice of the JV Entities, but in any case no less than quarterly.
Such Financial Statements will be prepared from the books and records
of the JV Entities and will present fairly, in all material respects,
the financial position of the JV Entities as of the dates thereof and
the results of their operations for the periods indicated in conformity
with GAAP (subject, in the case of interim financial statements, to
normal year-end adjustments and the absence of footnotes).
8.11 Dividend. The parties shall cause the JV Entities prior to the Closing
Date to declare a dividend consistent with past practice with respect
to the earnings of the JV Entities (taken as a whole) for the fiscal
year ended November 30, 2001 and for the period after November 30, 2001
and ending on the Closing Date.
8.12 Venezuela. On prior to December 31st, 2000, Ecolab shall (or shall
cause one of its Affiliates) to enter into a definitive agreement with
Henkel Venezuela (or some other Henkel Affiliate that owns the shares
in Ecolab S.A. (Venezuela)) to purchase, and Henkel Venezuela shall
enter into a definitive agreement with Ecolab (or one of its
Affiliates) to sell, all of the shares in Ecolab S.A. (Venezuela) owned
by Henkel or its Affiliates for a total consideration of $ 3,000,000
(in U.S. dollars), payable in cash. The terms of the purchase shall
include limited representations (with respect to ownership of the
shares and due authorization for the transaction, etc., but no
representation with respect to the condition of the business of Ecolab
S.A. (Venezuela)), covenants and indemnification provisions. Subject to
the receipt of any necessary consents or approvals from Governmental
Entities and the receipt of any material consents from third parties,
the parties shall close the transaction on or before the seventieth
(70th) day of 2001.
ARTICLE IX
9. COVENANTS OF HENKEL
9.1. Preservation of and Access to Books and Records.
(a) Prior to the Closing, Henkel will, and will cause its
Subsidiaries and the JV Entities to, permit Ecolab and its
Subsidiaries, and their advisors and auditors, through their
authorized representatives, reasonable access during normal
business hours (at no charge, cost or expense to Henkel, its
Subsidiaries or the JV Entities) to any and all of the
properties, assets, books, records and other documents of each of
the JV Entities as Ecolab may reasonably request, and Henkel
will, and will cause its Subsidiaries and the JV Entities to,
furnish to Ecolab such information and copies of such documents
and records pertaining to the JV Entities as Ecolab shall
reasonably request.
(b) Henkel shall not, and shall cause its Subsidiaries not to,
destroy any books or records (including, without limitation,
correspondence, memoranda, books of account, legal books,
environmental reports, tax reports and returns, manufacturing,
production and technical service records and the like) which have
not been transferred with the JV Entities in connection with the
consummation of the transactions contemplated by the Transaction
Documents but which can reasonably be deemed to relate to
▇▇▇▇▇▇'▇ or its Subsidiaries' operation of the business of the JV
Entities (including, without limitation, records with respect to
tax, pension, severance and litigation matters), and reasonably
relating to events occurring prior to the Closing and to
transactions or events occurring subsequent to the Closing which
are related to or arise out of transactions or events occurring
prior to the Closing Date. After the Closing Date and for so long
as such books and records are required by law to be maintained,
Henkel shall ensure that any such books and records are not
disposed of or destroyed without giving Ecolab forty-five (45)
days notice of the intention to dispose of such books and
records, during which period Ecolab shall have the right to take
possession of any such books and records.
(c) So long as the books and records which are subject to this
Section 9.1 are in the possession of Henkel or its Subsidiaries,
Henkel shall permit, during normal business hours (at no charge,
cost or expense to Henkel or its Subsidiaries), Ecolab and its
Subsidiaries, as the case may be, and their auditors, through
their authorized representatives, to have reasonable access to
and examine and take copies of all such books and records.
(d) Henkel shall direct its employees and those of its Subsidiaries
to render any assistance which Ecolab and its Subsidiaries may
reasonably request in examining or utilizing records referred to
in this Section 9.1 including, without limitation, assistance
related to the use of such records in the defense of any
litigation related to the business of the JV Entities.
9.2 Disclosure Schedule. As of the date hereof, Henkel has caused the JV
Entities to supply to Ecolab the following schedules (the "Disclosure
Schedule"), a copy of which Ecolab acknowledges having received:
(a) A description of all material real property of the JV Entities,
including a description or identification of each location, the
record title holder thereof and the buildings and other
improvements thereon;
(b) a list of (i) any actions, suits, inquiries, proceedings or
investigations by or before any Governmental Entity pending or,
to the best knowledge of Henkel, threatened against or involving
any JV Entity related to the business of the JV Entities, or any
product alleged to have been manufactured or sold by any JV
Entity in connection with the business of the JV Entities and
alleged to have been defective, or improperly designed or
manufactured, in each case that is out of the ordinary course of
business and seeks, or is reasonably likely to result in, damages
in an amount in excess of $100,000, or which questions or
challenges the validity of any of the Transaction Documents, the
Amended and Restated Stockholder's Agreement or any action taken
or to be taken by Henkel or any of its Subsidiaries pursuant to
the Transaction Documents and the Amended and Restated
Stockholder's Agreement or in connection with the transactions
contemplated thereby and (ii) any circumstances which, to the
knowledge of Henkel, would form a valid basis for any such
action, suit, inquiry, proceeding or investigation; and
(c) a list of all material permits, licenses, consents, approvals,
registrations, memberships, authorizations and qualifications
under all federal, state, local and foreign laws and regulations,
and with all Governmental Entities, required for the conduct by
the JV Entities of their businesses and the ownership or
possession by them of their properties and assets.
The parties acknowledge that the Disclosure Schedule does not, in and
of itself, constitute a representation or warranty of Henkel and is not
a representation or warranty except to the extent specifically referred
to in Article VI of this Agreement.
9.3 Amendments to Disclosure Schedule. Not less than three (3) business
days prior to the Closing Date, Henkel shall cause the JV Entities to
provide to Ecolab amendments, if any, to the Disclosure Schedule
delivered or to be delivered hereunder (the "Updated Disclosure
Schedule"). Ecolab and Henkel hereby acknowledge that if the Closing
occurs notwithstanding the delivery of an Updated Disclosure Schedule
as contemplated above, Ecolab shall be entitled to indemnification to
the extent provided by Article XIV for any new matters disclosed on the
Updated Disclosure Schedule.
9.4 Resignation of Officers and Directors. Prior to or at the Closing,
Henkel will cause each member of the Board of Directors (or similar
governing body under local law) of each JV Entity appointed by Henkel
to resign effective at the Closing.
9.5 Noncompetition. Henkel agrees that it will not, and shall ensure that
its Affiliates do not, at any time during the period beginning on the
Closing Date and ending on the fifth anniversary of the Closing Date,
engage in or have any controlling interest in, directly or indirectly,
whether alone or in conjunction with any Person, anywhere in Europe,
Russia or Turkey, any business which is in competition with the JV
Entities in the Cleaning and Sanitizing Field as conducted by the JV
Entities at Closing (a "Competing Business"), provided, however, that
Henkel and its Affiliates may continue to conduct their respective
businesses generally in the manner in which such businesses are being
conducted on the Closing Date. Henkel and its Affiliates shall not at
any time, directly or indirectly, use or purport to authorize any
person to use any Technology, Patent or Trademark or the "Henkel" name
in contravention of this Section 9.5. The provisions of this Section
9.5 shall not prohibit Henkel and its Affiliates from acquiring not
more than two percent (2%) of any class of securities of any company
with a class of securities registered under the Securities Exchange Act
of 1934, as amended, or otherwise publicly traded, provided Henkel and
its Affiliates do not control such company. Further, the provisions of
this Section 9.5 shall not prohibit Henkel and its Affiliates from
acquiring a Competing Business in Europe, Russia and Turkey if and only
if (a) Henkel or its Affiliate ceases to engage in such Competing
Business within two hundred seventy (270) days after the consummation
of such transaction and (b) Henkel shall have promptly first offered
Ecolab, upon customary commercial terms, the exclusive opportunity, for
a sixty (60) day period, to purchase such Competing Business at the
same price at which Henkel acquired such Competing Business. The
foregoing provisions of this Section 9.5, but not any claim previously
brought thereunder, shall cease to apply on the fifth anniversary of
the Closing Date.
9.6 General. Henkel shall not and shall cause its Subsidiaries not to take
any action not contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement which would cause the
representations or warranties made by Henkel in the Transaction
Documents or the Amended and Restated Stockholder's Agreement not to be
true and accurate as of the Closing.
ARTICLE X
10. COVENANTS OF ECOLAB
Ecolab covenants and agrees with Henkel as follows:
10.1. Books and Records. For a reasonable period of time after the Closing
Date (which for any tax-related matters shall mean at least seven (7)
years after the Closing Date), Ecolab will allow Henkel and its agents
reasonable access to the relevant portions of the JV Entities' books
and records for legitimate business reasons, such as the preparation of
Tax Returns or the defense of litigation. Copies of such books and
records may be made in accordance with this Section 10.1, at the cost
of Henkel. Henkel will not use and will hold in confidence all
confidential information identified as such by, and obtained from,
Ecolab and any of its officers, agents, representatives or employees;
provided, however, that information which (a) was in the public domain,
(b) was in fact known to Henkel prior to disclosure by Ecolab, its
officers, agents, representatives or employees, or (c) becomes known to
Henkel from or through a third party who has the legal right to
disclose such information, shall not be deemed to be confidential
information.
10.2 General. Ecolab shall not and shall cause its Subsidiaries not to take
any action not contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement which would cause the
representations or warranties made by Ecolab in the Transaction
Documents or the Amended and Restated Stockholder's Agreement not to be
true and accurate as of the Closing.
ARTICLE XI
11. CONDITIONS TO ▇▇▇▇▇▇'▇ OBLIGATION
Each and every obligation of Henkel under the Transaction Documents to be
performed on or before the Closing shall be subject to the satisfaction of each
of the following conditions, unless waived in writing by Henkel:
11.1. Representations and Warranties True. The representations and warranties
of Ecolab contained in this Agreement and in all certificates and other
documents delivered and to be delivered by Ecolab pursuant hereto or in
connection with the transactions contemplated hereby shall be true and
accurate as of the date when made and at and as of the Closing Date as
though such representations and warranties were made at and as of such
date, and the representations and warranties of Ecolab contained in the
other Transaction Documents and the Amended and Restated Stockholder's
Agreement and in all certificates and other documents delivered and to
be delivered by Ecolab pursuant thereto or in connection with the
transactions contemplated thereby shall be true and accurate as of the
Closing Date, except (a) for changes expressly permitted or
contemplated by the terms of the Transaction Documents and the Amended
and Restated Stockholder's Agreement and (b) to the extent that any
representation or warranty is made as of a specified date, in which
case such representation or warranty shall be true as of such specified
date, disregarding for purposes of this Section 11.1, the phrases
"material", "materially", "in all material respects", "Material Adverse
Effect" and any similar phrase, except for such failures to be true and
accurate which in the aggregate do not constitute a Material Adverse
Effect on Ecolab and its Subsidiaries, taken as a whole.
11.2. Performance. Ecolab shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by it on or
prior to the Closing.
11.3. Deliveries. Ecolab shall have delivered to Henkel all of the items
required to be delivered by Ecolab pursuant to Section 5.3 hereof.
11.4. Consents Obtained. Any and all consents, waivers, permits and approvals
from any Governmental Entity or any other Person required in connection
with the execution, delivery and performance of the Transaction
Documents and the Amended and Restated Stockholder's Agreement
(including, without limitation, expiration or termination of the
waiting period applicable to the consummation of the sale of the JV
Interests under applicable Antitrust Laws) shall have been duly
obtained and shall be in full force and effect on the Closing Date,
except for any such consents, waivers, permits or approvals as would
not, individually or in the aggregate, have a Material Adverse Effect
on Henkel and its Subsidiaries, taken as a whole, or materially
diminish the benefits intended to be afforded to Henkel under any of
the Transaction Documents or the Amended and Restated Stockholder's
Agreement. The New York Stock Exchange shall have approved (or have
previously approved, with respect to shares issued from treasury) the
listing of the Ecolab Common Stock to be acquired by Henkel pursuant to
this Agreement, subject to official notice of issuance.
11.5. No Government Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Governmental Entity shall be pending
or threatened as of the Closing Date which questions the validity or
legality of the transactions contemplated under the Transaction
Documents and the Amended and Restated Stockholder's Agreement.
11.6. No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any
nature issued by an agency or a court of competent jurisdiction
directing that the transactions contemplated in any of the Transaction
Documents and the Amended and Restated Stockholder's Agreement not be
consummated as provided therein or imposing any materially adverse
conditions on the consummation of the transactions contemplated under
the Transaction Documents and the Amended and Restated Stockholder's
Agreement.
11.7. Material Adverse Effect. There shall not have occurred, since the date
of this Agreement, any event, change or circumstance constituting a
Material Adverse Effect on Ecolab and its Subsidiaries, taken as a
whole.
ARTICLE XII
12. CONDITIONS TO ECOLAB'S OBLIGATION
Each and every obligation of Ecolab under the Transaction Documents to be
performed on or before the Closing shall be subject to the satisfaction of each
of the following conditions, unless waived in writing by Ecolab:
12.1. Representations and Warranties True. The representations and warranties
of Henkel contained in this Agreement, and in all certificates and
other documents delivered and to be delivered by Henkel pursuant hereto
or in connection with the transactions contemplated hereby shall be
true and accurate as of the date when made and at and as of the Closing
Date as though such representations and warranties were made at and as
of such date, and the representations and warranties of Henkel
contained in the other Transaction Documents and the Amended and
Restated Stockholder's Agreement and in all certificates and other
documents delivered and to be delivered by Henkel pursuant thereto or
in connection with the transactions contemplated thereby shall be true
and accurate as of the Closing Date, except (a) for changes expressly
permitted or contemplated by the terms of the Transaction Documents and
the Amended and Restated Stockholder's Agreement and (b) to the extent
that any representation or warranty is made herein as of a specified
date, in which case such representation or warranty shall be true as of
such specified date, disregarding for purposes of this Section 12.1,
the phases "material", "materially", "in all material respects",
"Material Adverse Effect" and any similar phrase, except for such
failures to be true and accurate which in the aggregate do not
constitute a Material Adverse Effect on Henkel and its Subsidiaries,
taken as a whole.
12.2. Performance. Henkel shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by it on or
prior to the Closing.
12.3. Deliveries. Henkel shall have delivered to Ecolab all of the items
required to be delivered by Henkel pursuant to Section 5.2 hereof.
12.4. Consents Obtained. Any and all consents, waivers, permits and approvals
from any Governmental Entity or any other Person required in connection
with the execution, delivery and performance of the Transaction
Documents and the Amended and Restated Stockholder's Agreement
(including, without limitation, expiration or termination of the
waiting period applicable to the consummation of the sale of the JV
Interests under applicable Antitrust Laws) shall have been duly
obtained and shall be in full force and effect on the Closing Date,
except for such consents, waivers, permits and approvals as would not,
individually or in the aggregate, have a Material Adverse Effect on
Ecolab and its Subsidiaries, taken as a whole, or the JV Entities,
taken as a whole, or materially diminish the benefits intended to be
afforded to Ecolab under any of the Transaction Documents or the
Amended and Restated Stockholder's Agreement. The New York Stock
Exchange shall have approved (or have previously approved, with respect
to shares issued from treasury) the listing of the Ecolab Common Stock
to be acquired by Henkel pursuant to this Agreement, subject to
official notice of issuance.
12.5. No Government Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Governmental Entity shall be pending
or threatened as of the Closing Date which questions the validity or
legality of the transactions contemplated under the Transaction
Documents and the Amended and Restated Stockholder's Agreement.
12.6. No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any
nature issued by an agency or a court of competent jurisdiction
directing that the transactions contemplated in any of the Transaction
Documents and the Amended and Restated Stockholder's Agreement not be
consummated as provided therein or imposing any materially adverse
conditions on the consummation of the transactions contemplated under
the Transaction Documents and the Amended and Restated Stockholder's
Agreement.
12.7. Updated Disclosure Schedule. The Updated Disclosure Schedule, if
delivered by Henkel, shall be acceptable to Ecolab in its sole and
absolute judgment.
12.8. No Material Adverse Effect. There shall not have occurred, since the
date of this Agreement, any event, change or circumstance constituting
a Material Adverse Effect on the JV Entities, taken as a whole.
ARTICLE XIII
13. TERMINATION
13.1. Termination Prior to Closing. Anything herein to the contrary
notwithstanding, this Agreement may be terminated at any time before
the Closing Date as follows:
(a) by mutual consent of Ecolab and Henkel; or
(b) by Ecolab if the Closing Date has not occurred on or prior to the
two-year anniversary of the date hereof, unless the failure of
the Closing Date to occur on or before such date has been caused
by, or is the result of, the failure of Ecolab to fulfill any of
its obligations under the Agreement; or
(c) by Henkel if the Closing Date has not occurred on or prior to the
two-year anniversary of the date hereof, unless the failure of
the Closing Date to occur on or before such date has been caused
by, or is the result of, the failure of Henkel to fulfill any of
its obligations under the Agreement; or
(d) by either Ecolab or Henkel, as the case may be, in the event that
the other party hereto shall, contrary to the terms of this
Agreement, willfully fail or willfully refuse to consummate the
transactions contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement or to take any other
action referred to in the Transaction Documents and the Amended
and Restated Stockholder's Agreement necessary to consummate the
transactions contemplated by the Transaction Documents and the
Amended and Restated Stockholder's Agreement, after affording the
defaulting party a ten (10) day period after notice in which to
cure such willful breach or willful default; or
(e) by Henkel if there shall have been a reduction in the cumulative
Earnings Per Share for Ecolab with respect to the three fiscal
quarters ended March 31, 2001, June 30, 2001 and September 30,
2001 to an amount of fifty percent (50 %) or less than the
cumulative Earnings Per Share for Ecolab with respect to the
three fiscal quarters ended March 31, 2000, June 30, 2000 and
September 30, 2000. "Earnings Per Share" for Ecolab shall mean
earnings per share on a fully diluted basis as reported by Ecolab
in its Quarterly Report on Form 10-Q filed with the SEC for the
relevant quarter.
13.2. Effect of Termination.
(a) In the event this Agreement is terminated pursuant to Section
13.1(d) hereof, the non-defaulting party shall have the right to
seek payment of damages incurred by such non-defaulting party
prior to such termination.
(b) Except as set forth in Section 13.2(a) hereof, any termination of
this Agreement in accordance with the terms hereof by either
party shall have the effect of causing the Agreement to thereupon
become void and of no further force or effect whatsoever (and the
Umbrella Agreement, the existing Stockholder's Agreement in
effect as of the date hereof between the parties, and the Joint
Venture Agreement shall continue in full force and effect), and
thereupon neither party will have any rights, duties, liabilities
or obligations of any kind or nature whatsoever against the other
party based upon either the Agreement or the transactions
contemplated thereby, except the obligations of each party under
Section 8.2 hereof, which shall survive any such termination.
ARTICLE XIV
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1. Survival. The respective representations and warranties of Ecolab and
Henkel contained in the Transaction Documents or in any certificates or
other documents delivered prior to or at the Closing shall survive for
a period of eighteen (18) months after the Closing (or such longer
period as is provided therein); provided, however, that (a) each such
representation and warranty and the liability of any party with respect
thereto, shall not terminate with respect to any claim, whether or not
fixed as to Liability or liquidated as to amount, with respect to which
such party has been given written notice by the other party prior to
the date specified above for the termination thereof and (b) the
representations and warranties contained in Sections 6.2, 6.4 and 7.2
hereof shall survive for a period of twenty (20) years after the
Closing Date.
14.2. Henkel Indemnification of Ecolab. Subject to the conditions and
provisions set forth herein, Henkel shall indemnify, defend and hold
harmless Ecolab and its Affiliates from and against any and all claims
and/or Damages which may be asserted against or suffered by Ecolab or
any of its Affiliates as a result or on account of any breach of any
representation, warranty or covenant on the part of Henkel made in the
Transaction Documents or any other instrument or document delivered by
Henkel pursuant thereto.
14.3. Limitation on ▇▇▇▇▇▇'▇ Indemnification Obligation. Except as provided
in Section 8.5(b), the obligations of Henkel pursuant to Section 14.2
hereof shall be limited as follows: (a) with respect to claims and/or
Damages that relate to the JV Entities, Henkel shall indemnify Ecolab
and its Affiliates in an amount equal to 50% of such claims and/or
Damages in the aggregate and (b) with respect to claims and/or Damages
suffered directly by Ecolab or any Ecolab Entity, Henkel shall
indemnify Ecolab and its Affiliates in an amount equal to 100% of such
claims and/or Damages in the aggregate.
14.4. Ecolab Indemnification of Henkel. Subject to the conditions and
provisions set forth herein, Ecolab shall indemnify, defend and hold
harmless Henkel and its Affiliates (other than, after the Closing, the
JV Entities) from and against any and all claims and/or Damages which
may be asserted against or suffered by Henkel or any of its Affiliates
(other than, after the Closing, the JV Entities) as a result or on
account of any breach of any representation, warranty or covenant , on
the part of Ecolab made in the Transaction Documents or any other
instrument or document delivered by Ecolab pursuant thereto.
14.5. Method of Asserting Claims, etc. All claims by an Indemnified Party
under this Article XIV shall be asserted and resolved as follows:
(a) In the event that (i) any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party
hereunder is asserted against or sought to be collected from such
Indemnified Party by a third party (such claim or demand, a
"Third Party Claim") or (ii) any Indemnified Party hereunder
should have a claim or demand against any Indemnifying Party
hereunder which does not involve a claim or demand being asserted
against or sought to be collected from it by a third party (such
claim or demand, a "Direct Claim"), the Indemnified Party shall
with reasonable promptness notify in writing the Indemnifying
Party of such claim or demand, specifying the nature of and the
specific basis for such claim or demand and the amount or the
estimated amount thereof to the extent then feasible to determine
(which estimate shall not be conclusive of the final amount of
such claim or demand) (a "Claim Notice"); provided, however, that
any failure to give such notice will not result in a waiver of
any rights of the Indemnified Party except to the extent the
rights of the Indemnifying Party are actually prejudiced.
(b) In the event of a Third Party Claim, the Indemnifying Party may,
and upon request of the Indemnified Party shall, retain counsel
reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any other persons the Indemnifying Party
may designate in connection with such claim or demand and shall
pay the fees and disbursements of such counsel with regard
thereto. In the event an Indemnifying Party shall retain such
counsel, an Indemnified Party shall have the right to retain its
own counsel, but the fees and disbursements of such counsel shall
be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and such Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) representation of
such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and
any other party represented by such counsel in such proceeding.
It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and disbursements of more
than one separate firm qualified in such jurisdiction to act as
counsel for the Indemnified Party. No Indemnifying Party shall be
liable to an Indemnified Party for any settlement of any action
or claim without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(c) in the event of a Direct Claim, if the Indemnifying Party does
not notify the Indemnified Party within sixty (60) days of
receipt of a Claim Notice that it disputes such claim, the amount
of such claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder and shall be paid to the Indemnified
Party immediately.
(d) Anything in this Section 14.5 to the contrary notwithstanding,
(i) if there is a reasonable probability that a Third Party Claim
may materially and adversely affect an Indemnified Party, the
Indemnified Party shall have the right to defend, compromise or
settle such claim, and (ii) the Indemnifying Party shall not,
without the Indemnified Party's written consent, settle or
compromise any claim or consent to entry of any judgment which
does not include as an unconditional term thereof the release by
the claimant or the plaintiff of the Indemnified Party and its
Subsidiaries from all liability in respect of such claim.
14.6. Remedies Cumulative. The remedies provided herein shall be cumulative
and shall not preclude an Indemnified Party from asserting any other
rights or seeking any other remedies against the Indemnifying Party or
its successors or assigns.
14.7. Purchase Price Adjustment; Net After-Tax Basis
(a) Henkel and Ecolab each agrees to treat any indemnification
payment made pursuant to this Agreement as a reduction or
increase (as the case may be) of the Purchase Price, unless such
party receives a written opinion from an internationally
recognized law firm (which law firm and opinion shall be
reasonably acceptable to the other party) to the effect that
there is no reasonable basis for taking such position
(b) The amount of any indemnification payable under this Agreement
shall be calculated on an net after-Tax basis, taking into
account any (i) net Tax benefit realized by the Indemnified Party
from the deductions or other benefits available with respect to
any amounts associated with a claim for which an indemnification
payment is received or (ii) net Tax detriment realized by the
Indemnified Party from the receipt of any indemnification
payment.
ARTICLE XV
15. SETTLEMENT OF DISPUTES
15.1. Informal Dispute Resolution. The parties acknowledge that, due to the
complex and long-term nature of the transactions contemplated by the
Transaction Documents, the Transaction Documents may not expressly
provide for every contingency in respect of their business
relationship. Accordingly, if there shall be any dispute, controversy
or claim (a "Dispute") between Ecolab and Henkel arising out of,
relating to, or connected with any of the Transaction Documents, the
breach, termination or invalidity thereof, or the provisions contained
therein or omitted therefrom the parties shall use their reasonable
efforts to resolve the matter on an amicable basis and in a manner fair
and equitable to the parties hereto.
15.2. Arbitration. If one party notifies the other party that a Dispute has
arisen and the parties are unable to resolve such Dispute within a
period of thirty (30) days from such notice, the Dispute may be
referred by Ecolab or Henkel (the "Claimant") to arbitration by three
(3) arbitrators pursuant to the Rules of Conciliation and Arbitration
of the International Chamber of Commerce ("I.C.C.") then in force in
accordance with the provisions of this Article XV. Once the informal
dispute resolution process described in Section 15.1 hereof is
completed, arbitration under this Article XV shall be the exclusive
means for a party to seek resolution of any dispute arising out of,
relating to or connected with any of the Transaction Documents except
that either party may bring an action before a competent court in
Geneva, Switzerland for the adoption of provisional or protective
measures.
15.3. Commencement of Arbitration and Selection of Arbitrators. The Claimant
shall file a request for arbitration with the I.C.C. and notify the
other party (the "Respondent") in writing of the nature of the claim(s)
and of the name of the Claimant's designated arbitrator. Within thirty
(30) days of receipt of such notification, the Respondent shall notify
the Claimant of the name of the Respondent's arbitrator. The two
arbitrators thus designated shall designate a third arbitrator who
shall not be a national of Germany or the United States of America
within sixty (60) days of designation of the second arbitrator. If the
Respondent fails to designate an arbitrator within the prescribed
thirty (30) day period, or if the two designated arbitrators fail to
designate the third arbitrator within the prescribed sixty (60) day
period, the I.C.C. Court of Arbitration shall make such designations
upon request of either party. Following the selection of arbitrators as
set forth above, the arbitration shall be conducted promptly and
expeditiously so as to enable the arbitrators to render a decision
within ninety (90) days after the three arbitrators have been
appointed.
15.4. Conflicts with I.C.C. Rules; Seat and Language of Arbitration. If there
is any conflict between the Rules of Conciliation and Arbitration of
the I.C.C. and this Article XV, this Article XV shall govern. The seat
of arbitration shall be in Geneva, Switzerland. The arbitration shall
be conducted in the English language.
15.5. Basis for Arbitration Decisions and Governing Law. In arriving at their
decision(s), the arbitrators shall apply the terms and conditions of
the Transaction Documents in accordance with the laws of Switzerland
and where appropriate the international usage of the trade applicable
to transactions of the kind covered by said agreements. The parties
acknowledge that the arbitrators shall have the authority to grant
equitable remedies, if appropriate.
15.6. Finality of Arbitral Award; Arbitration Expenses. The award of the
arbitrators shall be final and binding on the parties hereto.
Reasonable expenses of the arbitration shall be paid as the arbitrators
determine.
15.7. Consolidation of Claims. All claims which Ecolab and Henkel have under
the Transaction Documents shall be consolidated and submitted to
arbitration in the same proceeding on the demand of either party
hereto, if the arbitrators agree that such consolidation is feasible.
Ecolab and Henkel shall designate the same arbitrators previously
designated for all claims raised during the period such arbitrators
remain empanelled to resolve claims of the parties hereto.
15.8. Judgment on the Arbitral Award. Judgment on the arbitral award rendered
may be entered in any court having jurisdiction or application may be
made to such court for a judicial acceptance of the award and an order
of enforcement, as the case may be.
15.9 Specific Performance. The parties agree that, in addition to any other
remedies, each shall be entitled to enforce the terms of this Agreement
as provided in this Article XV by a decree of specific performance
without the necessity of proving the inadequacy of money as a remedy.
ARTICLE XVI
16. MISCELLANEOUS
16.1. Amendments. This Agreement may be amended, modified or superseded, and
any of the terms, covenants or conditions hereof may be waived, only by
a written instrument executed by Ecolab and Henkel, or, in the case of
a waiver, by the party waiving compliance.
16.2. Waivers. The failure at any time of either party to require performance
by the other party of any responsibility or obligation provided for in
this Agreement shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either
party of a breach of any provision of this Agreement by the other party
constitute a waiver of any succeeding breach of the same or any other
provision nor constitute a waiver of the responsibility or obligation
itself. No investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, whether prior or subsequent to the
date hereof, shall affect the representations and warranties contained
in this Agreement, or in the schedules or certificates delivered
pursuant hereto, or the rights of any party hereto with respect to such
representations and warranties or otherwise under this Agreement.
16.3. Assignability. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated in whole or in part by either
party without the prior written consent of the other party, and any
such attempted assignment or delegation without such consent shall be
null, void ab initio and without effect. Any permitted assignment of
this Agreement shall be binding upon and inure to the benefit of the
parties thereto and their respective successors and permitted assigns.
16.4. Severability. The provisions of this Agreement (including, without
limitation, Section 9.5 hereof) shall be deemed severable and, to the
fullest extent permitted by Applicable Law, the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provisions of
this Agreement (including, without limitation, Section 9.5 hereof), or
the application thereof to any person or circumstance, is invalid or
unenforceable, then, to the fullest extent permitted by Applicable Law,
(a) a suitable and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and enforceable, the intent
and purpose of such invalid or unenforceable provision; and (b) the
remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected by such invalidity
or unenforceability nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
16.5. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered by hand, or sent
by courier or facsimile transmission (provided that, in the case of
facsimile transmission, a confirmation copy of the notice shall be
retained by the sender thereof) as follows (until notice of a change
thereof is given as provided in this Section 16.5):
(a) If to Henkel, to:
▇▇▇▇▇▇ KGaA
Henkelstra(beta)e 67, Postfach 1100
D-4000 ▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Ecolab, to:
Ecolab Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All notices given in accordance with this Section 16.5 are effective, if
delivered by hand or mailed by courier, at the time of delivery, and, if
communicated by telex or facsimile, at the time of transmission.
16.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Switzerland and where appropriate the
international usage of the trade applicable to transactions of this
kind, except as and to the extent required by local law in the
jurisdictions in which assets of the JV Entities are located for the
consummation of the transactions contemplated by the Transaction
Documents.
16.7. Assurance of Further Action. Subject to the terms and conditions of
this Agreement, from time to time prior to or after the Closing, each
of the parties hereto agrees to use reasonable efforts to take or cause
to be taken all action, to do or cause to be done, and to assist and
cooperate with the other party hereto in doing, all things necessary,
proper or advisable under Applicable Laws to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by the Transaction Documents including, without
limitation, (a) the satisfaction of the conditions precedent to the
obligations of any of the parties hereto; (b) the defending of any
lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the performance of the
obligations hereunder or thereunder; and (c) the execution and delivery
of such instruments, and the taking of such other actions as the other
party hereto may reasonably require in order to carry out the intent of
this Agreement.
16.8. Costs. Each party hereto shall bear and pay its own costs, charges and
expenses incurred in the preparation, negotiation and implementation of
this Agreement, including without limitation the cost of its attorneys,
accountants, consultants, brokers, investment bankers or other advisors
it retained. Ecolab shall bear and pay any filing fees and any
transfer, real estate transfer, recording, and deed or stamp taxes
resulting from the transfers described in the Structuring Plan.
16.9. Entire Agreement. This Agreement, including the exhibits, annexes and
schedules hereto and the other documents and certificates delivered
pursuant to the terms hereof, constitute one single agreement and set
forth the entire agreement and understanding of the parties hereto in
respect of the subject matter thereof, and supersede all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party thereto, in respect of the
subject matter thereof. For purposes of clarity, it is understood that
the Amended and Restated Stockholder's Agreement dated June 21, 1991
between Ecolab and Henkel shall continue in full force and effect
pending the occurrence of the Closing.
16.10. Headings; References to Sections, Exhibits and Schedules. The headings
of the Sections and subsections of this Agreement are solely for
convenience and reference and shall not limit or otherwise affect the
meaning of any of the terms or provisions of this Agreement. The
references herein to Sections, exhibits and schedules, unless otherwise
indicated, are references to sections of and exhibits and schedules to
this Agreement.
16.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together
constitute one and the same instrument.
16.12. Third Parties. Except as specifically set forth or referred to in this
Agreement, nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person or entity other than the
parties hereto and their successors and assigns any rights or remedies
under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
▇▇▇▇▇▇ KOMMANDITGESELLSCHAFT AUF AKTIEN
By:
-------------------------
Its:
------------------------
ECOLAB INC.
By:
-------------------------
Its:
------------------------
SCHEDULES / EXHIBITS
--------------------
SCHEDULES
1.1 JV Entities
1.2 Henkel Entities
6.3 Change in Control Agreements
9.2 Disclosure Schedule
9.3 Updated Disclosure Schedule
EXHIBITS
A Structuring Plan
B Amended and Restated Stockholder's Agreement
C Communications Plan
D Environmental Agreement
E Intellectual Property Plan
F Toll Manufacturing and Supply Arrangements
G Services Arrangements
