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Stock And Asset Purchase Agreement

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EXECUTION COPY


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STOCK AND ASSET PURCHASE AGREEMENT


between


BRISTOL-MYERS SQUIBB COMPANY


and


THE PROCTER & GAMBLE COMPANY


----------------------------------------


Dated as of May 20, 2001


----------------------------------------


SALE OF CLAIROL INCORPORATED


and


RELATED STOCK AND ASSETS


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TABLE OF CONTENTS


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ARTICLE I


Purchase and Sale of the Clairol Shares, the International
Shares and the Acquired Assets


SECTION 1.01. Purchase and Sale of the Clairol Shares, the International
Shares and the Acquired Assets..............................2 SECTION 1.02. Assumption of the Assumed Liabilities...........................4 SECTION 1.03. Consents of Third Parties.......................................4


ARTICLE II


Closing; Purchase Price Adjustment


SECTION 2.01. Closing.........................................................5 SECTION 2.02. Purchase Price Adjustment.......................................7


ARTICLE III


Conditions to Closing


SECTION 3.01. Buyer's Obligation.............................................12 SECTION 3.02. Seller's Obligation............................................14 SECTION 3.03. Frustration of Closing Conditions..............................16


ARTICLE IV


Representations and Warranties of Seller


SECTION 4.01. Authority......................................................16 SECTION 4.02. No Conflicts; Consents.........................................17 SECTION 4.03. The Clairol Shares and the International Shares................18 SECTION 4.04. Organization and Standing; Books and Records...................19 SECTION 4.05. Capital Stock of the Company...................................19 SECTION 4.06. Clairol Subsidiaries; Equity Interests.........................20 SECTION 4.07. Financial Statements...........................................21 SECTION 4.08. Taxes..........................................................22 SECTION 4.09. Assets Other than Real Property Interests......................24 SECTION 4.10. Title to Real Property.........................................24


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SECTION 4.11. Intellectual Property..........................................25 SECTION 4.12. Contracts......................................................27 SECTION 4.13. Litigation.....................................................33 SECTION 4.14. Benefit Plans..................................................34 SECTION 4.15. Absence of Changes or Events...................................37 SECTION 4.16. Compliance with Applicable Laws................................37 SECTION 4.17. Employee and Labor Matters.....................................39 SECTION 4.18. Limitations on Representations and Warranties..................40


ARTICLE V


Covenants of Seller


SECTION 5.01. Access.........................................................41 SECTION 5.02. Ordinary Conduct...............................................41 SECTION 5.03. Insurance......................................................44 SECTION 5.04. No Use of Clairol Names........................................44 SECTION 5.05. Intercompany Accounts..........................................45


ARTICLE VI


Representations and Warranties of Buyer


SECTION 6.01. Authority......................................................45 SECTION 6.02. No Conflicts; Consents.........................................45 SECTION 6.03. Securities Act.................................................46 SECTION 6.04. Actions and Proceedings, etc...................................47 SECTION 6.05. Availability of Funds..........................................47


ARTICLE VII


Covenants of Buyer


SECTION 7.01. Confidentiality................................................47 SECTION 7.02. No Additional Representations..................................48 SECTION 7.03. No Use of Certain Names........................................48 SECTION 7.04. Buyer Activity on Closing Date.................................49 SECTION 7.05. Securities Act.................................................49 SECTION 7.06. Guarantees.....................................................49


ARTICLE VIII


Mutual Covenants


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SECTION 8.01. Consents.......................................................50 SECTION 8.02. Cooperation....................................................50 SECTION 8.03. Publicity......................................................51 SECTION 8.04. Best Efforts...................................................51 SECTION 8.05. Antitrust Notification and Other Regulatory Filings............52 SECTION 8.06. Records........................................................53 SECTION 8.07. Support Services...............................................54 SECTION 8.08. Collection of Receivables; Forwarding of Payments..............54 SECTION 8.09 Advisory Committees............................................54 SECTION 8.10. Transitional Relabeling Services...............................55


ARTICLE IX


Employee and Related Matters


SECTION 9.01. Employee Matters...............................................55 SECTION 9.02. Bargaining Unit Employees......................................56 SECTION 9.03. Continuity of Employment.......................................57 SECTION 9.04. Pension Plan...................................................58 SECTION 9.05. Savings and Investment Plan....................................59 SECTION 9.06. Non-Qualified Plans............................................59 SECTION 9.07. Welfare Benefit Plans..........................................60 SECTION 9.08. Severance......................................................62 SECTION 9.09. Vacation Benefits..............................................62 SECTION 9.10. Relocation Benefits............................................62 SECTION 9.11. Expatriates....................................................63 SECTION 9.12. Other Agreements and Benefits..................................63 SECTION 9.13. Annual Bonuses.................................................63 SECTION 9.14. Retention Bonus Arrangements...................................63 SECTION 9.15. International Pension and Savings Plans........................64


ARTICLE X


Further Assurances


SECTION 10.01. Further Assurances............................................64


ARTICLE XI


Indemnification


SECTION 11.01. Tax Indemnification...........................................64 SECTION 11.02. Other Indemnification by Seller...............................66


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SECTION 11.03. Other Indemnification by Buyer................................67 SECTION 11.04. Limitations on Liability; Cooperation.........................68 SECTION 11.05. Losses Net of Insurance, etc..................................68 SECTION 11.06. Termination of Indemnification................................69 SECTION 11.07. Procedures Relating to Indemnification for Third Party
Claims.....................................................69 SECTION 11.08. Procedures Related to Indemnification for Other Claims (Other
than Tax Claims under Section 11.01).......................71 SECTION 11.09. Procedures Relating to Indemnification of Tax Claims..........71


ARTICLE XII


Tax Matters


SECTION 12.01. Responsibility for Preparation and Filing of Tax Returns
and Amendment..............................................72 SECTION 12.02. Cooperation...................................................73 SECTION 12.03. Refunds and Credits...........................................74 SECTION 12.04. Section 338(h)(10)............................................75 SECTION 12.05. Purchase Price Allocations....................................76 SECTION 12.06. Transfer Taxes................................................76 SECTION 12.07. FIRPTA Certificate............................................77 SECTION 12.08. Buyer Activity Post-Closing...................................77


ARTICLE XIII


Termination


SECTION 13.01. Termination...................................................77 SECTION 13.02. Return of Confidential Information............................78 SECTION 13.03. Consequences of Termination...................................78 SECTION 13.04. Payment.......................................................79


ARTICLE XIV


Survival of Representations


SECTION 14.01. Survival of Representations...................................79


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ARTICLE XV


Miscellaneous


SECTION 15.01. Assignment....................................................79 SECTION 15.02. No Third-Party Beneficiaries..................................80 SECTION 15.03. Expenses......................................................80 SECTION 15.04. Attorney Fees.................................................80 SECTION 15.05. Amendments....................................................80 SECTION 15.06. Notices.......................................................80 SECTION 15.07. Interpretation; Exhibits and the Seller Disclosure Schedule;
Definitions...................................................81 SECTION 15.08. Counterparts..................................................89 SECTION 15.09. Entire Agreement..............................................89 SECTION 15.10. Broker and Finder Fees........................................89 SECTION 15.11. Severability..................................................90 SECTION 15.12. Bulk Transfer Laws............................................90 SECTION 15.13. Consent to Jurisdiction.......................................90 SECTION 15.14. Waiver of Jury Trial..........................................91 SECTION 15.15. GOVERNING LAW.................................................91


EXHIBIT A International Stock Selling Entities and International
Subsidiaries


EXHIBIT B-1 U.S. Asset Selling Entities


EXHIBIT B-2 International Asset Selling Entities


EXHIBIT C Form of International Stock Purchase Agreement


EXHIBIT D Form of International Asset Purchase Agreement


EXHIBIT E Allocations


EXHIBIT F-1 CMO Acquired Assets


EXHIBIT F-2 CMO Excluded Assets


EXHIBIT G-1 CMO Assumed Liabilities


EXHIBIT G-2 CMO Excluded Liabilities


EXHIBIT H-1 International Acquired Assets


EXHIBIT H-2 International Excluded Assets


EXHIBIT I-1 International Assumed Liabilities


EXHIBIT I-2 International Excluded Liabilities


EXHIBIT J-1 Other U.S. Acquired Assets


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EXHIBIT J-2 Other U.S. Excluded Assets


EXHIBIT K-1 Other U.S. Assumed Liabilities


EXHIBIT K-2 Other U.S. Excluded Liabilities


EXHIBIT L-1 CMO Transitional Services Agreement


EXHIBIT L-2 GBS Transitional Service Agreement


EXHIBIT L-3 International Transitional Services Agreement


EXHIBIT L-4 Information Management Agreement


EXHIBIT M Employee Benefits


EXHIBIT N Clairol Enhanced Severance/Retention Program


APPENDIX A International Pension and Savings Plans


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EXECUTION COPY


STOCK AND ASSET PURCHASE AGREEMENT dated as of May
20, 2001 (this "AGREEMENT"), between BRISTOL-MYERS
SQUIBB COMPANY, a Delaware corporation ("SELLER"), and
THE PROCTER & GAMBLE COMPANY, an Ohio corporation
("BUYER").


Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all the issued and outstanding shares of Common Stock, par value $10 per share (the "CLAIROL SHARES"), of Clairol Incorporated, a Delaware corporation and wholly owned subsidiary of Seller (the "COMPANY").


Buyer also desires to purchase from the subsidiaries of Seller set forth under the relevant caption in Exhibit A (each, an "INTERNATIONAL STOCK SELLING ENTITY"), and Seller desires to cause the International Stock Selling Entities to sell to Buyer and its designated Buyer Subsidiaries, all the issued and outstanding capital stock owned by Seller and its subsidiaries (the "INTERNATIONAL SHARES") of each of the subsidiaries of Seller set forth under the relevant caption in Exhibit A attached hereto (each, an "INTERNATIONAL CLAIROL SUBSIDIARY").


Seller's customer management organization in the United States (the "CMO") distributes and sells products of the Company, together with products of other businesses of Seller and its Affiliates. Buyer and Seller desire that Buyer acquire all Seller's CMO business and operations and that, following such acquisition, Buyer provide certain transitional distribution and sales services to Seller and its Affiliates as contemplated by the CMO Transitional Services Agreement. Accordingly, Buyer desires to acquire from Seller, and Seller desires to sell to Buyer, the CMO Acquired Assets. Buyer desires to assume, and Seller desires to assign, the CMO Assumed Liabilities.


Seller and certain of its subsidiaries set forth in Exhibit B-1 (each, a "U.S. ASSET SELLING ENTITY") hold certain assets of, and provide certain services to, the Acquired Business. Buyer and Seller desire that Buyer acquire such assets and certain other assets related to the provision of such services and assume certain liabilities related thereto. Accordingly, Buyer desires to acquire from Seller and the U.S. Asset Selling Entities, and Seller and the U.S. Asset Selling Entities desire to sell to Buyer, the Other U.S. Acquired Assets. Buyer desires to assume, and


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Seller and the U.S. Asset Selling Entities desire to assign, the Other U.S. Assumed Liabilities.


Seller and certain of its subsidiaries set forth in Exhibit B-2 (each, an "INTERNATIONAL ASSET SELLING ENTITY") manufacture, market, distribute or sell the products of the Acquired Business (other than the CMO) or otherwise have assets or liabilities of the Acquired Business (other than the CMO) in each of the corresponding countries set forth in Exhibit B-2. Buyer desires to acquire, or to cause its designated Buyer Subsidiaries to acquire, from Seller and the Asset Selling Entities, and Seller desires to transfer, and to cause the Asset Selling Entities to transfer, to Buyer and its designated Buyer Subsidiaries, the International Acquired Assets. Buyer desires to assume, and Seller desires to assign, the International Assumed Liabilities.


Buyer desires to hire certain employees associated with the Acquired Business, as set forth in this Agreement and the Other Transaction Documents.


Section 15.07(c) identifies the Sections of this Agreement in which capitalized terms used in this Agreement are defined.


Accordingly, Seller and Buyer hereby agree as follows:


ARTICLE I


PURCHASE AND SALE OF THE CLAIROL SHARES, THE INTERNATIONAL
SHARES AND THE ACQUIRED ASSETS


SECTION 1.01. PURCHASE AND SALE OF THE CLAIROL SHARES, THE INTERNATIONAL SHARES AND THE ACQUIRED ASSETS. (a) On the terms and subject to the conditions set forth in this Agreement, (i) Seller will sell, transfer and deliver to Buyer, and Buyer will purchase from Seller, the Clairol Shares, (ii) Seller will cause the International Stock Selling Entities to sell, transfer and deliver to Buyer or its designated Buyer Subsidiaries, and Buyer will purchase or cause such Buyer Subsidiaries to purchase from the International Stock Selling Entities, the International Shares, (iii) Seller will, and will cause the U.S. Asset Selling Entities to, sell, convey, transfer, assign and deliver to Buyer or its designated Buyer Subsidiaries, and Buyer will purchase or cause such Buyer Subsidiaries to purchase from Seller and the U.S. Asset Selling Entities,


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the U.S. Acquired Assets and (iv) Seller will, and will cause the International Asset Selling Entities to, sell, convey, transfer, assign and deliver to Buyer or its designated Buyer Subsidiaries, and Buyer will purchase or cause such Buyer Subsidiaries, to purchase from the International Asset Selling Entities, the International Acquired Assets, for (A) an aggregate purchase price equal to $4.95 billion (the "PURCHASE PRICE") together with, if the Closing shall occur after the Six Month Anniversary, interest on the Purchase Price accrued from the Six Month Anniversary to the Closing Date at the Prime Rate, payable and subject to adjustment as set forth in Article II, and (B) the assumption of the Assumed Liabilities. The purchase and sale of the Clairol Shares, the International Shares, the U.S. Acquired Assets and the International Acquired Assets and the assumption of the Assumed Liabilities is referred to in this Agreement, collectively, as the "TRANSACTION".


(b) The purchase and sale of the International Shares with respect to each International Clairol Subsidiary will be effected pursuant to short-form stock purchase agreements (each, an "INTERNATIONAL STOCK PURCHASE AGREEMENT") in substantially the same form as the form of International Stock Purchase Agreement attached as Exhibit C to this Agreement, except (as Buyer and Seller shall reasonably agree) for (i) the deletion of provisions which are inapplicable to such International Clairol Subsidiary, (ii) such changes as may be necessary to satisfy the requirements of applicable local law, (iii) such changes as may be reasonably agreed upon by Seller and Buyer regarding employees and employee benefits matters in order to adapt such agreement to the particular circumstances of the relevant International Clairol Subsidiary and country or countries in which it operates, PROVIDED that such changes shall be consistent with the principles underlying the corresponding provisions of this Agreement and (iv) such other changes as may be agreed by Seller and Buyer.


(c) The transfer of each International Business Unit (including the International Acquired Assets and International Assumed Liabilities) will be effected pursuant to short-form asset purchase agreements (the "INTERNATIONAL ASSET PURCHASE AGREEMENTS") on a country-by-country basis. Each International Asset Purchase Agreement shall be in substantially the same form as the form of International Asset Purchase Agreement attached as Exhibit D, except (as Buyer and Seller shall reasonably agree) for (i) the deletion of provisions which are inapplicable to such International Business Unit, (ii) such changes as may be


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necessary to satisfy the requirements of applicable local law, (iii) such changes as may be reasonably agreed upon by Seller and Buyer regarding employees and employee benefits matters in order to adapt such agreement to the particular circumstances of the relevant International Business Unit and country, provided that such changes shall be consistent with the terms and conditions of, and principles underlying, the corresponding provisions of this Agreement, and (iv) such other changes as may be agreed by Seller and Buyer.


(d) Buyer and Seller agree to allocate a portion of the Purchase Price (as adjusted pursuant to Section 2.02) to the International Shares and the Acquired Assets in accordance with Exhibit E, and the remainder of the Purchase Price (as adjusted pursuant to Section 2.02) to the Clairol Shares, in each case in accordance with Section 12.05. Buyer and Seller shall further agree on the allocation of the Purchase Price (as adjusted pursuant to Section 2.02) with respect to the Acquired Assets on a country-by-country or asset-by-asset basis. A proposed Exhibit E shall be prepared by Seller and delivered to Buyer not later than 30 days prior to Closing and Buyer and Seller shall reach agreement on a final Exhibit E no later than 120 days after the Closing Date. If Buyer and Seller are unable to reach agreement on a final Exhibit E by the end of such 120-day period, either party may refer any items of disagreement to the Accounting Firm for resolution within 45 days of the receipt of such submission using procedures comparable to those provided in Section 2.02(a)(iii).


SECTION 1.02. ASSUMPTION OF THE ASSUMED LIABILITIES. On the terms and subject to the conditions of this Agreement, Buyer shall, on the Closing Date, assume and shall pay, honor, perform and discharge (or cause to be assumed, paid, honored, performed and discharged) when due all the U.S. Assumed Liabilities and the International Assumed Liabilities (collectively, the "ASSUMED LIABILITIES").


SECTION 1.03. CONSENTS OF THIRD PARTIES. (a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any asset or any claim or right or any benefit arising under or resulting from such asset if an attempted assignment thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such third party, would be ineffective with respect to any party to an agreement concerning such asset, or would in any way adversely affect the rights of Seller or


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the Seller Entities or, upon transfer, Buyer or its designated Buyer Subsidiary under such asset. If any transfer or assignment by Seller or any Seller Entity to, or any assumption by Buyer or its designated Buyer Subsidiary of, any interest in, or liability, obligation or commitment under, any asset requires the consent of a third party, then such assignment or assumption shall be made subject to such consent being obtained.


(b) If any such consent is not obtained prior to the Closing, Seller and the Seller Entities, on the one hand, and Buyer and the Buyer Subsidiaries, on the other hand, shall cooperate (at their own expense) in any lawful and commercially reasonable arrangement reasonably proposed by Buyer under which (i) Buyer or its designated Buyer Subsidiary shall obtain (without infringing upon the legal rights of such third party or outside party or violating any Applicable Law) the economic claims, rights and benefits (net of the amount of any related Tax costs imposed on Seller and its Affiliates) under the asset, claim or right with respect to which the consent has not been obtained in accordance with this Agreement, and (ii) Buyer shall assume any related economic burden (including the amount of any related Tax costs imposed on Seller and its Affiliates) with respect to the asset, claim or right with respect to which the consent has not been obtained (including any related Assumed Liability).


ARTICLE II


CLOSING; PURCHASE PRICE ADJUSTMENT


SECTION 2.01. CLOSING. (a) Each of the Buyer and Seller are obligated to consummate the closing (the "CLOSING") of the Transaction on the earlier of (i) the second business day after the first date on which all the conditions to the Closing set forth in Article III shall have been satisfied and (ii) the Twelve Month Anniversary; PROVIDED, HOWEVER, that if on the Twelve Month Anniversary, (x) any of the conditions set forth in Section 3.01 (other than the conditions set forth in Sections 3.01(b) and (c)) shall not have been satisfied (or waived in writing by Buyer), (y) any of the conditions set forth in Section 3.02 shall not have been satisfied (or waived in writing by Seller) or (z) any statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other similar legal restraint or prohibition or other order enacted, entered, promulgated, enforced or issued by any U.S. Governmental Entity shall be


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in effect that prevents the purchase and sale of the Clairol Shares, then the Closing shall occur no later than the second business day after the satisfaction of such conditions or the termination of such restraint or prohibition, as applicable. The Closing shall be held on the Closing Date at 10:00 a.m. at the offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York. The date on which the Closing shall occur is hereinafter referred to as the "Closing Date."


(b) At the Closing, Buyer shall deliver to Seller, by wire transfer to a bank account designated in writing by Seller at least two business days prior to the Closing Date, immediately available funds in an amount equal to the sum of (i) the Purchase Price plus or minus (ii) an estimate, prepared by Seller and delivered to Buyer at least two business days prior to the Closing Date, of any adjustment to the Purchase Price under Section 2.02(b) plus (iii) any interest payable to Seller pursuant to Section 1.01(a). The Purchase Price plus or minus such estimate of any such adjustment under Section 2.02(b) is hereinafter called the "CLOSING DATE AMOUNT".


(c) Seller shall deliver or cause to be delivered to Buyer certificates representing the Clairol Shares, duly endorsed in bl
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