COTY INC. (Form: 10-K, Received: 08/17/2015 17:09:52)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

(Mark One)



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			FOR THE FISCAL YEAR ENDED JUNE 30, 2015
				OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM TO
			COMMISSION FILE NUMBER 001-35964

COTY INC.

(Exact name of registrant as specified in its charter)



Delaware		13-3823358
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

350 Fifth Avenue, New York, NY		10118
(Address of principal executive offices)		(Zip Code)

(212) 389-7300

Registrant’s telephone number, including area code




SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class		Name of each exchange on which registered
Class A Common Stock, $0.01 par value		New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer ý		Accelerated filer ¨
	Non-accelerated filer ¨		Smaller reporting company ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of December 31, 2014 , the aggregate market value of the registrant’s Class A Common Stock and Class B Common Stock held by non-affiliates was $1,516,499,906 based on the number of shares held by non-affiliates as of December 31, 2014 and the last reported sale price of the registrant’s Class A Common Stock on December 31, 2014 .

At August 13, 2015, 98,814,559 shares of the registrant’s Class A Common Stock, $0.01 par value, and 262,062,370 shares of the registrant’s Class B Common Stock, $0.01 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive proxy statement for the 2015 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10K.

Table of Contents

COTY INC.

INDEX TO ANNUAL REPORT ON FORM 10-K



		Page
Part I:
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Part II:
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	27
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	58
Item 9A.	Controls and Procedures	58
Part III:
Item 10.	Directors, Executive Officers and Corporate Governance	59
Item 11.	Executive Compensation	59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	59
Item 13.	Certain Relationships and Related Transactions, and Director Independence	59
Item 14.	Principal Accounting Fees and Services	59
Part IV:
Item 15.	Exhibits, Financial Statement Schedules	59
Signatures		65

Table of Contents

Forward-looking Statements

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. All statements in this Annual Report on Form 10-K that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. We generally identify these statements by words or phrases such as “anticipate,” “estimate,” “plan,” “project,” “expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “outlook,” “target” or other similar words or phrases. These statements discuss, among other things, our strategy, integration, future financial or operational performance, outcome or impact of pending or threatened litigation, anticipated benefits of acquisitions, domestic or international developments, planned organizational changes and their effects, nature and allocation of future expenses, marketing and growth initiatives, inventory levels and returns, cost of goods, future financings, other goals and targets and statements of the assumptions underlying or relating to any such statements. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations that we contemplate will be achieved.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, favorable circumstances or conditions, levels of activity or performance. Actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements, and you are cautioned not to place undue reliance on these statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include those described under “Risk Factors.” If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from our projections. These factors should not be construed as exhaustive, and should be read in conjunction with the other cautionary statements included in this report.

We undertake no obligation to publicly update any forward-looking statements in light of new information, subsequent events or otherwise except as required by law.

Industry, Ranking and Market Data

Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our industry and the market in which we operate, including our general expectations about our industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party sources widely available to the public such as independent industry publications (including Euromonitor International Ltd, or “Euromonitor”), government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources. We did not fund and are not otherwise affiliated with the third party sources that we cite. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions, and such information has not been verified by any independent sources. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market, industry and other information included in this Annual Report on Form 10-K to be the most recently available and to be generally reliable, such information is inherently imprecise and we have not independently verified any third-party information or verified that more recent information is not available.

We refer to North America, Western Europe and Japan as “developed markets,” and all other markets as “emerging markets.” We define North America as the United States of America (“U.S.”) and Canada. Except as specifically indicated, all references to rankings are based on retail value market share.

Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2015 ” refer to the fiscal year ended June 30, 2015 . Any reference to a year not preceded by “fiscal” refers to a calendar year.

Table of Contents

PART I

Item 1. Business.

We are a leading global beauty company. Founded in Paris in 1904, Coty is a pure play beauty company with a portfolio of well-known brands that compete in the three segments in which we operate: Fragrances, Color Cosmetics and Skin & Body Care. We hold the #2 global position in fragrances, the #4 global position in color cosmetics and have a strong regional presence in skin & body care. Our top 10 brands, which we refer to as our “power brands”, generated 72% of our net revenues in fiscal 2015 and comprise the following globally recognized brands: adidas, Calvin Klein, Chloé, Davidoff, Marc Jacobs, OPI, philosophy, Playboy, Rimmel and Sally Hansen. Our brands compete in all key distribution channels across both prestige and mass markets and in over 130 countries and territories.

Coty has transformed itself into a multi-segment beauty company with market leading positions in both North America and Europe through new product offerings, diversified sales channels and its global growth strategy. Today, our business has a diversified revenue base that generated net revenues in fiscal 2015 of 50%, 33% and 17% from Fragrances, Color Cosmetics and Skin & Body Care, respectively.

For segment and geographic area financial information and information about our long-lived foreign assets, see Note 3, “Segment Reporting” in the notes to our Consolidated Financial Statements, and for information about recent acquisitions or dispositions of any material amount of assets, see Note 4, “Business Combinations” in the notes to our Consolidated Financial Statements.

Our Brands

We grow organically through our focus on supporting and expanding global brands while consistently developing and seeking to acquire new brands and licenses. Brand innovation and new product development are critical components of our success.

Our “power brands”, each of which we describe in further detail below, are at the core of our accomplishments. We invest aggressively behind current and prospective power brands, which are our largest brands and those that we believe to have the greatest global potential, to enhance our scale in the three beauty segments in which we compete.

• adidas. adidas is one of the biggest licensed brands in the global mass skin & body care market and maintains a significant presence in deodorants and shower gels. Our adidas products for both men and women blend distinctive brand identity (through each fragrance and product design) and aspirations of performance (epitomized by the “developed with athletes” signature) to appeal to a broad range of consumers.

• Calvin Klein. Calvin Klein is our largest brand by net revenues and one of the largest fragrance brands by net revenues in the world. It holds strong positions in most developed markets, including the U.S., the United Kingdom, Germany and Spain, and in emerging markets, such as China and the Middle East. The brand is also sold in the travel retail sales channel, including duty-free shops. The brand reaches a diverse consumer base through several strong product lines, including ck one, Eternity and euphoria. We intend to increase the consumer reach and market share of our Calvin Klein brand in emerging markets.

• Chloé. Chloé is one of the fastest growing prestige fragrance brands for women over the past five years and is a top women’s fragrance in the global prestige market. Chloé ’s largest markets are travel retail, Italy, the U.S., France, Germany and Spain. Notable launches for the brand include Chloé Signature , See by Chloé and Chloé Love Story.

• Davidoff. Davidoff is the #10 men’s fragrance brand in the worldwide prestige market. Cool Water , Davidoff ’s most successful line, is the #2 men’s fragrance brand in the German prestige market and the #8 men’s prestige fragrance brand in the world. It has been one of the world’s leading prestige men’s fragrances since its initial launch in 1988. Davidoff Cool Water has joined forces with the National Geographic Society to support its Pristine Seas mission. This initiative aims to raise awareness about the importance of protecting the ocean. In fiscal 2015, we signed an agreement with actor Scott Eastwood to be the new face of the Davidoff Cool Water advertising campaign.

• Marc Jacobs. Marc Jacobs is an iconic fragrance brand, with Daisy Marc Jacobs , Daisy Dream Marc Jacobs , Marc Jacobs Lola, Dot Marc Jacobs and the anticipated launch of Marc Jacobs Decadence in fall 2015. In calendar year 2014, Marc Jacobs was the #6 women’s fragrance brand in the U.S. prestige market and the #2 women’s fragrance brand in the U.K. prestige market. The brand has been particularly successful in certain Asian markets, including China, and is a top ranking brand in global travel retail.

• OPI. OPI is a leader in professional nail care. With its portfolio of over 400 creatively-named unique shades, OPI links fashion and entertainment with color cosmetics. OPI regularly creates limited-edition collections with celebrities and entertainment franchises to promote the brand, including collaborations with Gwen Stefani and Miss Piggy and the Muppets. Our OPI brand product lines include OPI (which is sold through salons, travel retail and

traditional retailers) and Nicole by OPI (which is sold through mass retailers). OPI also markets nail gels, nail care products and nail accessories through salons. OPI is sold in over 100 countries and territories.

• philosophy. philosophy enjoys strong market position in skin & body care in the U.S. prestige market and leverages multiple distribution channels, including direct television sales and e-commerce. philosophy ’s miracle worker line is one of the most successful skin care launches in the U.S. prestige market the year it was launched. Building on the brand’s existing skincare franchises, philosophy has had several new launches in fiscal 2015, including renewed hope in a jar refreshing & refining moisturizer, no reason to hide multi-imperfection transforming serum and ultimate miracle worker multi-rejuvenating cream broad spectrum SPF 30 . In recent years, we commenced distribution of philosophy in certain international markets, including Canada, the Netherlands, the United Kingdom, Singapore and South Korea.

• Playboy. Playboy has quickly become a strong mass market brand with established positions in Europe as well as an expanding presence in emerging markets. Playboy offers a variety of deodorant, shower gel and fragrance products in both men and women markets.

• Rimmel. The Rimmel brand comprises a broad line of color cosmetics products covering the entire range of women’s color cosmetics, including eye, face, lip and nail products. Rimmel is sold in drugstores and other mass distribution channels. Rimmel is the #3 color cosmetics brand in the European retail mass market and has experienced a solid increase in net revenues over the course of the past several years. Rimmel has been represented for more than ten years by Kate Moss, who has also developed and promoted her own signature line of Rimmel lipsticks. Most recently, the brand is also represented by supermodel, Georgia May Jagger, and international music star, Rita Ora.

• Sally Hansen. Sally Hansen is the #1 nail care product brand in North America. We believe that Sally Hansen has the most diversified and successful line of nail products in North America. Products in our Sally Hansen line include nail care products, nail color lacquers and nail and beauty implements. We also sell a broad range of depilatory and wax products through our Sally Hansen brand. Sally Hansen is sold in drugstores and other mass retailers. Although Sally Hansen is currently primarily a North American brand, we have established a presence in Europe, Asia and South America by focusing on nail care and color. In fiscal 2015, we launched Sally Hansen Miracle Gel for at-home gel manicures. Sally Hansen Miracle Gel has won 23 industry awards to date.

In addition to our power brands, we have a broad and deep portfolio of over 60 other brands, which accounted for 28% of our net revenues in fiscal 2015 . These include regional brands such as Astor , Bourjois , Jil Sander , Joop! Lancaster and Manhattan , celebrity brands such as Beyoncé , David Beckham , Jennifer Lopez and Katy Perry and emerging brands such as Roberto Cavalli, Bottega Veneta and Miu Miu. A description of each of our brands is available at www.coty.com, but our website should not be considered part of or in any way incorporated by reference into this Annual Report on Form 10-K.

Our Strategic Vision

Our strategic vision is to strengthen Coty’s position as a global leader in beauty through a combination of organic and acquisitive growth. Our long-term financial targets are to bring over time our net revenue growth in line with or ahead of the growth of the markets and segments in which we compete, while steadily expanding profit margins and generating strong cash flow. To achieve our strategic vision and long-term financial targets, we have developed a long term plan with the following priorities:


•	Developing our power brands, with a strong focus on superior innovation and high levels of brand support. We expect to review our designated power brands in connection our recently announced transaction to acquire The Proctor & Gamble Company’s fine fragrance, color cosmetics, and hair color businesses (the “Beauty Business”).

•

We aim to strengthen Coty’s global position in Fragrances and Color Cosmetics, while expanding our presence in Skin & Body Care through organic growth and a well-targeted acquisition strategy. Our ambition is to become the undisputed number one global player in Fragrances and to be among the top three global players in Color Cosmetics. We also plan to expand Coty’s presence in Skin & Body Care. Based on current market data, we expect that the Beauty Business will help us achieve our ambitions in Fragrance and Color Cosmetics, while expanding our current offerings into hair color. As such, our renewed focus will be on further strengthening our positions in Fragrances, Color Cosmetics and hair color, while maintaining our ambition for expansion in Skin & Body Care.


•	Progressing our emerging markets expansion strategy, with the objective of generating more than one third of our net revenues from emerging markets.


•	Gaining efficiency and simplification in our operating model through a global efficiency plan. We believe our global efficiency plan will address the different cost components of our business, and we anticipate that annual savings from the plan will now be $270 million by the end of fiscal 2017.

Fragrances

Our Fragrances segment net revenues represented 50%, 51% and 50% of our net revenues in fiscal 2015 , 2014 and 2013 , respectively. In fiscal 2015 , 2014 and 2013 , our Fragrances segment generated $2.178 billion, $2.324 billion and $2.313 billion in net revenues, respectively, and $352.7 million, $341.2 million and $354.9 million in operating income, respectively.

We hold the #2 global position in fragrances. We believe that our success in fragrances results from a combination of strong executive leadership, global expansion, innovation, organic growth, acquisitions, product line extensions and new licenses.

Our fragrance products include a variety of men’s and women’s products. The brands in our Fragrances segment include brands associated with fashion designers, lifestyle brands and brands associated with entertainment personalities. We sell our fragrance products in all distribution channels, from mass to prestige, including travel and retail, to target consumers across all incomes, ages and geographies that we consider important to our business.

We own certain of the trademarks associated with our fragrance products and license other trademarks from celebrities, fashion houses and other lifestyle brands. In fiscal 2015 , we manufactured 76% of our fragrance products at our manufacturing facilities, and we market and distribute our fragrance products globally through local affiliates and third-party distributors. In fiscal 2015 , 2014 and 2013 , the Americas represented 31%, 31% and 34% , respectively, EMEA represented 52%, 53% and 50% , respectively, and Asia Pacific represented 17%, 16% and 16% , respectively, of our net revenues from our Fragrances segment.

Our top fragrance brands by percentage of net revenues are Calvin Klein , Marc Jacobs , Davidoff and Chloé. We have launched several new fragrance brands since 2010, including Balenciaga , Beyoncé , Bottega Veneta , Guess? , Katy Perry and Roberto Cavalli. Our newest fragrance brand Miu Miu , is scheduled for launch in calendar year 2015.

Color Cosmetics

Net revenues from our Color Cosmetics segment represented 33%, 30% and 31% of our net revenues in fiscal 2015, 2014 and 2013, respectively. In fiscal 2015 , 2014 and 2013 , our Color Cosmetics segment generated $1.445 billion, $1.366 billion and $1.468 billion in net revenues, respectively, and $158.5 million, $154.2 million and $208.8 million in operating income, respectively.

We are an emerging leader in color cosmetics. We are ranked 4th globally and 3rd in the combined North American and European mass retail markets. Our color cosmetics products include lip, eye, nail and facial color products. We maintain a #2 position in nail care products globally.

We have 11 brands in our Color Cosmetics segment, including Bourjois , which we acquired in fiscal 2015. Our top color cosmetics brands by percentage of net revenues are Rimmel, Sally Hansen and OPI. Most of our color cosmetics products are sold within mass distribution channels, with OPI mostly sold in professional distribution channels. Our strength in color cosmetics is driven by our OPI, Rimmel and Sally Hansen brands.

We own all the brands in our Color Cosmetics segment and their associated trademarks, except for Cutex , which we license. We associate celebrities’ images in the advertising of some of our color cosmetics brands such as Kate Moss, Georgia May Jagger and Rita Ora for Rimmel , Demi Lovato for N.Y.C. New York Color and Heidi Klum for Astor . In fiscal 2015, we manufactured 67% of our color cosmetics products at our manufacturing facilities. We market and distribute our color cosmetics products globally through our subsidiaries and our third-party distributors. In fiscal 2015, 2014 and 2013, the Americas represented 50%, 51% and 57%, respectively, EMEA represented 44%, 44% and 38%, respectively, and Asia Pacific represented 6%, 5% and 5%, respectively, of our net revenues from our Color Cosmetics segment.

Skin & Body Care

Our Skin & Body Care segment net revenues represented 17%, 19% and 19% of our net revenues in fiscal 2015, 2014 and 2013, respectively. In fiscal 2015, 2014 and 2013, our Skin & Body Care segment generated $771.9 million, $861.4 million and $867.8 million in net revenues, respectively and $33.1 million, $(337.3) million and $9.1 million in operating income (loss) , respectively.

In our Skin & Body Care segment, we continue to develop our brands and product lines and expand our product offerings. Our skin & body care products include shower gels, deodorants, skin care and sun treatment products. Our skin & body care brands are adidas, Lancaster, philosophy and Playboy. Lancaster and philosophy are sold in prestige distribution channels, adidas and Playboy are sold in mass distribution channels.

We own Lancaster and philosophy and their trademarks, and we license the trademarks associated with adidas and Playboy. In fiscal 2015, we manufactured 71% of our skin & body care products at our manufacturing facilities. We market and distribute our skin & body care products globally through our subsidiaries and our third-party distributors. In fiscal 2015, 2014

and 2013, the Americas represented 38%, 34% and 34%, respectively, EMEA represented 50%, 55% and 53%, respectively, and Asia Pacific represented 12%, 11% and 13%, respectively, of our net revenues from our Skin & Body Care segment.

Research and Development

Research and development is a pillar of our innovation. It combines cutting-edge research and technology, new ingredients and precise market testing, enabling us to develop and support the development of new products while continuing to improve our existing products. Our key new product developments with significant product innovation components in calendar years 2014 and 2015 included Rimmel Wonder’Lash mascara with Argan Oil, a patented creamy, volumizing and conditioning mascara, Sally Hansen Miracle Gel 2.0, the only two-step gel manicure with a plumping top coat that does not require light, philosophy ultimate miracle worker , featuring a patented multi-protection formula for the face and eyes, and Lancaster 365 Skin Repair Serum , which helps manage aging at the roots. Our products have received numerous awards, including awards from The Fragrance Foundation and CLIO. In fiscal 2015, among other awards, Daisy Dream Marc Jacobs received awards for Best Packaging of the Year and Consumer Choice Awards from The Fragrance Foundation Awards, Sally Hansen Miracle Gel received the Cosmetic Executive Women’s Insider Choice Beauty Award in Nail Product and Lancaster Sun Sport Invisible Mist Wet Skin Application SPF30 received Marie Claire’s Prix d’excellence 2014 award.

We continuously seek to improve our products through research and development, and strive to provide the consumer with the best possible products. Our research and development teams work with our marketing and operations teams to identify recent trends and consumer needs and to bring products quickly to market. Additionally, our basic and applied research groups, which conduct longer-term research such as “blue sky” research, seek to develop proprietary new technologies for first-to-market products and for improving existing products. This research and development is done both internally and through affiliations with various universities, technical centers, supply partners, industry associations and technical associations. As of August 2015, we owned approximately 750 patents and patent applications globally.

We perform extensive testing on our products, including testing for safety, packaging, toxicology, in vitro eye irritation, microbiology, quality and stability. We also have a robust internal and external testing program that includes sensory, consumer and clinical testing. We do not conduct animal testing on our products or ingredients, nor do we engage others to undertake such testing on our behalf, except when required by local country laws.

As of August 2015, we had approximately 230 employees engaged in research and development. Research and development expenditures totaled 1.1%, 1.0% and 1.0% of net revenues in fiscal 2015, 2014 and 2013, respectively. We maintain five research and development centers, which are located in the U.S., Europe and China.

Suppliers, Manufacturing and Related Operations

We manufacture approximately 70% of our products in eight facilities around the world. These facilities are located in the U.S., Europe and China. Several of these locations provide multi-segment manufacturing. Approximately 30% of our finished products are manufactured to our specifications by third parties.

We continue to streamline our manufacturing processes and identify sourcing opportunities to improve innovation, customer service and product quality, increase efficiencies and reduce costs. We have a dedicated worldwide procurement team that we believe follows industry best practices and that is making a concentrated effort to reduce costs associated with our third-party suppliers. While we believe that our manufacturing facilities are sufficient to meet current and reasonably anticipated manufacturing requirements, we continue to identify opportunities to make improvements in productivity. For example, we are streamlining our manufacturing facilities to optimize costs. To capitalize on supply chain benefits, we will continue to complement our own manufacturing network with the use of pertinent third parties on a global basis for finished goods production.

The principal raw materials used in the manufacture of our products are essential oils, alcohol and specialty chemicals. The essential oils in our fragrance products are generally sourced from fragrance houses. As a result, we realize material cost savings and benefits from the technology, innovation and resources provided by these fragrance houses.

We purchase the raw materials for all our products from various third parties. We also purchase packaging components that are manufactured to our design specifications. We work in collaboration with our suppliers to meet our stringent design and creative criteria. In fiscal 2015, no single supplier accounted for more than 8% of the materials used in the manufacture of our products.

We regularly benchmark the performance of our supply chain and adjust our suppliers and our distribution networks and manufacturing footprint based upon the changing needs of our business. We are always considering new ways to improve our overall supply chain performance through better use of our production and sourcing capabilities. We believe that we currently have adequate sources of supply for all our products. We have not experienced material disruptions in our supply chain in the past, and we believe we have robust practices in place to respond to any potential disruptions in our supply chain.

We have established a global distribution network designed to meet the changing demands of our customers while maintaining service levels. In calendar year 2013, we received a Frost & Sullivan Manufacturing Leadership 100 award for leadership in global value chain and in fiscal 2015, we received awards in Leadership and Strategy and Manufacturing in Action, from the Manufacturer of the Year Awards. We are continuing to evaluate and restructure our physical distribution network to increase efficiency and reduce our order lead times.

We also recognize the importance of our employees and have programs in place designed to ensure operating safety. We also have in place programs designed to ensure that our manufacturing and distribution facilities comply with applicable environmental rules and regulations, and these programs have improved our employee safety as benchmarked against industry levels.

Marketing and Sales

We have dedicated marketing and sales forces (including ancillary support services) in most of our significant markets. We believe that local teams dedicated to the commercialization of our brands give us the greatest opportunity to execute our business strategy. We are also developing branding and marketing execution strategies with our top customers.

Our marketing strategy creates a distinct image and personality for each brand. Many of our products are linked to recognized designers and design houses such as Balenciaga, Bottega Veneta, Calvin Klein, Chloé, Marc Jacobs and Robert Cavalli , celebrities, such as Beyoncé Knowles, David Beckham, Enrique Iglesias, Jennifer Lopez and Katy Perry, and lifestyle brands, such as adidas , Davidoff, Playboy and Vespa. Each of our brands is promoted with consistent logos, packaging and advertising designed to enhance its image and the uniqueness of each brand. Our strategy is to promote these brands mostly in television, print, outdoor ads, in-store displays and online on brand sites and social networks. We also leverage our relationships with celebrities to endorse certain of our products. Recent campaigns include Kate Moss and Georgia May Jagger for Rimmel , Scott Eastwood for Davidoff , Jasmine Tookes and Tobias Sorensen for Calvin Klein Eternity NOW , Christy Turlington and Ed Burns for Calvin Klein Eternity and a television spot for Marc Jacobs Daisy Dream directed by long-time Marc Jacobs muse Sofia Coppola .

Our marketing efforts also benefit from cooperative advertising programs with retailers, often in connection with in-store marketing activities. Such activities are designed to attract consumers to our counters, displays and walls and make them try, or purchase, our products. We also engage in sampling and “gift-with-purchase” programs designed to stimulate product trials. We have more recently been expanding our digital marketing efforts, including through websites we do not control or operate, with a multi-pronged strategy that ranges from brand sites, social networking campaigns and blogs, to e-commerce. Currently, 39 of our brands have marketing sites, 34 have social networking activities and 12 are sold on branded e-commerce sites. We also partner with key “brick and mortar” retailers in their expansion into e-commerce.

Our consolidated expenses for advertising and promotional costs were $1.008 billion, $1.070 billion and $1.072 billion in fiscal 2015 , 2014 and 2013 , respectively. Our consolidated expenses for total marketing and advertising were $1.471 billion, $1.563 billion and $1.574 billion in fiscal 2015 , 2014 and 2013 , respectively.

Distribution Channels and Retail Sales

We currently have offices in more than 35 countries and market, sell and distribute our products in over 130 countries and territories.

We have a balanced multi-channel distribution strategy and market products across price points in prestige and mass channels of distribution. We offer certain products through multiple distribution channels to reach a broader range of customers. We sell products in each of our segments through retailers, including hypermarkets, supermarkets, independent and chain drug stores and pharmacies, upscale perfumeries, upscale and mid-tier department stores, nail salons, specialty retailers, duty-free shops and traditional food, drug and mass retailers. Our principal retailers in the mass distribution channel include CVS, Rite-aid, Target, Walgreens and Wal-Mart in the U.S. and Boots, DM, Carrefour and Watson’s in Europe. Our principal retailers in the prestige distribution channel include Macy’s, Ulta, Dillards, BonTon and Nordstrom in the U.S., AS Watson and Douglas in Europe and Sephora in multiple geographic regions. Other principal retailers include Kohl’s and QVC. In fiscal 2015, no retailer accounted for more than 10% of our global net revenues; however, certain retailers accounted for more than 10% of net revenues within certain geographic markets. In fiscal 2015, our top ten retailers combined accounted for 29% of our net revenues and Wal-Mart, our top retailer, accounted for 7% of our net revenues. We are pursuing our strategy of geographic expansion by selling through retailers, our subsidiaries or third-party distributors and our strategy of increasing our presence in e-commerce by selling through websites that support an e-commerce-only product distribution business, including our own branded websites. We believe our commercial expertise enhances our capabilities when we enter new markets where products must suit local consumer preferences, incomes and demographics.

We also sell a broad range of our products through travel retail sales channels, including duty-free shops, airlines, cruise lines and other tax-free zones. Travel retail sales channels represented 7% of our net revenues in fiscal 2015. In addition, we

sell our products through the internet over our retail partners’ e-commerce sites and through online retailers, and we sell our philosophy products through philosophy -branded websites and through direct marketing via television.

In countries and territories in which we sell our products but where we do not have a subsidiary, our products are sold through third-party distributors. Distributors in different countries or territories may sell to different types of customers, such as traditional retailers or via direct marketing. In some cases, we also outsource functions or parts of functions that can be performed more effectively by external service providers. For example, we have outsourced significant portions of our logistics management for our European prestige and mass distribution and our U.S. mass distribution, as well as certain technology-related functions, to third-party service providers. We direct our third-party service providers and distributors in the marketing, advertising and promotion of our products. Our third-party distributors contribute knowledge of the local market and dedicated sales personnel.

In accordance with accounting principles generally accepted in the U.S. (“GAAP”), we report revenues on a net basis, which reflects the amount of actual returns received and the amount established for anticipated returns. As a percentage of gross sales after customer discounts and allowances, returns accounted for approximately 3.3%, 3.9% and 3.7% in fiscal 2015 , 2014 and 2013 , respectively.

Competition

We compete against a number of manufacturers and marketers of fragrances, color cosmetics and personal care products. In addition to the established multinational brands against which we compete, small targeted niche brands continue to enter the market. Competition is also increasing from private label products sold by apparel retailers and mass distribution retailers.

We believe that we compete primarily on the basis of perceived value, including pricing and innovation, service to the consumer, promotional activities, advertising, special events, new product introductions, e-commerce and mobile-commerce initiatives, direct sales and other activities. It is difficult for us to predict the timing and scale of our competitors’ actions in these areas. Refining product portfolios with more enhanced, newer and redesigned products has become a priority as we compete in the slower-growing developed markets.

Intellectual Property

Our success depends, at least in part, on our ability to protect our proprietary technology and intellectual property and to operate without infringing the proprietary rights of others. We rely on a combination of trademarks, patents, copyrights, trade secrets and know-how, intellectual property licenses and other contractual rights (including confidentiality and invention assignment agreements) to establish and protect our proprietary rights.

We own the trademark rights in key sales countries in international Class 3 trademark class (cosmetics and cleaning preparations) for use in connection with the distribution of the following brands: Astor, Bourjois, Coty, Joop!, Jovan, Lancaster, Manhattan, N.Y.C. New York Color, OPI, philosophy, Rimmel and Sally Hansen. We license the trademarks for the balance of our material products, and we are generally the exclusive trademark licensee for all Class 3 trademarks as used in connection with our products. We or our licensors, as the case may be, actively protect the trademarks used in our principal products in the U.S. and significant markets worldwide. We consider the protection of our trademarks to be essential to our business.

A number of our products also incorporate patented, patent-pending or proprietary technology in their respective formulations and/or packaging, and in some cases our product packaging is subject to copyright, trade dress or community design protection. While we consider our patents and copyrights, and the protection thereof, to be important, no single patent or copyright, or group of patents or copyrights, is material to the conduct of our business. As of August 2015, we owned approximately 750 patents and patent applications globally.

Products representing a significant portion of our net revenues are manufactured and marketed under exclusive license agreements granted to us for use on a worldwide and/or regional basis. As of June 30, 2015, we maintained 33 brand licenses. In fiscal 2015, 57% of our net revenues were generated from licensed brands, with our licensed power brands (our top six licenses) representing between 3% and 17% of total net revenues. In each of fiscal 2014 and 2013, 60% and 58% of our net revenues were generated from licensed brands, respectively.

Our existing licenses, including those for our power brands, impose obligations on us that we believe are common to many licensing relationships in the beauty industry. These obligations include:

• paying annual royalties on net sales of the licensed products;

• maintaining the quality of the licensed products and the applicable trademarks;


•	permitting the licensor’s involvement in and, in some cases, approval of advertising, packaging and marketing plans relating to the licensed products;

• maintaining minimum royalty payments and/or minimum sales levels for the licensed products;

• actively promoting the sales of the licensed products;

• spending a certain amount of net sales on marketing and advertising for the licensed products;

• maintaining the integrity of the specified distribution channel for the licensed products;

• expanding the sales of the licensed products and/or the markets in which it is sold;

• agreeing not to enter into licensing arrangements with competitors of certain of our licensors;

• indemnifying the licensor in the event of product liability or other claims related to our products;

• limiting assignment and sub-licensing to third parties without the licensor’s consent; and


•	in some cases, requiring notice to, or approval by, the licensor of certain changes in control as a condition to continuation of the license.

We are currently in material compliance with all terms of our brand license agreements.

Most brand licenses have renewal options for one or more terms, which can range from three to twenty years. Certain brand licenses provide for automatic extensions, so long as minimum annual royalty payments are made, while renewal of others is contingent upon attaining of specified sales levels. The next power brand license scheduled to expire that does not provide for automatic renewal or renewal at our option expires in fiscal 2022. Five of our brand licenses expire during fiscal 2016. We expect to renew four of these brand licenses, three of which provide for automatic renewal or renewal at our option. For additional risks associated with our licensing arrangements, see “—Risk Factors —Our business is dependent upon certain licenses.”

We may be unable to obtain, maintain and protect the intellectual property rights necessary to conduct our business, and may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For more information, see “—Risk Factors —Our business is dependent upon certain licenses,” “—Risk Factors —If we are unable to obtain, maintain and protect our intellectual property rights, in particular trademarks, patents and copyrights, or if our brand partners and licensors are unable to maintain and protect their intellectual property rights that we use in connection with our products, our ability to compete could be negatively impacted,” “—Risk Factors —Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of other parties” and “—Risk Factors —The illegal distribution and sale by third parties of counterfeit versions of our products could have a negative impact on our reputation and business.”

Employees

As of August 2015 , we had approximately 8,100 full-time employees in over 35 countries. In addition, we employ a large number of seasonal contractors during our peak manufacturing and promotional season, primarily at our manufacturing facility in Sanford, North Carolina. We recognize the importance of our employees to our business and believe our relationship with our employees is satisfactory.

Our employees in the U.S. are not covered by collective bargaining agreements. Our employees in certain countries in Europe are subject to works council arrangements. We have not experienced a material strike or work stoppage in the U.S. or any other country where we have a significant number of employees.

Government Regulation

We and our products are subject to regulation by various U.S. federal regulatory agencies as well as by various state and local regulatory authorities and by the applicable regulatory authorities in the countries in which our products are produced or sold. Such regulations principally relate to the ingredients, labeling, packaging, advertising and marketing of our products. Because we have commercial operations overseas, we are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”) as well as other countries’ anti-corruption and anti-bribery regimes, such as the U.K. Bribery Act.

Environmental, Health and Safety

We are subject to numerous foreign, federal, provincial, state, municipal and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and environmental protection, including those relating to emissions to the air, discharges to land and surface waters, generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, and the registration and evaluation of chemicals. We maintain policies and procedures to monitor and control environmental, health and safety risks, and to monitor compliance with applicable environmental, health and safety requirements. Compliance with such laws and regulations pertaining to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon our capital expenditures, earnings or competitive position. However, environmental laws and regulations have tended to become increasingly stringent and, to the extent regulatory changes occur in the future, they could result in, among other things, increased costs to us. For example, certain states, such as California, and the U.S. Congress have proposed legislation relating to chemical disclosure and other requirements related to the content of our products. For more information, see “—Risk Factors —We are subject to environmental, health and safety laws and regulations that could affect our business or financial results.”

Seasonality

Our sales generally increase during our second fiscal quarter as a result of increased demand by retailers associated with the holiday season. Working capital requirements, sales, and cash flows generally experience variability during the three to six months preceding the holiday period due in part to product innovations and new product launches and the size and timing of certain orders from our customers. While we continue to attempt to reduce this seasonality, sales volume of holiday gift items is, by its nature, difficult to forecast.

We generally experience peak inventory levels from July to October and peak receivable balances from September to December. During the months of November, December and January of each year, cash is normally generated as customer payments for holiday season orders are received.

In response to this seasonality and other factors, management has implemented various working capital programs aimed at optimizing the effectiveness of our inventories, customer receivables and accounts payable. For example, to improve inventory productivity, we have enhanced our sales and operational planning forecasting processes. To improve accounts payable efficiency, we have commenced a harmonization of our vendor management practices across geographies to optimize our payments to vendors.

Availability of Reports

We make available financial information, news releases and other information on our website at www.coty.com. There is a direct link from the website to our Securities and Exchange Commission (“SEC”) filings via the EDGAR database at www.sec.gov, where our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge as soon as reasonably practicable after we file such reports and amendments with, or furnish them to, the SEC. Stockholders may also contact Investor Relations at 350 Fifth Avenue, New York, New York 10118 or call 212-389-7300 to obtain hard copies of these reports without charge.

Item 1A. Risk Factors.

You should consider the following risks and all of the other information in this Annual Report in connection with evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. Our business may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be immaterial. If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, prospects, financial condition and results of operations, may be materially and adversely affected.

The beauty business is highly competitive, and if we are unable to compete effectively our results will suffer.

We face vigorous competition from companies throughout the world, including large multinational consumer products companies. Some of our competitors have greater resources than we do and may be able to respond more effectively to changing business and economic conditions than we can. Most of our products compete with other widely-advertised brands within each product segment. Competition in the beauty business is based on pricing of products, quality of products and packaging, perceived value and quality of brands, innovation, in-store presence and visibility, promotional activities, advertising, editorials, e-commerce and mobile-commerce initiatives and other activities. It is difficult for us to predict the timing and scale of our competitors’ actions in these areas or whether new competitors will emerge in the beauty business, including competitors who offer comparable products at more attractive prices. In particular, the fragrances segment and nail category in the U.S. are being influenced by the high volume of new product introductions by diverse companies across several different distribution channels, including private label brands and lower cost brands that have increased pricing pressure. In

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addition, further technological breakthroughs, new product offerings by competitors, and the strength and success of our competitors’ marketing programs may impede our growth and the implementation of our business strategy. Our ability to compete also depends on the continued strength of our products, both power brands and other brands, the success of our branding, innovation and execution strategies, our ability to acquire or enter into new licenses and to continue to act as licensee of choice for various brands, the success of any future acquisitions, the continued diversity of our product offerings to help us compete effectively, the successful management of new product introductions and innovations, our success in entering new markets and expanding our business in existing geographies and our ability to protect our intellectual property. If we are unable to continue to compete effectively on a global basis, it could have an adverse impact on our business, results of operations and financial condition.

Rapid changes in market trends and consumer preferences could adversely affect our financial results.

Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to industry trends and to changes in consumer preferences for fragrances, color cosmetics and skin & body care products, consumer attitudes toward our industry and brands and changes in where and how consumers shop for those products. We must continually work to develop, produce and market new products, maintain and enhance the recognition of our brands, achieve a favorable mix of products and refine our approach as to how and where we market and sell our products. Net revenues and margins on beauty products tend to decline as they advance in their life cycles, so our net revenues and margins could suffer if we do not successfully and continuously develop new products. While we devote considerable effort and resources to shape, analyze and respond to consumer preferences, consumer tastes cannot be predicted with certainty and can change rapidly, which could impact demand for our products. Additionally, due to the increasing use of social and digital media by consumers and the speed by which information and opinions are shared, trends and tastes may continue to change even more quickly. If we are unable to anticipate and respond to trends in the market for beauty and related products and changing consumer demands, our brand names and brand images may be impaired. Even if we react appropriately to changing trends and consumer preferences, consumers may consider our brand images to be outdated or associate our brands with styles that are no longer popular or trend-setting. Any of these outcomes could have a material adverse effect on our brands, business, financial condition and operating results.

Our success depends on our ability to achieve our global business strategy.

Our future growth, profitability and cash flows depend upon our ability to successfully implement our global business strategy, which is dependent upon a number of factors, including our ability to:



	Ÿ		develop our power brands portfolio through branding, innovation and execution;

	Ÿ		identify and incubate new and existing brands with the potential to develop into global power brands;

	Ÿ		innovate and develop new products that are appealing to the consumer;

	Ÿ		extend our brands into the other segments of the beauty industry in which we compete and develop new brands;

	Ÿ		acquire or enter into new licenses;

	Ÿ		expand our geographic presence to take advantage of opportunities in developed and emerging markets;

	Ÿ		continue to expand our distribution channels within existing geographies to increase market presence, brand recognition and sales;

	Ÿ		expand our market presence through alternative distribution channels;

	Ÿ		expand margins through sales growth, the development of higher margin products and supply chain integration and efficiency initiatives;

	Ÿ		optimize the efficiency of our marketing spend and in-store execution;

	Ÿ		manage capital investments and working capital effectively to improve the generation of cash flow; and

	Ÿ		execute any acquisitions efficiently and integrate businesses successfully.

There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect. Further, achieving these objectives will require investments which may result in short-term costs without generating any current net revenues and, therefore, may be dilutive to our earnings, at least in the short term. In addition, we may decide to divest or discontinue certain brands or streamline operations and incur other costs or special charges in doing so. We cannot give any assurance that we will realize, in full or in part, the anticipated strategic benefits we expect our strategy will achieve. The failure to realize those benefits could have a material adverse effect on our business, financial condition and results of operations.

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We may not realize the benefits that we expect from our Organizational Redesign.

On July 9, 2014, we announced an organizational structure (“Organizational Redesign”) aimed at reinforcing our growth path and strengthening our position as a global leader in beauty.

The successful implementation of our Organizational Redesign presents significant organizational challenges and uncertainties and may also require successful negotiations with third parties, including labor organizations, suppliers and other business partners. As a result, we may not be able to realize in full the anticipated benefits from our Organizational Redesign. Events and circumstances such as financial or strategic difficulties, unexpected employee turnover, delays and unexpected costs may occur that could result in us not realizing all of the anticipated benefits or us not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated savings of our Organizational Redesign, our ability to fund other initiatives may be adversely affected. Any failure to implement our Organizational Redesign in accordance with our expectations could adversely affect our business, results of operations and financial condition.

We may not be able to identify suitable acquisition targets or realize the full intended benefit of acquisitions we undertake.

During the past several years, we have explored and undertaken opportunities to acquire other companies and assets as part of our growth strategy. The assets we have acquired in the past several years represent a significant portion of our net assets. We continue to seek financially accretive acquisitions that we believe strengthen our competitive position in our key segments or accelerate our ability to grow our emerging markets presence, including, for example our recently announced transaction with The Procter & Gamble Company (“P&G”) to acquire its fine fragrance, color cosmetics and hair color business.

There can be no assurance that we will be able to continue to identify suitable acquisition candidates in the future or consummate acquisitions on favorable terms or otherwise realize the full intended benefit of such transactions. For example, in fiscal 2014, despite efforts to organize the management team and introduce new product innovation, the execution of the brand revamp plan by the management team for TJoy did not gain expected results, resulting in TJoy performing below our expectations and impairments of trademarks. In June 2014, we made the decision to discontinue the TJoy brand. Similarly, Philosophy earned lower net revenues than expected in the first fiscal year after its acquisition primarily due to delays in planned international distribution expansion, an innovation plan that was less successful than expected and a slowdown of brand sales momentum in certain key retailers, all of which also resulted in impairments of trademarks. See “—Our goodwill and other assets have been subject to impairment and may continue to be subject to impairment in the future” and “—The purchase price of future acquisitions may not be representative of the operations acquired.” Our failure to achieve intended benefits from any future acquisitions could cause a material adverse effect on our results, business or financial condition.

Our acquisition activities may present managerial, integration, operational and financial risks.

Our acquisition activities expose us to certain risks, including diversion of management attention from existing core businesses and potential loss of customers or key employees of acquired businesses. If required, the financing for an acquisition could increase our indebtedness, dilute the interests of our stockholders or both. The assumptions we use to evaluate acquisition opportunities may not prove to be accurate, and intended benefits may not be realized. In addition, acquisitions of foreign businesses entail certain particular risks, including difficulties in markets and environments where we lack a significant presence, including inability to seize opportunities available in those markets in comparison to our global or local competitors. For example, our growth strategy may require us to seek market penetration through sales channels with which we are not familiar, which may be the dominant sales channels in the relevant geographies. To the extent we acquire businesses located in countries or jurisdictions with currencies other than the U.S. dollar, the U.S. dollar equivalent cost of the acquisition, as well as future profits and revenues, may be adversely impacted should exchange rates vary in unexpected ways. We may experience difficulties in integrating newly acquired businesses, such as the difficulties we experienced in our acquisition of TJoy relating to the earlier than expected departure of key employees and transition to new leadership. Even if we are able to integrate our acquired businesses, such transactions involve the risk of unanticipated or unknown liabilities, including with respect to environmental and regulatory matters. Our failure to successfully integrate any acquired business could have a material adverse effect on our business, financial condition and operating results.

The P&G Beauty Business combination will expose the Company to risks inherent in the hair color business, and risks inherent in those geographies where P&G’s Beauty Business operates.

On July 8, 2015, we entered into a transaction agreement (the “Transaction Agreement”) with P&G, Galleria Co., a wholly owned subsidiary of P&G, and Green Acquisition Sub Inc., our wholly owned subsidiary (“Merger Sub”), to merge P&G’s Beauty Business into Merger Sub through a tax-free Reverse Morris Trust transaction.

If consummated successfully, the transaction is anticipated to create one of the world’s largest beauty companies and would represent a significant transformation of our existing business. Together with P&G’s Beauty Business, we are expected to become a global leader in fragrances and to significantly enhance our position in color cosmetics. The transaction is expected to give us a new category in the beauty industry through the addition of P&G’s hair color business, including the brands Wella

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and Clairol. The transaction is also expected to significantly expand our geographical footprint, providing scale in large beauty markets like Brazil and Japan, while also expanding our presence in important geographies in which we currently operate, such as in North America, Europe, the Middle East and Asia.

Upon completion of the transaction, we will be subject to a variety of risks associated the hair color business, in addition to those we already face in the fragrance, skin and body care, and color cosmetics business. These risks include changes in consumer preferences, volatility in the prices of raw materials, consumer perceptions of the brands, competition in the retail market, and other risks. In addition, we will be exposed to risks inherent in operating in geographies in which we have been less present in the past. See “—The beauty business is highly competitive, and if we are unable to compete effectively our results will suffer”, “—Rapid changes in market trends and consumer preferences could adversely affect our financial results”, “—Third-party suppliers provide, among other things, the raw materials used to manufacture our products, and the loss of these suppliers, damage to our third-party suppliers’ reputations or a disruption or interruption in the supply chain may adversely affect our business” and “—Our operations and acquisitions in certain foreign areas expose us to political, regulatory, economic and reputational risks”.

The integration of P&G’s Beauty Business may not be successful or anticipated benefits from the transaction may not be realized.

In addition to acquiring risks associated with P&G’s Beauty Business itself, we also face the challenge of successfully integrating P&G’s Beauty Business operations into our own. The integration process will require us to significantly expand the scope of our operations and financial systems. Our management will be required to devote a significant amount of time and attention to the process of integrating the operations of our business and P&G’s Beauty Business. There is a significant degree of difficulty and management involvement inherent in that process. We may not be able to successfully or cost-effectively integrate P&G’s Beauty Business. The process of integrating P&G’s Beauty Business into our operations may cause an interruption of, or loss of momentum in, the activities of our business. If our management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer and our results of operations and financial condition may be harmed.

Even if we are able to successfully combine the two business operations, it may not be possible to realize the full benefits of the increased sales volume and other benefits that are currently expected to result from the transactions, or realize these benefits within the time frame that is currently expected. For example, the elimination of duplicative costs may not be possible or may take longer than anticipated, or the benefits from the P&G Beauty Business transaction may be offset by costs incurred or delays in integrating the companies. In addition, the benefits of the P&G Beauty Business transaction may be offset by operating losses relating to changes in commodity or energy prices, or in increased competition, or by other risks and uncertainties. If we fail to realize the benefits we anticipate from the P&G Beauty Business transaction, our results of operations may be adversely affected. See “—The purchase price of future acquisitions may not be representative of the operations acquired” and “—Our acquisition activities may present managerial, integration, operational and financial risks.”

Our operations and acquisitions in certain foreign areas expose us to political, regulatory, economic and reputational risks.

We currently have offices in more than 35 countries and market, sell and distribute our products in over 130 countries and territories. Our growth strategy depends in part on our ability to grow in emerging markets. Our presence in such markets may also expand as a result of our acquisition strategy, including our recently announced transaction with P&G.

Our acquisitions and operations in some emerging markets may be subject to greater political and economic volatility and greater vulnerability to infrastructure and labor disruptions than are common in established areas. Although we have implemented policies, procedures and trainings designed to ensure compliance with anti-bribery laws, trade controls and economic sanctions, and similar regulations, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. We may incur costs or other penalties in the event that any such violations occur, which could have an adverse effect on our business and reputation.

The U.S. has imposed export controls and economic sanctions that prohibit export or re-export of products subject to U.S. jurisdiction to specified end users and destinations, and/or prohibit U.S. companies and other U.S. persons from engaging in business activities with certain persons, entities, countries or governments that it determines are adverse to U.S. foreign policy interests, including Iran and Syria. In 2012, we determined that our majority-owned subsidiary in the United Arab Emirates (“UAE”) had re-exported certain of our products manufactured in the U.S. to Syria, which may have been in violation of U.S. export control laws. We have taken remedial action to cease further sales to Syria. After voluntarily reporting these re-exports to the U.S. Department of Commerce’s Bureau of Industry and Security’s Office of Export Enforcement (the “OEE”), we received a warning letter from the OEE on January 6, 2014 stating that the OEE had closed its investigation. No financial penalties were imposed. In addition, we voluntarily reported to the U.S. Treasury Department's Office of Foreign Assets Control (“OFAC”) that some of the affiliate’s Syria sales were made to a party that was designated as a target of U.S. economic sanctions by OFAC. We also determined that the same affiliate had re-exported some of our products to Iran through an intermediary UAE entity. We ceased all sales to the OFAC-designated party in January 2010 and have ceased all sales to Iran,

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Syria and OFAC-designated parties. On May 12, 2015, OFAC decided to resolve the matter of these sales by issuing a cautionary letter and declining to impose a financial penalty. The cautionary letter does not preclude OFAC from taking further action if we violate OFAC administered sanctions in the future. We may experience reputational harm and increased regulatory scrutiny as a result of our subsidiary’s sales to Syria and Iran. In addition, the U.S. may impose additional sanctions at any time on other countries where we sell our products. If so, our existing activities may be adversely affected, or we may incur costs in order to come into compliance with future sanctions, depending on the nature of any further sanctions that may be imposed.

Under U.S. law, U.S. companies and their controlled-in-fact foreign subsidiaries and affiliates are prohibited from participating in unsanctioned foreign boycotts. Currently, the U.S. considers the Arab League boycott of Israel to constitute an unsanctioned foreign boycott. In the course of our internal investigation into compliance with U.S. export laws by our majority-owned subsidiary in the UAE, we determined that the subsidiary may have violated EAR anti-boycott laws by certifying on invoices (including some that involved goods manufactured in the U.S.) that the orders did not contain any materials of Israeli origin. See “—We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations” for additional information regarding risks related to such certifications.

In addition, some of our recent acquisitions have required us to integrate non-U.S. companies which had not, until our acquisition, been subject to U.S. law. In many countries outside of the U.S., particularly in those with developing economies, it may be common for persons to engage in business practices prohibited by laws and regulations applicable to us, such as the FCPA or similar local anti-bribery laws. These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials for the purpose of obtaining or retaining business. Failure by us and our subsidiaries to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our business, financial condition, cash flows and results of operations.

We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations.

In 2012, we determined that our majority-owned subsidiary in the UAE had re-exported certain of our products to Syria, and we voluntarily reported these transactions to OEE. We also undertook remedial action to prevent any further such transactions, including auditing the subsidiary and notifying each of the subsidiary’s employees and distributors of the current U.S. sanctions and export control laws and asking that each distributor acknowledge the same. We also notified OFAC of our voluntary disclosure to the OEE. We received a warning letter from the OEE on January 6, 2014 stating that the OEE had closed its investigation, and that the OEE imposed no financial penalties. On May 12, 2015, OFAC decided to resolve the matter of these sales by issuing a cautionary letter and declining to impose a financial penalty. However, in the course of our internal investigation into compliance by our majority-owned subsidiary in the UAE with U.S. export control laws, we also determined that the subsidiary may have violated EAR anti-boycott laws by including a legend on invoices confirming that the corresponding goods did not contain materials of Israeli origin. A number of the invoices involved U.S.-origin goods. We voluntarily disclosed the potential violations to the U.S. Department of Commerce, Bureau of Industry and Security, Office of Antiboycott Compliance (“OAC”) and undertook remedial action to prevent any further inclusion of the legends on invoices.

Penalties for EAR violations can be significant and civil penalties can be imposed on a strict liability basis, without any showing of knowledge or willfulness. OAC has wide discretion to settle claims for violations. We believe that a penalty or penalties that would result in a material loss are reasonably possible. Irrespective of any penalty, we could suffer other adverse effects on our business as a result of any violations or the potential violations, including legal costs and harm to our reputation, and we also will incur costs associated with our efforts to improve our compliance procedures. We have not established a reserve for potential penalties. We do not know whether OAC will assess a penalty or what the amount of any penalty would be, if a penalty or penalties were assessed. See Note 25, “Commitments and Contingencies” in our notes to Consolidated Financial Statements.

Our business is dependent upon certain licenses.

Products covering a significant portion of our net revenues are marketed under exclusive license agreements which grant us and/or our subsidiaries the rights to use certain intellectual property (trademarks, trade dress, names and likeness, etc.) in certain fields on a worldwide and/or regional basis. As of June 30, 2015, we maintained 33 brand license agreements, which collectively accounted for 57% of our net revenues in fiscal 2015. In addition to our brand licenses, we also have other arrangements in place granting us rights to use trademarks and certain other intellectual property in products marketed under both our licensed and owned brands. In fiscal 2015, our top six licensed brands collectively accounted for 41% of our net revenues, and each represented between 3% and 17% of net revenues. The termination of one or more of our brand license agreements or the renewal of a brand license agreement on less favorable terms could have a material adverse effect on our business, financial condition and results of operations. While we may enter into additional brand license agreements in the future, the terms of such brand license agreements may be less favorable than the terms of our existing brand license agreements.

We rely on our brand licensors to manage and maintain their brands. Many of our brand licenses are with celebrities whose public personae we believe are in line with our current business strategy. Since we do not maintain control over such

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celebrities’ brand and image, however, they are subject to change at any time without notice, and there can be no assurance that these celebrity licensors will maintain the appropriate celebrity status or positive association among the consumer public to maintain sales of products bearing their names and likeness at the projected sales levels. Similarly, since we are not responsible for the brand or image of our designer licensors, sales of related products or projected sales of related products could suffer if the designer suffers a general decline in the popularity of its brands due to mismanagement, changes in fashion or consumer preferences, or other factors beyond our control.

Our existing brand licenses run for varying periods with varying renewal options and may be terminated if certain conditions, such as royalty payments, are not met. These brand licenses impose various obligations on us which we believe are common to many licensing relationships in the beauty industry. These obligations include:



	Ÿ		maintaining the quality of the licensed product and the applicable trademarks;

	Ÿ		permitting the licensor’s involvement in and, in some cases, approval of advertising, packaging and marketing plans;

	Ÿ		paying royalties at minimum levels and/or maintaining minimum sales levels;

	Ÿ		promoting the sales of the licensed product actively;

	Ÿ		spending a certain amount of net sales on marketing and advertising for the licensed product;

	Ÿ		maintaining the integrity of the specified distribution channel for the licensed product;

	Ÿ		expanding the sales of the product and/or the jurisdictions in which the product is sold;

	Ÿ		agreeing not to enter into licensing arrangements with competitors of certain of our licensors;

	Ÿ		indemnifying the licensor in the event of product liability or other claims related to our products;

	Ÿ		limiting assignment and sub-licensing to third parties without the licensor’s consent; and

	Ÿ		requiring, in some cases, notice to the licensor or its approval of certain changes in control.

If we breach any of these obligations or any other obligations set forth in any of our brand license agreements, our rights under the brand license agreements that we have breached could be terminated, which could have a material adverse effect on our business, financial condition and results of operations.

Our success is also partially dependent on the reputation of our brand licensors and the goodwill associated with their intellectual property. Our licensors’ reputation or goodwill may be harmed due to factors outside our control, which could have a material adverse effect on our business, financial condition and results of operations. In addition, in the event that any of our licensors were to enter bankruptcy proceedings, we could lose our rights to use the intellectual property that the applicable licensors license us to use.

Furthermore, the transfer of certain fragrance brand licenses from P&G to Coty, in connection with our transaction with P&G, is subject to licensor consent. If these consents cannot be obtained, we or P&G’s Beauty Business may suffer a loss of potential future revenues and may lose rights that are material to our or its respective businesses and the business of the combined company. In addition, third parties with whom we or P&G’s Beauty Business currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the transaction. Any such disruptions could limit our ability to achieve the anticipated benefits of the transaction.

If we are unable to obtain, maintain and protect our intellectual property rights, in particular trademarks, patents and copyrights, or if our brand partners and licensors are unable to maintain and protect their intellectual property rights that we use in connection with our products, our ability to compete could be negatively impacted.

Our intellectual property is a valuable asset of our business. For example, the market for our products depends to a significant extent upon the value associated with our product innovations and our owned and licensed brands. Although certain of our intellectual property is registered in the U.S. and in several of the foreign countries in which we operate, there can be no assurances with respect to the rights associated with such intellectual property in those countries, including our ability to register, use or defend key trademarks. We rely on a combination of trademark, trade dress, patent, copyright, unfair competition and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights. However, these laws, procedures and restrictions provide only limited and uncertain protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated, including by counterfeiters as discussed under “—The illegal distribution and sale by third parties of counterfeit versions of our products could have a negative impact on our reputation and business,” which could adversely affect our competitive position or ability to sell our products. In addition, our intellectual property portfolio in many foreign countries is less extensive than our portfolio

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in the U.S., and the laws of foreign countries, including many emerging markets in which we operate, such as China, may not protect our intellectual property rights to the same extent as the laws of the U.S. The costs required to protect our trademarks and patents may be substantial.

In addition, we may fail to apply for, or be unable to obtain, intellectual property protection for certain aspects of our business. For example, we cannot provide assurance that our applications for patents, trademarks and other intellectual property rights will be granted, or, if granted, will provide meaningful protection. In addition, third parties have in the past and could in the future bring infringement, invalidity, co-inventorship, re-examination, opposition or similar claims with respect to any of our current trademarks, patents and copyrights, or any trademarks, patents or copyrights that we may seek to obtain in the future. Any such claims, whether or not successful, could be extremely costly to defend, divert management’s attention and resources, damage our reputation and brands, and substantially harm our business and results of operations. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. Furthermore, patent expirations may affect our business and operating results. As patents expire, competitors may be able to legally produce and market products similar to ours, which could have a material adverse effect on our sales and results of operations.

In order to protect or enforce our intellectual property and other proprietary rights, or to determine the enforceability, scope or validity of the intellectual or proprietary rights of others, we may initiate litigation or other proceedings against third parties, such as infringement suits, opposition proceedings or interference proceedings. Any lawsuits or proceedings that we initiate could be expensive, take significant time and divert management’s attention from other business concerns. Litigation and other proceedings also put our intellectual property at risk of being invalidated or interpreted narrowly. Additionally, we may provoke third parties to assert claims against us. We may not prevail in any lawsuits or other proceedings that we initiate and the damages or other remedies awarded, if any, may not be commercially valuable. The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.

In addition, many of our products bear, and the value of our brands is affected by, the trademarks and other intellectual property rights of our brand partners and licensors. Our brand partners’ and licensors’ ability to maintain and protect their trademark and other intellectual property rights is subject to risks similar to those described above with respect to our intellectual property. We do not control the protection of the trademarks and other intellectual property rights of our brand partners and licensors and cannot ensure that our brand partners and licensors will be able to secure or protect their trademarks and other intellectual property rights. The loss of any of our significant owned or licensed trademarks, patents, copyrights or other intellectual property in any jurisdiction where we conduct a material portion of our business or where we plan geographic expansion could have a material adverse effect on our business, financial condition and results of operations.

Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of other parties.

Our commercial success depends at least in part on our ability to operate without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and other proprietary rights of others. However, we cannot be certain that the conduct of our business does not and will not infringe, misappropriate or otherwise violate such rights. Many companies have employed intellectual property litigation as a way to gain a competitive advantage, and to the extent we gain greater visibility and market exposure as a public company, we may also face a greater risk of being the subject of such litigation. For these and other reasons, third parties may allege that our products, services or activities infringe, misappropriate or otherwise violate their trademark, patent, copyright or other proprietary rights. Defending against allegations and litigation could be expensive, take significant time, divert management’s attention from other business concerns, and delay getting our products to market. In addition, if we are found to be infringing, misappropriating or otherwise violating third party trademark, patent, copyright or other proprietary rights, we may need to obtain a license, which may not be available on commercially reasonable terms or at all, or redesign or rebrand our products, which may not be possible. We may also be required to pay substantial damages or be subject to a court order prohibiting us and our customers from selling certain products or engaging in certain activities. Our inability to operate our business without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of others could therefore have a material adverse effect on our business, financial condition and results of operations.

Our goodwill and other assets have been subject to impairment and may continue to be subject to impairment in the future.

We are required, at least annually, or as facts and circumstances warrant, to test goodwill and other assets to determine if impairment has occurred. Impairment may result from any number of factors, including adverse changes in assumptions used for valuation purposes, such as actual or projected net revenue growth rates, profitability or discount rates, or other variables. If the testing indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other assets and the implied fair value of the goodwill or the fair value of other assets in the period the determination is made. We cannot always accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other assets become impaired, it would have an adverse effect on our financial

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condition and results of operations. During fiscal 2014 we recorded asset impairment charges of $316.9 million. The fiscal 2014 impairment charge of $60.5 million primarily related to TJoy’s trademark, customer relationships and manufacturing facility. Additionally, goodwill impairment charges of $256.4 on our Beauty - Skin & Body Care reporting unit were included in the fiscal 2014 impairment charges. These asset impairment charges are described under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations —Operating Income —Adjusted Operating Income —Asset Impairment Charges.”

The purchase price of future acquisitions may not be representative of the operations acquired.

During the past several years, we have taken advantage of selected acquisition opportunities that we believed would complement our current product offerings, expand our distribution channels, increase the size and geographic scope of our operations or otherwise offer operating efficiency opportunities and growth potential. Among other acquisitions in fiscal 2011, we acquired 100% of TJoy for a total cash purchase price of $351.7 million via a stock purchase. In fiscal 2014, we incurred asset impairment charges of $316.9 million, representing the write-off of goodwill, identifiable intangible assets and certain tangible assets with respect to our Beauty - Skin & Body Care reporting unit. These impairment charges were driven by TJoy, where cash outflows significantly exceeded management expectations notwithstanding the reorganization of the management team and distribution network and the launch of new product offerings.

We are not aware of any other impairments at this time, and we cannot accurately predict the amount and timing of any other such impairments, if any. We may experience subsequent impairment charges with respect to goodwill, intangible assets or other items, as we did in fiscal 2014. It is possible that our recent and future acquisitions, such as the recently completed Bourjois acquisition and the recently announced transaction with P&G may result in acquisition of additional goodwill and/or other intangible assets. Any such goodwill or assets acquired may become subject to impairment, which would reflect that the purchase price paid or owed with respect to such acquisitions is not representative of the operations or business acquired, which could have an adverse effect on our financial condition and results of operations.

A general economic downturn, the debt crisis and economic environment in Europe or a sudden disruption in business conditions may affect consumer purchases of our products, which could adversely affect our financial results.

The general level of consumer spending is affected by a number of factors, including general economic conditions, inflation, interest rates, energy costs and consumer confidence, each of which is beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods and otherwise weak economic environments, when disposable income is lower, and may impact sales of our products. For example, our net revenues declined in the 2008-09 economic downturn, and our fiscal 2014 net revenues were affected by a slowdown in the U.S. beauty market in the segments in which we compete, particularly in the mass channel. Global events beyond our control may impact our business, operating results and financial condition.

Weak economic environments in Europe, the U.S. and elsewhere could affect the demand for our products and may result in longer sales cycles, slower acceptance of new products and increased competition for sales. For example, the weak economic environment in the U.S. and Europe has contributed to declines in the fragrances segment and nail category in the combined region. Deterioration of economic conditions in Europe or elsewhere could also impair collections on accounts receivable. In addition, sudden disruptions in business conditions, for example, as a consequence of events such as a pandemic, or as a result of a terrorist attack, retaliation or the threat of further attacks or retaliation, or as a result of adverse weather conditions or climate changes, can have a short- and, sometimes, long-term impact on consumer spending. Events that impact consumers’ willingness or ability to travel and/or purchase our products while traveling have impacted our travel retail business, and may continue to do so in the future. A downturn in the economies in which we sell our products or a sudden disruption of business conditions in those economies where our travel retail business is located could adversely affect our net revenues and profitability.

If consumer purchases decrease, we may not be able to generate enough cash flow to meet our obligations and commitments. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to raise necessary funds. We cannot predict whether we would be able to undertake any of these actions to raise funds on a timely basis or on satisfactory terms.

A sudden disruption in business conditions or a general economic downturn may affect the financial strength of our customers that are retailers, which could adversely affect our financial results.

A decline in consumer purchases tends to impact our retailer customers. The financial difficulties of a retailer could cause us to curtail or eliminate business with that customer. We may also decide to assume more credit risk relating to the receivables from that retailer. Our inability to collect receivables from one of our largest customers that is a retailer, or from a group of these customers, could have a material adverse effect on our business, results of operations and financial condition. If a retailer were to go into liquidation, we could incur additional costs if we choose to purchase the retailer’s inventory of our products to protect brand equity.

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Volatility in the financial markets could have a material adverse effect on our business.

While we currently generate significant cash flows from our ongoing operations and have access to global credit markets through our various financing activities, credit markets may experience significant disruptions. Deterioration in global financial markets could make future financing difficult or more expensive. If any financial institutions that are parties to our credit facility or other financing arrangements, such as interest rate or foreign currency exchange hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or could leave us unhedged against certain interest rate or foreign currency exposures, which could have an adverse impact on our business, financial condition and results of operations. In addition, the cost of certain items required by our operations, such as raw materials, transportation and freight, may be affected by changes in the value of the relevant currencies in which their price or cost is quoted or analyzed. We hedge certain exposures to foreign currency exchange rates arising in the ordinary course of business in order to mitigate the effect of such fluctuations.

Our debt facilities require us to comply with specified financial covenants that may restrict our current and future operations and limit our flexibility and ability to respond to changes or take certain actions.

We remain dependent upon others for our financing needs, and our debt agreements contain restrictive covenants. Our 2013 Credit Agreement (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition-Liquidity and Capital Resources—Debt”) contains covenants requiring us to maintain specific financial ratios and contain certain restrictions on us with respect to guarantees, liens, sales of certain assets, consolidations and mergers, affiliate transactions, indebtedness, dividends and other distributions and changes of control. There is a risk that these covenants could constrain execution of our business strategy and growth plans, including acquisitions. Should we decide to pursue an acquisition that requires financing that would result in a violation of our existing debt covenants, refusal of our current lenders to permit waivers or amendments to our existing covenants could delay or prevent consummation of our plans. The 2013 Credit Agreement will expire in April 2018 and the 2015 Credit Agreement (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources—Debt”) is payable in full in March 2018. There is no assurance that alternative financing or financing on as favorable terms will be found when these agreements expire.

We will assume a significant amount of debt as a result of our transaction with P&G, and anticipate seeking to refinance our own debt, which may not occur on favorable terms, or at all.

At the close of the transaction with P&G, we would, by operation of the merger, become responsible for the P&G Beauty Business’ debt, which is contractually agreed to be $2.9 billion, subject to certain adjustments, which may result in such amounts being higher. The terms of this debt will permit us to incur a substantial amount of additional indebtedness, including secured debt. The existing debt together with the incurrence of additional indebtedness could have important consequences for our creditors. Additionally, as part of this transaction, we anticipate refinancing our existing debt. There can be no assurance that we will be able to refinance our existing indebtedness on terms favorable to us, or at all.

We are subject to risks related to our international operations.

We operate on a global basis, and the majority of our fiscal 2015 net revenues was generated outside the U.S. We maintain offices in over 35 countries and have key operational facilities located outside the U.S. that manufacture, warehouse or distribute goods for sale throughout the world. As of June 30, 2015, approximately 69% of our total net revenues, and approximately 31% of our long-lived assets were attributable to our foreign operations. Non-U.S. operations are subject to many risks and uncertainties, including:



	Ÿ		fluctuations in foreign currency exchange rates, which have affected and may in the future affect our results of operations, reported earnings, the value of our foreign assets, the relative prices at which we and foreign competitors sell products in the same markets and the cost of certain inventory and non-inventory items required by our operations;

	Ÿ		changes in foreign laws, regulations and policies, including restrictions on foreign investment, trade, import and export license requirements, quotas, trade barriers and other protection measures imposed by foreign countries, and tariffs and taxes, as well as changes in U.S. laws and regulations relating to foreign trade and investment;

	Ÿ		difficulties and costs associated with complying with, and enforcing remedies under, a wide variety of complex domestic and international laws, treaties and regulations, including the FCPA, and different regulatory structures and unexpected changes in regulatory environments;

	Ÿ		lack of well-established or reliable legal and administrative systems;

	Ÿ		failure to effectively and immediately implement processes and policies across our diverse operations and employee base; and

	Ÿ		adverse weather conditions, social and economic conditions, terrorist attacks, war or other military action or violent revolution, such as recent events in Greece, Ukraine, Russia and the Middle East, and other geopolitical conditions.

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We intend to reinvest undistributed earnings and profits from our foreign operations indefinitely, except where we are able to repatriate these earnings to the U.S. without material incremental tax expenditures. Any repatriation of funds currently held in foreign jurisdictions may result in higher effective tax rates. In addition, there have been proposals to change U.S. tax laws that would significantly impact how U.S. multinational corporations are taxed on foreign earnings. We cannot predict whether or in what form this proposed legislation may pass. If enacted, such legislation could have a material adverse impact on our tax expense and cash flow. Further, certain U.S. tax provisions have expired that, if not retroactively extended, could materially and adversely affect the tax positions of many U.S. multinationals, including ourselves.

Substantially all of our cash and cash equivalents that result from these earnings remain outside the U.S. As of June 30, 2015, 2014 and 2013, cash and cash equivalents in foreign operations included $337.7 million, $1.233 billion and $914.2 million, or 99%, 99.6% and 99.3% of aggregate cash and cash equivalents, respectively.

We are also subject to the interpretation and enforcement by governmental agencies of other foreign laws, rules, regulations or policies, including any changes thereto, such as restrictions on trade, import and export license requirements, privacy and data protection laws, and tariffs and taxes, which may require us to adjust our operations in certain markets where we do business. We face legal and regulatory risks in the U.S. and, in particular, cannot predict with certainty the outcome of various contingencies or the impact that pending or future legislative and regulatory changes may have on our business. It is not possible to gauge what any final regulation may provide, its effective date or its impact at this time. These risks could have a material adverse effect on our business, prospects, financial condition and results of operations.

Fluctuations in currency exchange rates may negatively impact our financial condition and results of operations.

Exchange rate fluctuations may affect the costs that we incur in our operations. The main currencies to which we are exposed are the euro, the British pound, the Polish zloty, the Czech Republic koruna, the Australian dollar and the Canadian dollar. The exchange rates between these currencies and the U.S. dollar in recent years have fluctuated significantly and may continue to do so in the future. A depreciation of these currencies against the U.S. dollar will decrease the U.S. dollar equivalent of the amounts derived from foreign operations reported in our consolidated financial statements and an appreciation of these currencies will result in a corresponding increase in such amounts. The cost of certain items, such as raw materials, transportation and freight, required by our operations may be affected by changes in the value of the relevant currencies. To the extent that we are required to pay for goods or services in foreign currencies, the appreciation of such currencies against the U.S. dollar will tend to negatively impact our financial condition and results of operations.

Our failure to protect our reputation, or the failure of our partners to protect their reputations, could have a material adverse effect on our brand images.

Our ability to maintain our reputation is critical to our various brand images. Our reputation could be jeopardized if we fail to maintain high standards for product quality and integrity or if we, or the third parties with whom we do business, do not comply with regulations or accepted practices. Any negative publicity about these types of concerns may reduce demand for our products. Failure to comply with ethical, social, product, labor and environmental standards, or related political considerations, such as animal testing, could also jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts. Failure to comply with local laws and regulations, including applicable U.S. trade sanctions, to maintain an effective system of internal controls or to provide accurate and timely financial statement information could also hurt our reputation. See “—Our operations and acquisitions in certain foreign areas expose us to political, regulatory, economic and reputational risks” and “—We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations.” We are also dependent on the reputations of our brand partners and licensors, which can be affected by matters outside of our control. Damage to our reputation or the reputations of our brand partners or licensors or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations, financial condition and cash flows, as well as require additional resources to rebuild our reputation.

Our business is subject to seasonal variability.

Our sales generally increase during our second fiscal quarter as a result of increased demand by retailers associated with the holiday season. Accordingly, our financial performance, sales, working capital requirements, cash flow and borrowings generally experience variability during the three to six months preceding the holiday period. Any substantial decrease in net revenues, in particular during periods of increased sales due to seasonality, could have a material adverse effect on our financial condition, results of operations and cash flows.

We sell our products in a continually changing retail environment.

The retail industry, particularly in the U.S. and Europe, has continued to experience consolidation and other ownership changes, and the business environment for selling fragrances, color cosmetics, and skin & body care products may change further. During the last several years, significant consolidation has occurred. The trend toward consolidation, particularly in developed markets such as the U.S. and Western Europe, has resulted in us becoming increasingly dependent on key retailers that control a higher percentage of retail locations, including large-format retailers and consolidated entities that own retail

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chains in both the mass and prestige distribution channels, which have increased their bargaining strength. Major retailers may, in the future, continue to consolidate, undergo restructuring or realign their affiliations, which could decrease the number of stores that sell our products or increase ownership concentration within the retail industry. Further business combinations among retailers may impede our growth and the implementation of our business strategy. In addition, the highly competitive U.S. discount and drug store environment has resulted in financial difficulties and store closings for a number of retailers, several of whom have liquidated or been acquired as a result. During the first half of fiscal 2014, retailers, particularly in North America, reduced to a substantial extent their inventories of products, including our products. In fiscal 2015, no retailer accounted for more than 10% of our global net revenues; however, certain retailers accounted for more than 10% of net revenues within certain geographic markets, including the U.S.

This trend towards consolidation has also resulted in an increased risk related to the concentration of our customers with respect to which we do not have long-term sales agreements or other contractual assurances as to future sales. Accordingly, these customers could reduce their purchasing levels or cease buying products from us at any time and for any reason, which, in addition to a general deterioration of our customers’ business operations, could have a corresponding material adverse effect on our business.

As the retail industry changes, consumers may prefer to purchase their fragrances and cosmetics from other distribution channels than those we use, and we may not be as successful in penetrating those channels as we currently are in other channels, or as successful as our competitors are. For example, we have historically not sold products through the direct sales channel in the markets where it is significant, and we are less experienced in e-commerce, direct response and door-to-door than in our more traditional distribution channels. Assuming e-commerce, direct response and door-to-door sales continue to grow worldwide, we will need to continue to develop strategies for these channels in order to remain competitive. If we are not successful in the direct sales channel, we may experience lower than expected revenues or be required to recognize impairments. See “—Our goodwill and other assets have been subject to impairment and may continue to be subject to impairment in the future.”

In addition, as we expand into new markets, other distribution channels that we do not utilize may be more significant. Although we have been able to recognize and adjust to many such changes in the retail industry to date, we can make no assurance as to our ability to make such adjustments in the future or the future effect of any such changes, including any potential material adverse effect such changes could have on our business, results of operations and financial condition. This concern is also valid with respect to new markets with which we are less familiar.

A disruption in operations could adversely affect our business.

As a company engaged in manufacturing and distribution on a global scale, we are subject to the risks inherent in such activities, including industrial accidents, environmental events, strikes and other labor disputes, disruptions in supply chain or information systems, loss or impairment of key manufacturing sites, product quality control, safety, licensing requirements and other regulatory issues, as well as natural disasters, pandemics, border disputes, acts of terrorism, and other external factors over which we have no control. The loss of, or damage to, any of our manufacturing facilities or distribution centers could have a material adverse effect on our business, results of operations and financial condition.

Our decision to outsource certain functions means that we are dependent on the entities performing those functions.

As part of our long-term strategy, we are continually looking for opportunities to provide essential business services in a more cost-effective manner. In some cases, this requires the outsourcing of functions or parts of functions that can be performed more effectively by external service providers. We have outsourced significant portions of our management for our logistics and European and U.S. distribution centers, as well as certain technology-related functions, to third-party service providers. The dependence on a third party could lessen our control over deliveries to our customers. For example, in the third quarter of fiscal 2013 we transitioned to a new third-party logistics provider in Europe, which negatively impacted our sales. While we believe we conduct appropriate due diligence before entering into agreements with outsourcing entities, the failure of one or more such entities to provide the expected services, provide them on a timely basis or provide them at the prices we expect, or the costs incurred in returning these outsourced functions to being performed under our management and direct control, may have a material adverse effect on our results of operations or financial condition.

Third-party suppliers provide, among other things, the raw materials used to manufacture our products, and the loss of these suppliers, damage to our third-party suppliers’ reputations or a disruption or interruption in the supply chain may adversely affect our business.

We manufacture and package a majority of our products. Raw materials, consisting chiefly of essential oils, chemicals, containers and packaging components, are purchased from various third-party suppliers. The loss of multiple suppliers or a significant disruption or interruption in the supply chain could have a material adverse effect on the manufacturing and packaging of our products. Increases in the costs of raw materials or other commodities may adversely affect our profit margins if we are unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies in

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manufacturing and distribution. In addition, failure by our third-party suppliers to comply with ethical, social, product, labor and environmental laws, regulations or standards, such as conflict minerals requirements, or their engagement in politically or socially controversial conduct, such as animal testing, could negatively impact their reputations. Any of these failures or behaviors could lead to various adverse consequences, including damage to our reputation, decreased sales and consumer boycotts.

Furthermore, the P&G Beauty Business has contracts with third-party suppliers, vendors, customers, landlords and other business partners which may require us or it to obtain consents from these other parties in connection with our transaction with P&G. If these consents cannot be obtained, we or the P&G Beauty Business may suffer a loss of potential future revenues and may lose rights that are material to our or its respective businesses and the business of the combined company. In addition, third parties with whom we or the P&G Beauty Business currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the transaction. Any such disruptions could limit our ability to achieve the anticipated benefits of the transaction.

We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic and financial information, to manage a variety of business processes and activities, and to comply with regulatory, legal and tax requirements. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers and suppliers around the world. These information technology systems, some of which are managed by third parties that we do not control, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events. If our information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our product sales, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results.

In addition, if we are unable to prevent security breaches, we may suffer financial and reputational damage or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers or suppliers. In addition, the unauthorized disclosure of nonpublic sensitive information could lead to the loss of intellectual property or damage our reputation and brand image or otherwise adversely affect our ability to compete.

Our success depends, in part, on our employees.

Our success depends, in part, on our ability to retain our employees, including our key personnel, such as our executive officers and senior management team and our research and development and marketing personnel. The unexpected loss of one or more of our key employees could adversely affect our business. Our success also depends, in part, on our continuing ability to identify, hire, train and retain other highly qualified personnel. Competition for these employees can be intense, and although our key personnel have signed non-compete agreements, it is possible that these agreements would be unenforceable in some jurisdictions, permitting employees in those jurisdictions to transfer their skills and knowledge to the benefit of our competitors with little or no restriction. We may not be able to attract, assimilate or retain qualified personnel in the future, and our failure to do so could adversely affect our business. These risks may be exacerbated by the stresses associated with the implementation of our strategic plan, our recently announced reorganization, recent changes in our senior management team and other initiatives.

Our success depends, in part, on the quality, efficacy and safety of our products.

Product safety or quality failures, actual or perceived, or allegations of product contamination, even when false or unfounded, or inclusion of regulated ingredients could tarnish the image of our brands and could cause consumers to choose other products. Allegations of contamination or other adverse effects on product safety or suitability for use by a particular consumer, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected production was distributed. Such issues or recalls could negatively affect our profitability and brand image.

If our products are perceived to be defective or unsafe, or if they otherwise fail to meet our consumers’ standards, our relationships with customers or consumers could suffer, the appeal of one or more of our brands could be diminished, and we could lose sales or become subject to liability claims. In addition, safety or other defects in our competitors’ products could reduce consumer demand for our own products if consumers view them to be similar. Any of these outcomes could result in a material adverse effect on our business, financial condition and results of operations.

Our success depends, in part, on our ability to successfully manage our inventories.

We currently engage in a program seeking to improve control over our inventories. This program has identified, and may continue to identify, inventories that are not saleable in the ordinary course, and that may have an adverse effect on our

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financial results. Moreover, there is no assurance that any inventory management program will be successful. If we misjudge consumer preferences or demands or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. If we are not successful in managing our inventory, our business, financial condition and results of operations could be adversely affected.

Changes in laws, regulations and policies that affect our business or products could adversely affect our financial results.

Our business is subject to numerous laws, regulations and policies. Changes in the laws, regulations and policies, including the interpretation or enforcement thereof, that affect, or will affect, our business or products, including changes in accounting standards, tax laws and regulations, environmental or climate change laws, restrictions or requirements related to product content, labeling and packaging, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result, could adversely affect our financial results.

Our new product introductions may not be as successful as we anticipate, which could have a material adverse effect on our business, financial condition and/or results of operations.

We have a rigorous process for the continuous development and evaluation of new product concepts, led by executives in marketing, sales, research and development, product development, operations, law and finance. Each new product launch, including those resulting from this new product development process, carries risks, as well as the possibility of unexpected consequences, including:



	Ÿ		our advertising, promotional and marketing strategies for our new products may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption;

	Ÿ		product purchases by our consumers may not be as high as we anticipate;

	Ÿ		we may experience out-of-stocks and/or product returns exceeding our expectations as a result of our new product launches or retailer space reconfigurations or our net revenues may be impacted by retailer inventory management or changes in retailer pricing or promotional strategies;

	Ÿ		we may incur costs exceeding our expectations as a result of the continued development and launch of new products, including, for example, advertising, promotional and marketing expenses, sales return expenses or other costs related to launching new products;

	Ÿ		we may experience a decrease in sales of certain of our existing products as a result of newly-launched products; and

	Ÿ		our product pricing strategies for new product launches may not be accepted by our retail customers or their consumers, which may result in our sales being less than anticipated.

The illegal distribution and sale by third parties of counterfeit versions of our products or the unauthorized diversion by third parties of our products could have a negative impact on our reputation and business.

Third parties may illegally distribute and sell counterfeit versions of our products, which may be inferior or pose safety risks. Consumers could confuse our products with these counterfeit products, which could cause them to refrain from purchasing our brands in the future and in turn could adversely affect our business. While many fragrance brands are distributed in either the prestige or mass market, over the past several years “prestige” brands have become increasingly available in other outlets through unauthorized means. The presence of counterfeit versions of our products in the market and of prestige products in mass distribution channels could also dilute the value of our brands or otherwise have a negative impact on our reputation and business.

We believe our trademarks, copyrights, patents, and other intellectual property rights are extremely important to our success and our competitive position. While we devote significant resources to the registration and protection of our intellectual property and the protection of our brand image and are aggressive in pursuing entities involved in the trafficking and sale of counterfeit products and the unauthorized diversion of our products, we have not been able to prevent, and may in the future be unable to prevent, the imitation and counterfeiting of our products, the infringement of our trademarks or the unauthorized diversion of our products. In recent years, there has been an increase in the availability of counterfeit goods, including fragrances, in various markets by street vendors and small retailers, as well as on the internet. There can be no assurance that counterfeiting of our products and the unauthorized diversion of our prestige products into mass distribution channels will not have an adverse impact on our business, prospects, financial condition or results of operations.

We are subject to environmental, health and safety laws and regulations that could affect our business or financial results.

We are subject to various foreign, federal, provincial, state, municipal and local environmental, health and safety laws and regulations relating to or imposing liability with respect to, among other things, the use, storage, handling, transportation and disposal of hazardous substances and wastes as well as the emission and discharge of such into the ground, air or water at our facilities or off-site, and the registration and evaluation of chemicals. Certain environmental laws and regulations also may

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impose liability for the costs of cleaning up contamination, without regard to fault, on current or previous owners or operators of real property and any person who arranges for the disposal or treatment of hazardous substances, regardless of whether the affected site is owned or operated by such person. We are currently involved in investigation or removal and/or remediation activities at certain sites. For example, prior to its acquisition by us, Del Labs sold its LaCross facility in Newark, New Jersey. The buyer gave Del Labs certain indemnities and agreed to remediate the property. Coty received a demand from the New Jersey Department of Environmental Protection to complete the remediation of the property and, in response, we initiated litigation against the buyer in New Jersey Superior Court for the appointment of a statutory receiver of the property in connection with the remediation. The court has held that the buyer is responsible for the remediation of the property, although the court has not yet issued a final decision. While there can be no assurances as to remediation costs, we do not expect the remediation to result in material expenditures. Third parties may also make claims for personal injuries and property damage associated with releases of hazardous substances from these or other sites in the future.

Environmental laws and regulations are complex, change frequently and have tended to become increasingly stringent and, as a result, environmental liabilities, costs or expenditures could adversely affect our financial results or results of operations.

We are involved in a class action lawsuit and other litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our business, financial condition, or results of operations.

We are currently the subject of a stockholder class action suit in connection with our initial public offering. While we believe this lawsuit is without merit and intend to vigorously defend against it, there can be no assurances that a favorable final outcome will be obtained and defending any lawsuit is costly and can impose a significant burden on management and employees.

In addition to the class action lawsuit, we are involved in other lawsuits in the ordinary course of our business. Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal or in payments of substantial monetary damages or fines, or we may decide to settle lawsuits on similarly unfavorable terms, either of which could adversely affect our business, financial conditions, or results of operations.

Our stock repurchase program could affect our stock price and increase stock price volatility.

Any repurchases pursuant to our stock repurchase program initially announced on February 14, 2014 could affect our stock price and increase volatility. The existence of a stock repurchase program could potentially reduce the market liquidity for our stock. Additionally, we are permitted to and could discontinue our stock repurchase program at any time and any such discontinuation could cause the market price of our stock to decline.

We are controlled by JAB Cosmetics, B.V. (“JABC”), Lucresca SE (“Lucresca”), and Agnaten SE (“Agnaten”). As a result of their control of us, they have the ability to prevent or cause a change in control or approve, prevent or influence certain actions by us .

As of August 17, 2015, we are controlled by JABC. Lucresca and Agnaten indirectly share voting and investment control over the shares held by JABC. JABC holds 100% of our outstanding Class B Common Stock, 1.5% of our Class A Common Stock and 96% of the combined voting power of our outstanding common stock. Each share of our Class B common stock has ten votes per share, and our Class A Common Stock has one vote per share. As a result, JABC, Lucresca and Agnaten have the ability to exercise control over decisions requiring stockholder approval, including the election of directors, amendments to our Certificate of Incorporation and significant corporate transactions, such as a merger or other sale of the Company or its assets. JABC, Lucresca and Agnaten have the ability to make these decisions regardless of whether others believe that such change or transaction is in our best interests. So long as JABC or affiliates of JABC continue to beneficially own a sufficient number of shares of Class B Common Stock, even if they own significantly less than 50% of the shares of our outstanding common stock, they will continue to be able to effectively control stockholder decisions.

This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of the Company, could deprive stockholders of an opportunity to receive a premium for their Class A Common Stock as part of a sale of the Company and may negatively affect the market price of our Class A Common Stock. Also, JABC and its affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete indirectly with us. JABC or its affiliates may also pursue acquisition opportunities that are complementary to our business and, as a result, those acquisition opportunities may not be available to us.

We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, are relying on exemptions from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not “controlled companies”.

JABC, Lucresca and Agnaten collectively own more than 50% of the total voting power of our common shares and, as a result, we are a “controlled company” under the New York Stock Exchange (“NYSE”) corporate governance standards. As a

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controlled company, we are exempt under the NYSE standards from the obligation to comply with certain NYSE corporate governance requirements, including the requirements:



	Ÿ		that a majority of our board of directors consists of independent directors;

	Ÿ		that we have a nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

	Ÿ		that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

While we have voluntarily caused our Board to have a majority of independent directors, our Remuneration and Nomination Committee is not comprised solely of independent directors. As a result of our use of the “controlled company” exemptions, investors will not have the same protection afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

W e occupy numerous offices, manufacturing and distribution facilities in the U.S. and abroad. Our principal executive office is located in New York, New York. We have five research and development facilities worldwide, located in the United States, Europe and China. We also operate manufacturing facilities in the United States, Europe and China. In fiscal 2012, we created a fragrance “Center of Excellence” for research and development and centralized global supply chain management in Geneva, Switzerland.

We consider our properties to be generally in good condition and believe that our facilities are adequate for our operations and provide sufficient capacity to meet anticipated requirements. The following table sets forth our principal owned and leased corporate, manufacturing and research and development facilities as of August 17, 2015. The leases expire at various times subject to certain renewal options at our option.




Location/Facility		Use
New York, New York (leased)		Corporate/Commercial
Phoenix, Arizona (multiple locations) (leased)		Manufacturing
North Hollywood, California (multiple locations) (leased)		Manufacturing/Commercial/R&D
Morris Plains, New Jersey (leased)		R&D
Sanford, North Carolina (owned)		Manufacturing
Ashford, England (land leased, building owned)		Manufacturing
Chartres, France (owned)		Manufacturing
Paris, France (2 locations) (leased)		Corporate/Commercial
Geneva, Switzerland (leased)		Corporate/Commercial/R&D
Monaco (2 locations) (leased)		Manufacturing/R&D
Granollers, Spain (owned)		Manufacturing
Jiangsu Province, China (land leased, building owned)		Manufacturing/Commercial/R&D

Item 3. Legal Proceedings.

On June 28, 2013, we submitted our final voluntary disclosure to the U.S. Commerce Department’s Bureau of Industry and Security’s Office of Export Enforcement (“OEE”) which disclosed the results of our internal due diligence review conducted with the advice of outside counsel regarding certain export transactions from January 2008 through March 2012. In particular, we disclosed information relating to overall compliance with U.S. export control laws by our majority-owned subsidiary in the UAE, and the nature and quantity of its re-exports to Syria that we believe may constitute violations of the U.S. Export Administration Regulations (“EAR”). The disclosure addressed the above described findings and the remedial actions we have taken to date. On January 6, 2014, we received a warning letter from the OEE stating that the bureau has closed its investigation of our final voluntary disclosure and determined not to pursue administrative or criminal prosecution even though the transactions violated EAR. The OEE imposed no financial penalties.

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Our June 28, 2013 letter to OEE also disclosed that prior to January 2010 some of our subsidiary’s sales to Syria were made to a party that was designated as a target of U.S. economic sanctions by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). We did not believe these sales constituted a violation of U.S. trade sanctions administered by OFAC, however, we also notified OFAC of our final voluntary disclosure to the OEE. On May 12, 2015, OFAC decided to resolve the matter of these sales by issuing a cautionary letter and declining to impose a financial penalty. The cautionary letter does not preclude OFAC from taking further action if we violate OFAC administered sanctions in the future.

On June 28, 2013, we also voluntarily disclosed to the U.S. Department of Commerce’s Bureau of Industry and Security’s Office of Antiboycott Compliance (“OAC”) the final results of our internal due diligence review. In particular, we disclosed information relating to overall compliance with U.S. antiboycott laws by our majority-owned subsidiary in the UAE, including with respect to the former inclusion of a legend on invoices, confirming that the corresponding goods did not contain materials of Israeli origin. A number of the invoices involved U.S. origin goods. We believe the inclusion of this legend may constitute violations of U.S. antiboycott laws. The disclosure addressed the above described findings and the remedial actions we have taken to date. OAC continues to review our voluntary disclosure. We cannot predict when OAC will complete its review.

Penalties for EAR violations can be significant and civil penalties can be imposed on a strict liability basis, without any showing of knowledge or willfulness. OAC has wide discretion to settle claims for violations. We believe that it is reasonably possible that OAC may impose a penalty or penalties that would result in a material loss. Irrespective of any penalty, we could suffer other adverse effects on our business as a result of any violations or the potential violations, including legal costs and harm to our reputation, and we also will incur costs associated with our efforts to improve our compliance procedures. We have not established a reserve for potential penalties. We do not know whether OAC will assess a penalty or what the amount of any penalty would be, if a penalty or penalties were assessed. See “Risk Factors — We may incur penalties and experience other adverse effects on our business as a result of possible EAR violations” and Note 25, “Commitments and Contingencies” in our notes to Consolidated Financial Statements.

In fiscal 2014, two putative class action complaints were filed in the United States District Court for the Southern District of New York against the Company, our directors and certain of our executive officers, and the underwriters of the IPO alleging violations of the federal securities laws in connection with our initial public offering (“IPO”). Those lawsuits were consolidated under the caption In re Coty Inc. Securities Litigation (“Securities Litigation”), and following the court’s appointment of lead plaintiffs and lead counsel, a consolidated and amended complaint (the “Securities Complaint”) was filed on July 7, 2014. The Securities Complaint asserts claims against Coty Inc., its directors and certain of its executive officers under Sections 11, 12 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), and seeks, on behalf of persons who purchased our Class A Common Stock in the IPO, damages of an unspecified amount and equitable or injunctive relief.

On September 9, 2014, Plaintiffs voluntarily dismissed their claims against the underwriter defendants without prejudice. The Securities Complaint was further amended on October 18, 2014. We have filed a motion to dismiss the Securities Complaint which has been fully briefed since December 2014. The motion to dismiss is currently pending. We believe the Securities Complaint is without merit and intend to vigorously defend it.

In addition, we are involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to our business. In 2007, prior to its acquisition by Coty, Del Laboratories, Inc. (“Del Labs”) sold its LaCross manufacturing facility in Newark, New Jersey. The buyer gave Del Labs certain indemnities and assumed responsibility for environmental remediation of the property as required by the New Jersey Department of Environmental Protection (“NJDEP”). In February 2013, we received a demand from NJDEP to complete the remediation of the property. In May 2013, we initiated litigation against the buyer in New Jersey Superior Court for the appointment of a statutory receiver of the property in connection with the remediation as well as for indemnification and reimbursement of our legal fees. In February 2015, the court held that the buyer is responsible for the remediation and the reimbursement of certain of our legal fees, although the court has not yet issued a final decision. While we cannot predict the final outcome of the matter, management believes that the outcome of this matter and other current litigation, regulatory actions and legal proceedings will not have a material effect upon our business, results of operations, financial condition or cash flows. However, management’s assessment of our current litigation, regulatory actions and other legal proceedings could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against us not presently known to us or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our Class A Common Stock is listed and publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “COTY” as of June 13, 2013.

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	Fiscal 2015						Fiscal 2014
	High		Low		Cash Dividends		High		Low		Cash Dividends
July 1 - September 30	$	18.47	$	16.39	$	—	$	17.74	$	14.46	$	—
October 1 - December 31	21.00		15.74		0.20		16.68		14.63		0.20
January 1 - March 31	24.71		18.33		—		15.92		12.83		—
April 1 - June 30	32.62		23.26		—		18.95		14.85		—

Our Common Stock was not listed on the New York Stock Exchange or any other exchange prior to June 13, 2013. Our Class B Common Stock is not listed or publicly traded on any exchange.

On June 26, 2015, we issued 134,771 shares of our Class A Common Stock, in addition to the 15.4 million shares of Class A Common Stock issued on April 1, 2015, as consideration for the Bourjois acquisition in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereunder for a transaction by an issuer not involving any public offering.

Stockholders of Record

As of June 30, 2015 there were 22 stockholders of record of our Class A Common Stock and one stockholder of record of our Class B Common Stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

Dividend Policy

Subject to legally available funds, we intend to pay an annual cash dividend on our Class A Common Stock and Class B Common Stock in the second quarter of each fiscal year. Our ability to pay dividends has certain risks and limitations, and we cannot assure you that any dividends will be paid in the anticipated amounts and frequency, or at all. Our Board of Directors retains the right to change our intention to pay dividends at any time. The declaration and payment of all future dividends, if any, will be at the sole discretion of our Board of Directors.

In the first quarter of fiscal 2014, we declared a cash dividend of $0.20 per share, or approximately $77.6 million, on our Class A Common Stock and Class B Common Stock, of which $76.9 million was paid in the second quarter of fiscal 2014 to holders of record on October 11, 2013. The remaining $0.7 million is paid as shares of restricted stock and restricted stock units vest or settle, as applicable.

In the first quarter of fiscal 2015, we declared a cash dividend of $0.20 per share, or approximately $71.9 million on our Class A and Class B Common Stock. Of the $71.9 million, $71.0 million was paid in the second quarter of fiscal 2015 to holders of record of Class A and Class B Common Stock on October 1, 2014. The remaining $0.9 million is paid as restricted stock units settle.

As of June 30, 2015, we are required to comply with certain covenants contained within the 2013 Credit Agreement (as defined in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources—Debt”) and the 2015 Credit Agreement. These covenants within the Agreements contain customary representations and warranties as well as customary affirmative and negative covenants, including but not limited to, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources—Debt.”

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Market Performance Graph

Comparison of Cumulative Total Return Since Date of IPO ^(a)

Coty Inc., The S&P 500 Index, and Fiscal 2015 Peer Group ^(b)

^(a) Total return assumes reinvestment of dividends at the closing price at the end of each quarter, since June 13, 2013, the date of the IPO.

^(b) The Peer Group includes L'Oréal S.A., Avon Products, Inc., Estee Lauder Companies, Inc., Revlon, Inc., and Elizabeth Arden, Inc.

The Market Performance Graph above assumes a $100.00 investment on June 13, 2013, in Coty Inc.’s common stock (on the date of the IPO), the S&P 500 Index and the Peer Group. The dollar amounts indicated in the graph above and in the chart below are as of the last trading day in the quarter.

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Equity Compensation Plan Information



Plan Category
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) )
Equity compensation plans approved by security holders
Options	12,134,744	$	11.56
Series A Preferred Stock	1,243,266	27.97
Restricted Stock Units	4,257,266	n/a
Subtotal	17,635,276	—		12,519,399
Equity compensation plans not approved by security holders
Options ^(a)	1,811,145	$	9.75	—
Series A Preferred Stock ^(b)	645,921	27.97
Phantom Units ^(c)	49,432	n/a
Subtotal	2,506,498	—		—
Total	20,141,774			12,519,399

n/a

is not applicable

(a)

Executive Ownership Plan

From fiscal 2008 until December 2012, we invited certain key executives to purchase shares of our common stock, and receive stock options to match such purchases, through our Executive Ownership Plan. The Executive Ownership Plan was replaced by the Platinum Program in December 2012. Executives who participated in the Executive Ownership Plan could purchase an amount of restricted shares of our common stock, equal to their APP award for the prior fiscal year. If an executive purchased restricted shares under the Executive Ownership Plan, such executive would receive matching stock options. All matching stock options have five-year cliff vesting tied to continued employment with us and continued ownership of the restricted shares that the matching stock options match.

(b)

On April 14, a duly constituted committee of the Board of Directors of the Company unanimously approved employment inducement awards of Series A Preferred Stock in the amount of 645,921 shares to Camillo Pane who had been announced as the Company’s new EVP of Category Development.

(c)

On December 1, 2014, the Board of Directors granted Lambertus J.H. Becht, our Chairman of the Board and interim Chief Executive Officer, an award of 49,432 phantom units. The award to Mr. Becht was outside of the Company’s Equity and Long-Term Incentive Plan. At the time of grant, the phantom units had a value of $1,000,000 based on the closing price of the Company’s Class A Common Stock on December 1, 2014, and each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock. The phantom units vest on the fifth anniversary of the grant date and, in the event of a change in control or Mr. Becht’s death or disability, the phantom units shall vest immediately. Within 30 days of the grant date, Mr. Becht had the ability to elect whether to receive payment in respect of the phantom units in cash or shares of Class A Common Stock. Mr. Becht elected to receive payment in respect of the phantom units in shares of Class A Common Stock.

Issuer Purchases of Equity Securities

No shares of Class A or Class B Common Stock were repurchased during the fiscal quarter ended June 30, 2015.

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Item 6. Selected Financial Data.



(in millions, except per share data)	Year Ended June 30,
(in millions, except per share data)	2015			2014			2013			2012			2011 ^(a)
Consolidated Statements of Operations Data:
Net revenues	$	4,395.2		$	4,551.6		$	4,649.1		$	4,611.3		$	4,086.1
Gross profit	2,638.2			2,685.9			2,788.8			2,787.3			2,446.1
Acquisition-related Costs	34.1			0.7			8.9			10.3			20.9
Asset impairment charges	—			316.9			1.5			575.9			—
Operating income (loss)	395.1			25.7			394.4			(209.5		)	280.9
Interest expense—related party	—			—			—			—			5.9
Interest expense, net	73.0			68.5			76.5			89.6			85.6
Loss on early extinguishment of debt	88.8			—			—			—			—
Other expense (income), net	—			1.3			(0.8		)	32.0			4.4
Income (Loss) before income taxes	233.3			(44.1		)	318.7			(331.1		)	185.0
(Benefit) provision for income taxes	(26.1		)	20.1			116.8			(37.8		)	95.1
Net income (loss)	259.4			(64.2		)	201.9			(293.3		)	89.9
Net income attributable to noncontrolling interests	15.1			17.8			15.7			13.7			12.5
Net income attributable to redeemable noncontrolling interests	11.8			15.4			18.2			17.4			15.7
Net income (loss) attributable to Coty Inc.	232.5			(97.4		)	168.0			(324.4		)	61.7
Per Share Data:
Weighted-average common shares
Basic	353.3			381.7			381.7			373.0			329.4
Diluted	362.9			381.7			396.4			373.0			339.1
Cash dividends declared per common share	$	0.20		$	0.20		$	0.15		$	—		$	0.10
Net income (loss) attributable to Coty Inc. per common share:
Basic	$	0.66		$	(0.26	)	$	0.44		$	(0.87	)	$	0.19
Diluted	0.64			(0.26		)	0.42			(0.87		)	0.18



(in millions)	Year Ended June 30,
(in millions)	2015			2014			2013			2012			2011 ^(a)
Consolidated Cash Flows Data:
Net cash provided by operating activities	$	526.3		$	536.5		$	463.9		$	589.3		$	417.5
Net cash (used in) investing activities	(171.2		)	(257.6		)	(229.9		)	(333.9		)	(2,252.5		)
Net cash (used in) provided by financing activities	(1,138.2		)	(5.7		)	69.0			(97.7		)	1,903.8



(in millions)	As of June 30,
(in millions)	2015		2014		2013		2012		2011 ^(a)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	341.3	$	1,238.0	$	920.4	$	609.4	$	510.8
Total assets	6,018.9		6,592.5		6,470.0		6,183.4		6,813.9
Total debt	2,634.7		3,293.5		2,630.2		2,460.3		2,622.4
Total Coty Inc. stockholders’ equity	969.8		843.8		1,494.0		857.2		1,361.9

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(a)	Fiscal 2011 data includes results from the acquisitions of TJOY Holdings Co., Ltd. (“TJoy”), Dr. Scheller Cosmetics AG, OPI Products, Inc., and Philosophy Acquisition Company, Inc. (“Philosophy”) as of the date of their respective acquisition during fiscal 2011.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the financial condition and results of operations of Coty Inc. and its majority and wholly-owned subsidiaries, should be read in conjunction with the information contained in the Consolidated Financial Statements and related notes included elsewhere in this document. When used in this discussion, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. The following discussion contains forward-looking statements. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion on the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements. The following discussion includes certain non-GAAP financial measures. See “Overview—Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated.

All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

OVERVIEW

We are a leading global beauty company. We manufacture and market beauty products in the Fragrances, Color Cosmetics and Skin & Body Care segments with distribution in over 130 countries and territories across both prestige and mass markets. We continue to operate in a challenging market environment particularly in mass fragrance and color cosmetics with heightened promotional activities in mass retail in Western Europe and the U.S. We are focused on growing our ten power brands around the world through innovation, strong support levels and excellence in market execution. With respect to our non-power brands, we expect to see a gradual decline of certain of those brands which are later in their lifecycle. We are also focused on expanding our geographic footprint into emerging markets and diversifying our distribution channels within existing geographies to increase market presence. As part of our expansion efforts, we entered into agreements to broaden distribution in Asia, South Africa, Brazil, the United Kingdom (“U.K.”), United Arab Emirates (“U.A.E.”) and Kingdom of Saudi Arabia (“K.S.A.”) during fiscal 2014 and 2015 and our results from certain of these efforts reflect incremental net revenues from joint venture consolidations and conversion from third party to direct distribution in these geographies.

We have determined that our operating and reportable segments are Fragrances, Color Cosmetics and Skin & Body Care (also referred to as “segments”). The reportable segments also represent our product groupings. During the three months ended September 30, 2014, in conjunction with the Organizational Redesign restructuring program (see Note 7, “Restructuring Costs” in Item 4, “Consolidated Financial Statements”), we reclassified revenues and costs associated with a brand from Fragrances to Skin & Body Care operating segment. This change has been reflected in each reporting period presented, both in the segment results below and in Note 11, “Goodwill and Other Intangible Assets, Net” in Item 4 “Consolidated Financial Statements”.

Non-GAAP Financial Measures

Adjusted Operating Income, Adjusted Income Before Income Taxes, Adjusted Net Income Attributable to Coty Inc. and Adjusted Net Income Attributable to Coty Inc. per Common Share are non-GAAP financial measures which we believe better enable management and investors to analyze and compare the underlying business results from period to period.

These non-GAAP financial measures should not be considered in isolation, or as a substitute for or superior to, financial measures calculated in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, and we provide reconciliations from the most directly comparable GAAP financial measures to the non-GAAP financial measures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Adjusted Operating Income, Adjusted Income Before Income Taxes, Adjusted Net Income Attributable to Coty Inc. and Adjusted Net Income Attributable to Coty Inc. per Common Share provide an alternative view of performance used by management and we believe that an investor’s understanding of our performance is enhanced by disclosing these adjusted performance measures. In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these adjusted performance measures. The following are examples of how these adjusted performance measures are utilized by management:


•	senior management receives a monthly analysis of our operating results that are prepared on an adjusted performance basis;


•	strategic plans and annual budgets are prepared on an adjusted performance basis; and

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•	senior management’s annual compensation is calculated, in part, using adjusted performance measures.

Adjusted Operating Income

We define Adjusted Operating Income as operating income adjusted for the following:

Share-based compensation adjustment:


•	For grants issued prior to June 12, 2013, the effective date of the share-based compensation plan amendments, the component of share-based compensation expense adjustment represents the difference between the grant date fair value and the fair value at June 12, 2013 using equity plan accounting.

•

Future adjustments for share-based compensation will consist of the difference between expense under equity plan accounting based on the grant date fair value and total estimated share-based compensation expense, which is based on (i) the fair value on June 12, 2013 for nonqualified stock option awards and restricted stock units (“RSUs”) and (ii) all costs associated with the special incentive awards granted in fiscal 2012 and 2011. The estimated aggregate expense is approximately $4, $1, and $0 for the fiscal years ended June 30, 2016, 2017, and 2018 respectively.


•	Share-based compensation adjustment may also include special transactions. Refer to “Management Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” for a full discussion of the share-based compensation adjustment; and

Other adjustments, which include:


•	asset impairment charges;


•	restructuring costs and business structure realignment programs;


•	acquisition-related costs and certain acquisition accounting impacts; and


•	other adjustments that we believe investors may find useful.

Adjusted Net Income and Net Income per Common Share Attributable to Coty Inc.

We define Adjusted Net Income Attributable to Coty Inc. as net income attributable to Coty Inc. adjusted for the following:


•	adjustment made to reconcile operating income to Adjusted Operating Income, net of the income tax effect thereon (see Adjusted Operating Income);


•	certain interest and other (income) expense, net of the income tax effect thereon, that we do not consider indicative of our performance; and


•	certain tax effects that are not indicative of our performance.

Adjusted basic and diluted Net Income Attributable to Coty Inc. per Common Share is calculated as:


•	Adjusted Net Income Attributable to Coty Inc. divided by


•	Adjusted weighted-average basic and diluted common shares using the treasury stock method.

Constant Currency

We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations (“constant currency”). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.

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Marketing and Advertising Costs

Management reviews marketing and advertising costs on an aggregated basis, including trade marketing spend activities and advertising and consumer promotional costs, which are included as a reduction to gross revenue and in selling, general and administrative expenses, respectively, based on the counterparty. Marketing and advertising costs for the year ended June 30, 2015 , 2014 and 2013 are presented below:



	Year Ended June 30,
	2015			2014			2013
Trade marketing spend activities	$	463.2		$	492.9		$	502.1
% of Net revenues	10.5		%	10.8		%	10.8		%
Advertising and consumer promotional costs	1,007.7			1,070.0			1,072.3
% of Net revenues	22.9		%	23.5		%	23.1		%
Total marketing and advertising costs	$	1,470.9		$	1,562.9		$	1,574.4
% of Net revenues	33.4		%	34.3		%	33.9		%

NET REVENUES

In fiscal 2015 , net revenues decreased 3% , or $156.4 , to $4,395.2 from $4,551.6 in fiscal 2014 . The decrease was primarily the result of a negative foreign currency exchange translations impact of 5%, partially offset by an increase in unit volume of 1% and a positive price and mix impact of 1%. In fiscal 2014 , we announced the discontinuation of our TJoy brand and the reorganization of our mass business in China (“China Optimization”). The discontinuation of TJoy and China Optimization had an immaterial impact on our consolidated results, however positively affected our Skin & Body Care segment in Asia Pacific. In the quarter ended June 30, 2015, we completed the acquisition of the Bourjois cosmetics brand (“Bourjois acquisition”), which positively impacted total net revenues in fiscal 2015 by 1%. The impact to net revenues from the Bourjois acquisition affected our Color Cosmetics segment primarily in EMEA. Excluding the negative impact of foreign currency exchange translations, the discontinuation of TJoy and China Optimization and the Bourjois acquisition, total net revenues in fiscal 2015 were consistent with total net revenues in fiscal 2014 , reflecting a positive price and mix impact of 1% offset by a decrease in unit volume of 1%. Excluding the impact Bourjois acquisition, new launches represented approximately 16% of net revenues for fiscal 2015 . The contribution from new launches was offset by an approximate 20% decline in net revenues from existing products that are later in their life cycles, in part due to the negative impact of foreign currency exchange translations.

In fiscal 2014 , net revenues decreased 2% , or $97.5 , to $4,551.6 from $4,649.1 in fiscal 2013 . Foreign currency exchange translations had an immaterial impact on total net revenues. The decrease was primarily the result of a decline in unit volume of 3% partially offset by a positive price and mix impact of 1%. In fiscal 2013 , one of our licenses was divested and a certain North American service agreement expired and was not renewed (“2013 Ceased Activities”). The 2013 Ceased Activities had an immaterial impact on our consolidated results, however negatively affected the Fragrances segment, particularly in the Americas and EMEA. In the quarter ended June 30, 2014, we announced the discontinuation of our TJoy brand and the reorganization of our mass business in China, which resulted in a one-time charge related to product returns. This one-time charge had an immaterial impact on our consolidated results, h owever it negatively affected primarily our Skin & Body Care segment in Asia Pacific. New launches represented approximately 15% of our net revenues for fiscal 2014 . The contribution from new launches was partially offset by an approximate 16% decline in net revenues from existing products that are later in their life cycles.

Net Revenues by Segment



	Year Ended June 30,						Change %
(in millions)	2015		2014		2013		2015/2014		2014/2013
NET REVENUES
Fragrances	$	2,178.3	$	2,324.0	$	2,312.8	(6	%)	—	%
Color Cosmetics	1,445.0		1,366.2		1,468.5		6	%	(7	%)
Skin & Body Care	771.9		861.4		867.8		(10	%)	(1	%)
Total	$	4,395.2	$	4,551.6	$	4,649.1	(3	%)	(2	%)

Fragrances

In fiscal 2015 , net revenues of Fragrances decreased 6% , or $145.7 to $2,178.3 from $2,324.0 in fiscal 2014 . The decrease was primarily the result of a negative price and mix impact of 6% and a negative foreign currency exchange translations impact

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of 4%, partially offset by an increase in unit volume of 4%. Excluding the negative impact of foreign currency exchange translations, net revenues of Fragrances decreased 2%. The decrease in the segment primarily reflects lower net revenues from existing celebrity brands that are later in their lifecycles, Calvin Klein , whose lower net revenues were primarily due to the negative impact of foreign currency exchange translations, and Davidoff and Roberto Cavalli , reflecting lower new launch activity in fiscal 2015 relative to the strong contribution from new launches in fiscal 2014 , and declines from existing product lines. The decline in the segment also reflects continued deterioration of fragrance market trends, particularly in Europe. Partially offsetting the decrease in the segment were higher net revenues from Marc Jacobs, in part due to the new launch Marc Jacobs Daisy Dream, along with incremental net revenues from recently launched Enrique Iglesias Adrenaline and Vespa . Results for Chloé were negatively impacted by foreign currency exchange translations. Excluding the impact of foreign currency exchange translations, net revenues for Chloé increased in part due to the new launch of Chloé Love Story . The negative price and mix impact primarily reflects an ongoing increased level of promotional and discounted pricing activity, reflecting a competitive retail environment. Also contributing to the negative price and mix were higher relative volumes of lower-priced products sold in the mass retail channel in a certain emerging market, driven by a change in our distribution model.

In fiscal 2014 , net revenues of Fragr ances increased $11.2 to $2,324.0 from $2,312.8 in fiscal 2013 . Foreign currency exchange translations had an immaterial impact on net revenues in Fragrance s. An increase in unit volume of 3%, which includes a negative impact on net revenues related to the 2013 Ceased Activities of 1%, was offset by a negative price and mix impact of 3%. Excluding the impact to net revenues from the 2013 Ceased Activities, net revenues of Fragrances increased 1%. Segment growth was primarily driven by incremental net revenues from the newly established brand Katy Perry Killer Queen and higher net revenues from Calvin Klein , Davidoff and Roberto Cavalli in part due to the launches of Calvin Klein Downtown, Calvin Klein Endless Euphoria, Davidoff Cool Water Night Dive, Davidoff Cool Water Woman Sea Rose, Davidoff the Game, Roberto Cavalli Nero Assoluto and Just Cavalli for Him . Power brands Marc Jacobs and Chloé also positively impacted segment results in part due to the launches of Marc Jacobs Honey , Roses de Chloé and continued growth of Marc Jacobs Daisy . Also contributing to segment growth were higher net revenues from David Beckham , Jil Sander, Guess , Bottega Veneta and Nautica . Partially offsetting the increase in the segment was a decline in net revenues from Lady Gaga , Beyoncé and Vera Wang in part due to a lower level of new launch activity for these brands in fiscal 2014 compared to fiscal 2013 , the expiration of certa in licenses and lower net revenues from existing celebrity brands that are later in their lifecycles. Segment growth reflects weak market conditions in developed markets. The negative price and mix impact primarily reflects an increased level of promotional and discounted pricing activity in select developed markets, reflecting a competitive retail environment. Also contributing to lower price and mix was lower prices for select brands as we cascade them into different distribution channels in accordance with our strategy.

Color Cosmetics

In fiscal 2015 , net revenues of Color Cosmetics increased 6% , or $78.8 , to $1,445.0 from $1,366.2 in fiscal 2014 . The increase was primarily the result of a positive price and mix impact of 7% and an increase in unit volume of 5%, partially offset by a negative foreign currency exchange translations impact of 6%. The Bourjois acquisition positively impacted net revenues by 4%, contributing 4% to the unit volume increase. Excluding the impact to net revenues from the Bourjois acquisition and the impact of foreign currency exchange translations, net revenues of Color Cosmetics increased 8%. Higher net revenues were primarily driven by strong growth in Sally Hansen and Rimmel . The increase in Sally Hansen was primarily driven by the success of new launch Sally Hansen Miracle Gel. Higher net revenues in Rimmel primarily reflect incremental net revenues from new launches such as Rimmel Wonder'full mascara and Rimmel Provocalips liquid lipstick along with growth from existing brands, such as Rimmel Lasting Finish foundation and Rimmel Exaggerate eyeliner. Results for OPI were negatively impacted by foreign currency exchange translations. Excluding the impact of foreign currency exchange translations, net revenues for OPI increased, driven by growth in the U.S. professional channel, primarily due to incremental net revenues from new launch OPI Infinite Shine , and an increase in net revenues internationally, primarily reflecting incremental net revenues following the acquisition of a U.K. distributor. Partially offsetting the increase in OPI were lower net revenues in the U.S. retail channel driven by a decline in Nicole by OPI . The positive price and mix impact for the segment primarily reflects a price improvement in all major brands, in part reflecting the new launch of Sally Hansen Miracle Gel .

In fiscal 2014 , net revenues of Color Cosmetics decreased 7% , or $102.3 , to $1,366.2 from $1,468.5 in fiscal 2013 . Foreign curre ncy exchange translations had an immaterial impact on net revenues in Color Cos metics. The decrease was primarily the result of a decline in unit volume of 5% and a negative price and mix impact of 2%. Th e decline in the segment was primarily driven by lower net revenues from nail products, in part reflecting continued declines since the first quarter of fiscal 2014 in the U.S. retail nail market. The Sally Hansen brand was the largest contributor to the segment decline, in part due to lower net revenues from Sally Hansen Insta Gel and Sally Hansen Salon Effects nail products that generated stronger net revenues in fiscal 2013 , partially offset by higher net revenues from new launches Sally Hansen Triple Shine , Sally Hansen Miracle Gel and Sally Hansen I Heart Nail Art in fiscal 2014 . Also contributing to the decline in Sally Hansen was the impact of several key U.S. mass retailers significantly reducing their inventory on hand, particularly in the first quarter of fiscal 2014 in response to the sudden decline in consumer demand for nail products, resulting in lower replenishment orders in fiscal 2014 compared to

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fiscal 2013 . Net revenues for Sally Hansen were also negatively affected by an increasingly competitive retail environment, decline in market share and the aforementioned weaker demand in the nail category in the U.S . Lo wer net revenues from OPI also contributed to the decline in the Color Cosmetics segment, reflecting a decline in the U.S. retail channel driven by lower net revenues of Nicole by OPI and the discontinuation of a particular product line sold exclusively by a large retailer. These decreases in OPI were partially offset by incremental net revenues attributable to new distribution through a professional salon chain in the U.S., incremental net revenues in the U.K. following the acquisition of a U.K. distributor and expanded distribution in Australia and our travel retail business. Partially offsetting the decline in the segment was an increase in Rimmel primarily reflecting strong growth of Rimmel Scandal’eyes mascara and Rimmel Stay Matte foundation. The negative price and mix impact for the segment was primarily driven by unit price declines in most key brands within the segment primarily driven by an increased level of highly promotional and discounted pricing activity, reflecting a competitive retail environment.

Skin & Body Care

In fiscal 2015 , net revenues of Skin & Body Care decreased 10% , or $89.5 , to $771.9 from $861.4 in fiscal 2014 . The decrease in the segment was primarily the result of a decline in unit volume of 9% and a negative foreign currency exchange translations impact of 6%, partially offset by a positive price and mix impact of 5%. The discontinuation of TJoy and China Optimization contributed 3% to the unit volume decline and positively impacted price and mix by 4%. Excluding the negative impact of foreign currency exchange translations and the impact to net revenues from the discontinuation of TJoy and China Optimization, net revenues of Skin & Body Care decreased 5% with a unit volume decline of 6% and a positive price and mix impact of 1%, primarily reflecting higher relative volumes of higher-priced products. The decrease in the segment was primarily driven by lower net revenues from adidas and Playboy . Lower net revenues from adidas in part reflect the negative impact of foreign currency exchange translations, a change in our distribution model from subsidiary to distributor in China, a decline in the U.S. primarily related to lower holiday orders and reduced shelf space at a key retailer in fiscal 2015 compared to fiscal 2014 and declining net revenues in existing product lines. Partially offsetting these declines in adidas were incremental net revenues from new launches such as adidas UEFA Champions League Edition and incremental net revenues in Brazil, due to the commercial distributor relationship with Avon. The decline in Playboy was in part driven by the negative impact of foreign currency exchange translations, declining net revenues in existing product lines and lower net revenues in the U.S. related to reduced shelf space at select retailers and lower holiday orders in fiscal 2015 compared to fiscal 2014 . Partially offsetting the decline in Playboy were incremental net revenues from new launches such as Playboy #Generation for Him and Playboy #Generation for Her and growth in Brazil, due to the commercial distributor relationship with Avon. Partially offsetting the decrease in the segment were higher net revenues from philosophy primarily reflecting strong growth in Asia Pacific and higher net revenues in key distribution channels in the U.S., in part due to new launch philosophy renewed hope in a jar .

In fiscal 2014 , net revenues of Skin & Body Care decreased 1% , or $6.4 , to $861.4 from $867.8 in fiscal 2013 . Results were primarily driven by a decline in unit volume of 4% and a decline related to product returns associated with the reorganization of our mass business in China of 2%, partially offset by a positive price and mix impact of 4% and a positive foreign currency exchange translations impact of 1% . E xcluding the impact to net revenues associated with the reorganization of our mass business in China and the positive impact of foreign currency exchange translations, net revenues of Skin & Body Care in fiscal 2014 were consistent with fiscal 2013 as higher net revenues from philosophy , Lancaster and adidas were offset by a decline in TJoy and Playboy . N et revenues from philosophy increased primarily due to higher net revenues in key distribution channels in the U.S., in part due to expanded distribution and new launches, and strong growth in Asia Pacific in part due to expanded distribution. Net revenues from Lancaster reflected strong growth primarily due to strong growth in sun care products and new launch Lancaster Total Age Correction , along with expanded distribution in China . Net revenues from adidas increased reflecting strong growth in emerging markets such as Southeast Asia, Brazil, China, and South Africa, partially offset by lower net revenues in developed markets such as the U.S., Germany, the Netherlands and Southern Europe in part due to an increased level of highly promotional and discounted pricing activity. Partially offsetting these increases in the segment were declines in TJoy, reflecting weak demand for the products which led to our decision to discontinue the brand along with the one-time impact to net revenues associated with the discontinuation of the brand, and Playboy, primarily due lower holiday customer orders in fiscal 2014 compared to fiscal 2013 . The positive price and mix impact for the segment was primarily driven by lower relative volumes of lower-priced TJoy products and higher relative volumes of higher-priced philosophy and Lancaster products.

Net Revenues by Geographic Regions

In addition to our reporting segments, management also analyzes our net revenues by geographic region. We define our geographic regions as Americas (comprising North, Central and South America), EMEA (comprising Europe, the Middle East and Africa) and Asia Pacific (comprising Asia and Australia).

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	Year Ended June 30,						Change %
(in millions)	2015		2014		2013		2015/2014		2014/2013
NET REVENUES
Americas	$	1,696.0	$	1,703.8	$	1,914.8	—	%	(11	%)
EMEA	2,166.0		2,302.9		2,188.9		(6	%)	5	%
Asia Pacific	533.2		544.9		545.4		(2	%)	—	%
Total	$	4,395.2	$	4,551.6	$	4,649.1	(3	%)	(2	%)

Americas

In fiscal 2015 , net revenues in the Americas decreased $7.8 , to $1,696.0 from $1,703.8 in fiscal 2014 . Excluding the negative impact of foreign currency exchange translations of 1%, net revenues in the Americas increased 1%. Generating strong growth in the region was Brazil, due to incremental net revenues resulting from the commercial distributor relationship with Avon. Net revenues in the U.S. in fiscal 2015 were consistent with fiscal 2014 , in part reflecting strong growth from power brands Sally Hansen , Rimmel and Marc Jacobs offset by lower net revenues from OPI , primarily reflecting the impact of international business transfer to subsidiaries outside of the U.S., a decline in existing celebrity fragrance brands that are later in their lifecycles, and lower net revenues from body care products , in part due to reduced shelf space at select retailers in the U.S. and lower holiday orders in fiscal 2015 compared to fiscal 2014 . Net revenues in Canada declined in part due to the negative impact of foreign currency exchange translations along with lower net revenues in the Fragrances segment.

In fiscal 2014 , net revenues in the Americas decreased 11% , or $211.0 , to $1,703.8 from $1,914.8 in fiscal 2013 . Excluding the negative impact of foreign currency exchange translations of 1% and the impact of net revenues related to the 2013 Ceased Activities of 1%, net revenues in the Americas decreased 9% primarily driven by lower net revenues in the U.S. The decline in the U.S. was largely driven by lower net revenues in Color Cosmetics, primarily due to a decline in Sally Hansen and OPI as described under “Net Revenues by Segment—Color Cosmetics ” above, and Fragrances. The decline in Fragrances in the U.S. primarily reflects lower net revenues from Lady Gaga, Beyoncé and Vera Wang, in part due to a lower level of new launch activity in fiscal 2014 compared to fiscal 2013 , the expiration of certain licenses, lower net revenues from existing celebrity brands that are later in th eir lifecycles and a decline in mature products in our power brands Chloé , Calvin Klein and Davido ff. Results in the U.S. reflect weak market conditions and reduction of inventory on hand by retailers. Lo wer net revenues from Canada also contributed to the decline in the region, in part reflecting a decrease in Sally Hansen, Lady Gaga , due to a lower level of new launch activity in fiscal 2014 compared to fiscal 2013 , and lower net revenues from fragrances in the prestige market. Slightly offsetting the decline in the Americas were higher net revenues in Brazil, primarily reflecting the impact of our joint venture and commercial partnership established in fiscal 2013 , and our travel retail business in th e region, primarily due to growth from fragrances in the prestige market.

EMEA

In fiscal 2015 , net revenues in EMEA decreased 6% , or $136.9 , to $2,166.0 from $2,302.9 in fiscal 2014 . Excluding the negative impact of foreign currency exchange translations of 8% and the impact of the Bourjois acquisition of 2%, net revenues in EMEA in fiscal 2015 were consistent with fiscal 2014 . Generating growth in the region was our new subsidiary in South Africa and the Middle East, where we have benefited from our new U.A.E. and K.S.A. joint ventures. Results for Eastern Europe were negatively impacted by foreign currency exchange translations. Excluding the impact of foreign currency exchange translations and the Bourjois acquisition, net revenues for Eastern Europe increased primarily driven by growth in Color Cosmetics and Calvin Klein. Results for Germany and Southern Europe were negatively impacted by foreign currency exchange translations. Excluding the impact of foreign currency exchange translations and the Bourjois acquisition, net revenues for Germany and Southern Europe in fiscal 2015 were consistent with fiscal 2014 . Net revenues in the U.K. declined in part due to the negative impact of foreign currency exchange translations and lower net revenues of Fragrances and Body Care products, offset by strong growth in Color Cosmetics driven by incremental net revenues from OPI due to the acquisition of a U.K. distributor and increased net revenues from Rimmel . Net revenues in our travel retail business declined primarily due to Calvin Klein . Net revenues in EMEA also reflect the negative impact of foreign currency exchange on transactions in our export and travel retail businesses.

In fiscal 2014 , net revenues in EMEA increased 5% , or $114.0 , to $2,302.9 from $2,188.9 in fiscal 2013 . Excluding the positive impact of foreign currency exchange translations of 3% and the impact of net revenues related to the 2013 Ceased Activities of 1%, net revenues in EMEA increased 3%. Growth in EMEA was primarily driven by the U.K., Eastern Europe, the Middle East, where we have transitioned to a new U.A.E. joint venture, and our new subsidiary in South Africa, reflecting our strategy of expanding our geographic footprint into emerging markets. Higher net revenues in the U.K. reflected incremental net revenues from OPI resulting from the acquisition of a U.K. distributor and from newly-established brand Katy Perry Killer Queen , strong growth from David Beckham and Rimmel , along with the positive impact of foreign currency translations

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resulting from the improvement of the British Pound exchange rate. Higher net revenues in Eastern Europe primarily reflect strong growth in our power brands, Calvin Klein , Rimmel , Davidoff , and adidas , in addition to the positive impact of foreign currency exchange translations. Also generating strong growth were higher net revenues in our travel retail business in the region driven by growth in Fragrances from new launches within the Calvin Klein , Marc Jacobs , Davidoff, Jil Sander and Chloé brands, along with higher net revenues due to expanded distribution of OPI . Net revenues in Germany and Southern Europe increased reflecting the positive impact from foreign currency exchange translations. Excluding the impact of foreign currency exchange translations and the net revenues related to the 2013 Ceased Activities, net revenues in Germany declined primarily due to lower net revenues from Color Cosmetics, in part due to a shift in the market towards value brands and the planned withdrawal of the Rimmel brand from the market, along with a decline in adidas . Excluding the im pact of foreign currency exchange translations, net revenues in Southern Europe declined primarily due to lower net revenues in part reflecting weak market trends. Partially offsetting growth in the region were lower net revenues in Russia, in part reflecting the negative impact of the devaluation of the Russian Ruble and a more challenging retail environment.

Asia Pacific

In fiscal 2015 , net revenues in Asia Pacific decreased 2% , or $11.7 , to $533.2 from $544.9 in fiscal 2014 . Excluding the negative impact of foreign currency exchange translations of 4% and the impact to net revenues from the discontinuation of TJoy and China Optimization of 2%, net revenues in Asia Pacific in fiscal 2015 were consistent with fiscal 2014 . Net revenues in Australia were affected by the negative impact of foreign currency exchange translations. Excluding this impact, however, net revenues in Australia increased primarily due to strong growth in Color Cosmetics, driven by Rimmel , OPI and Sally Hansen , and an increase in Fragrances . Contributing to growth in the region were higher net revenues in our travel retail business, primarily driven by power brands Marc Jacobs , philosophy and OPI , and Korea, primarily driven by Calvin Klein . Results for Southeast Asia were negatively impacted by foreign currency exchange translations. Excluding the impact of foreign currency exchange translations, net revenues for Southeast Asia in fiscal 2015 were consistent with fiscal 2014 . Results in the region were adversely impacted by lower net revenues in China. The decline in China was primarily driven by lower net revenues from adidas , in part due to the change in our distribution model.

In fiscal 2014 , net revenues in Asia Pacific decreased $0.5 , to $544.9 from $545.4 in fiscal 2013 . The negative impact of foreign currency exchange translations of approximately 4% was predominantly driven by the devaluation of the Australian Dollar and Japanese Yen. Excluding the impact to net revenues associated with the reorganization of our mass business in China of 3% and the negative impact of foreign currency exchange translations, net revenues in Asia Pacific increased 7%. N ew subsidiaries in Taiwan, Korea and Southeast Asia contributed incremental net revenue growth to the region. Higher net revenues in Hong Kong, Australia, Singapore and our travel retail business in the region also positively impacted results. Growth in Hong Kong and Singapore primarily reflected higher net revenues in Fragrances while the increase in our travel retail business was primarily due to expanded distribution of OPI . Higher net revenues from Australia also positively impacted the region primarily reflecting strong growth in Fragrances, Rim mel and incremental net revenues from the introduction of OPI , partially offset by the negative impact of foreign currency exchange translations. Results in the region were adversely impacted by lower net revenues in Japan and China. Lower net revenues in Japan primarily reflected the negative impact of foreign currency exchange translations as mentioned above. The decline in China was primarily driven by lower net revenues from TJoy , partially offset by growth in Fragrances, adidas and Lancaster . Excluding the impact associated with the reorganization of our mass business in China, net revenues in China increased primarily due to growth in Fragrances an d adidas , despite overall deceleration in consumer demand particularly in the prestige distribution channel.

COST OF SALES

In fiscal 2015 , cost of sales decreased 6% , or $108.7 , to $1,757.0 from $1,865.7 in fiscal 2014 . Cost of sales as a percentage of net revenues decreased to 40.0% in fiscal 2015 from 41.0% in fiscal 2014 , resulting in a gross margin improvement of approximately 100 basis points. Gross margin includes the positive impact from the refinement of estimates associated with China Optimization partially offset by the negative impact of higher acquisition-related costs in fiscal 2015 compared to fiscal 2014 , in part due to costs associated with the Bourjois acquisition. Excluding the impact of these items on net revenues and cost of sales, gross margin improved approximately 50 basis points primarily reflecting continued contribution from our supply chain savings program, reported in cost of sales, partially offset by the negative impact of higher customer discounts and allowances, reported in net revenues.

In fiscal 2014 , cost of sales increased $5.4 , to $1,865.7 from $1,860.3 in fiscal 2013 . Cost of sales as a percentage of net revenues increased to 41.0% in fiscal 2014 from 40.0% in fiscal 2013 , resulting i n a gross margin decline of approximately 100 basis points. The decline in gross margin includes the impact of product returns and inventory obsolescence associated with the reorganization of our mass business in China and the revaluation of inventory acquired through business acquisitions. Excluding the impact of these items on net revenues and cost of sales, gross margin declined approximately 40 basis points primarily reflecting the negative impact of higher customer discounts and allowances necessary to compete in the difficult market environment, reported in net revenues, and the negative impact of foreign currency exchange transactions, partially offset by continued contribution from our supply chain savings program, reported in cost of sales, and positive product mix. We

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expect a higher level of customer discounts and allowances to continue until there is improvement in the overall economic environment.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In fiscal 2015 , selling, general and administrative expenses decreased 7% , or $153.5 , to $2,066.1 from $2,219.6 in fiscal 2014 . Selling, general and administrative expenses as a percentage of net revenues decreased to 47.0% in fiscal 2015 from 48.8% in fiscal 2014 . This decrease of 180 basis points includes a reduction of approximately 140 basis points primarily related to lower real estate consolidation program costs, share-based compensation expense adjustment, acquisition-related costs and China Optimization costs partially offset by higher business structure realignment costs. See “Adjusted Operating Income.” Excluding the items described above and the impact to net revenues associated with China Optimization, selling, general and administrative expenses decreased 5% , or $99.7 , to $2,034.4 from $2,134.1 in fiscal 2014 and decreased as a percentage of net revenues to 46.3% from 46.7% . This decrease of 40 basis points primarily reflects lower advertising and consumer promotion spending and administrative costs, partially offset by losses related to foreign currency hedging. Lower advertising and consumer promotion spending primarily reflects the impact of foreign currency exchange translations. Excluding this impact, advertising and consumer promotion spending increased driven by investment in our power brands but declined as a percentage of net revenues, as the increase in spending on power brands was offset by a strategic reduction for the remainder of the portfolio. Lower administrative costs primarily reflect the impact of foreign currency exchange translations and costs savings resulting from our Organizational Redesign and China Optimization programs, partially offset by additional administrative costs related to the Bourjois acquisition and higher accruals related to the management incentive program.

In fiscal 2014 , selling, general and administrative expenses decreased 3% , or $64.1 , to $2,219.6 from $2,283.7 in fiscal 2013 . Selling, general and administrative expenses as a percentage of net revenues decreased to 48.8% in fiscal 2014 from 49.1% in fiscal 2013 . This decrease of 30 basis points includes approximately 150 basis points related to lower share-based compensation expense adjustment and public entity preparedness costs partially offset by higher real estate consolidation program costs. See “Operating Income —Adjusted Operating Income.” Excluding the items described above and the impact to net revenues associated with the reorganization of our mass business in China, selling, general and administrative expenses increased $8.3, to $2,134.1 , in fiscal 2014 from $2,125.8 in fiscal 2013 and increased as a percentage of net revenues to 46.7% from 45.7%. This increase of 100 basis points primarily reflects our investment in new subsidiaries in emerging markets, higher advertising and consumer promotion spending as a percentage of net revenues and the negative impact from foreign currency exchange translations, partially offset by lower discretionary costs reflecting our focus on cost containment in developed markets.

OPERATING INCOME

In fiscal 2015 , operating income increased $369.4 , to $395.1 from $25.7 in fiscal 2014 . Operating margin, or operating income as a percentage of net revenues, increased to 9.0% of net revenues in fiscal 2015 as compared to 0.6% in fiscal 2014 . This margin improvement primarily reflects the impact of lower asset impairment charges in our Skin & Body Care segment of approximately 700 basis points. Also contributing to margin improvement was approximately 180 basis points related to lower selling, general and administrative expenses, approximately 100 basis points related to lower cost of sales, approximately 20 basis points related lower amortization expense and approximately 20 basis points related to the gain on sale of an asset, partially offset by approximately 90 basis points related to higher restructuring expense and approximately 80 basis points related to higher acquisition-related costs.

In fiscal 2014 , operating income decreased 93% , or $368.7 , to $25.7 from $394.4 in fiscal 2013 . Operating margin, or operating income as a percentage of net revenues, decreased to 0.6% of net revenues in fiscal 2014 as compared to 8.5% in fiscal 2013 . This margin decline primarily reflects the impact of asset impairment charges in our Skin & Body Care segment of approximately 700 basis points. Also contributing to margin decline was approximately 100 basis points driven by higher cost of sales, approximately 40 basis points due to a gain on sale of assets in fiscal 2013 not repeated in fiscal 2014 and approximately 20 basis points related to higher restructuring expense, partially offset by approximately 30 basis points of lower selling, general and administrative expenses, approximately 20 basis points of lower acquisition-related costs and approximately 10 basis points related lower amortization expense.

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Operating Income by Segment



	Year Ended June 30,									Change %
(in millions)	2015			2014			2013			2015/2014		2014/2013
OPERATING INCOME (LOSS)
Fragrances	$	352.7		$	341.2		$	354.9		3	%	(4	%)
Color Cosmetics	158.5			154.2			208.8			3	%	(26	%)
Skin & Body Care ^(a)	33.1			(337.3		)	9.1			>100%		<(100%)
Corporate	(149.2		)	(132.4		)	(178.4		)	(13	%)	26	%
Total	$	395.1		$	25.7		$	394.4		>100%		(93	%)

^(a) In fiscal 2014 , we recorded an impairment charge of $316.9 , of which $256.4 related to goodwill and $60.5 to other long lived assets, reported in the Skin & Body Care segment.

Fragrances

In fiscal 2015 , operating income for Fragrances increased 3% , or $11.5 , to $352.7 from $341.2 in fiscal 2014 . Operating margin increased to 16.2% of net revenues in fiscal 2015 as compared to 14.7% in fiscal 2014 , primarily driven by lower selling, general and administrative expenses as a percentage of net revenues, partially offset by higher cost of sales as a percentage of net revenues.

In fiscal 2014 , operating income for Fragrances decreased 4% , or $13.7 , to $341.2 from $354.9 in fiscal 2013 . Operating margin decreased to 14.7% of net revenues in fiscal 2014 as compared to 15.3% in fiscal 2013 , primarily driven by higher cost of sales as a percentage of net revenues.

Color Cosmetics

In fiscal 2015 , operating income for Color Cosmetics increased 3% , or $4.3 , to $158.5 from $154.2 in fiscal 2014 . Operating margin decreased to 11.0% of net revenues in fiscal 2015 as compared to 11.3% in fiscal 2014 , primarily driven by the impact of the Bourjois acquisition on the segment. Excluding results directly attributable to the Bourjois acquisition, operating income margin improved 50 basis points driven by lower cost of sales partially offset by higher selling, general and administrative expenses as percentages of net revenues.

In fiscal 2014 , operating income for Color Cosmetics decreased 26% , or $54.6 , to $154.2 f rom $208.8 in fiscal 2013 . The decrease in operating income reflects lower net revenues and a decline in operating margin. Operating margin decreased to 11.3% of net revenues in fiscal 2014 as compared to 14.2% in fiscal 2013 , primarily driven by higher selling, general and administrative expenses and cost of sales as percentages of net revenues.

Skin & Body Care

In fiscal 2015 , operating income for Skin & Body Care increased $370.4 , to $33.1 from $(337.3) in fiscal 2014 , primarily reflecting asset impairment charges of $316.9 in fiscal 2014 . The impairment represents the write-off of goodwill, identifiable intangible assets and certain tangible assets associated with the Beauty - Skin & Body Care reporting unit which is included in the Skin & Body Care segment. Operating income for Skin & Body Care segment includes one-time gains and losses related to China Optimization.

Excluding the impact of China Optimization in fiscal 2015 and fiscal 2014 and asset impairment charges in fiscal 2014 , operating income increased $12.6 , to $15.2 from $2.6 in fiscal 2014 . Operating margin increased to 2.0% of net revenues in fiscal 2015 as compared to 0.3% in fiscal 2014 , primarily driven by lower selling, general and administrative expenses and amortization expense as percentages of net revenues.

In fiscal 2014 , operating income for Skin & Body Care decreased $346.4 , to a loss of $(337.3) from $9.1 in fiscal 2013 , primarily reflecting asset impairment charges of $316.9 and the impact of the reorganization of our mass business in China of $23.0. The impairment represents the write-off of goodwill, identifiable intangible assets and certain tangible assets associated with the Beauty - Skin & Body Care reporting unit which is included in the Skin & Body Care segment. One-time charges related to the reorganization of our mass business in China primarily include product returns, inventory obsolescence, the write-off of marketing material and accelerated depreciation of building furniture.

Excluding asset impairment charges and the one-time charge related to the reorganization of our mass business in China, operating income decreased $6.5, to $2.6 in fiscal 2014 from $9.1 in fiscal 2013 . Operating margin decreased to 0.3% of net revenues in fiscal 2014 as compared to 1.0% in fiscal 2013 , primarily driven by higher selling, general and administrative

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expenses in part due to higher advertising and consumer promotion spending partially offset by lower cost of sales and amortization expense as percentages of net revenues.

Corporate

Corporate primarily includes corporate expenses not directly relating to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

Operating loss for Corporate was $149.2 , $132.4 and $178.4 in fiscal 2015 , 2014 and 2013 , r espectively , as described under “Adjusted Operating Income” below.

Adjusted Operating Income

We believe that Adjusted Operating Income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported operating income to Adjusted Operating Income is presented below:



	Year Ended June 30,									Change %
(in millions)	2015			2014			2013			2015/2014		2014/2013
Reported Operating Income	$	395.1		$	25.7		$	394.4		>100%		(93	%)
% of Net revenues	9.0		%	0.6		%	8.5		%
Restructuring and other business realignment costs	91.4			34.1			36.1			>100%		(6	%)
Acquisition-related costs ^(a)	44.2			26.9			9.6			64	%	>100%
Share-based compensation expense adjustment	18.3			27.6			120.3			(34	%)	(77	%)
Asset impairment charges	—			316.9			1.5			(100	%)	>100%
Public entity preparedness costs	—			1.2			7.7			(100	%)	(84	%)
Gain on sale of asset ^(b)	—			—			(19.3		)	N/A		100	%
Real estate consolidation program costs	(0.7		)	32.3			22.5			<(100%)		44	%
China Optimization	(19.4		)	35.9			—			<(100%)		N/A
Total adjustments to Reported Operating Income	133.8			474.9			178.4			(72	%)	>100%
Adjusted Operating Income	$	528.9		$	500.6		$	572.8		6	%	(13	%)
% of Net revenues	12.0		%	11.0		%	12.3		%

^(a) Acquisition-related costs include items in addition to what is recorded in acquisition-related costs of $34.1, $0.7 and $8.9 for fiscal 2015, 2014 and 2013, respectively, in the Consolidated Statements of Operations. See “Acquisition-Related Costs.”

^(b) The amount for fiscal 2015 differs from gain on sale of asset in the Consolidated Statement of Operations by $7.2 as gain related to the sale of a China facility is included in China Optimization. See “China Optimization.”

In fiscal 2015 , Adjusted Operating Income increased 6% , or $28.3 , to $528.9 from $500.6 in fiscal 2014 . Adjusted operating margin increased to 12.0% of net revenues in fiscal 2015 as compared to 11.0% in fiscal 2014 , driven by lower cost of sales, selling, general and administrative expenses and amortization expense. Excluding the impact of foreign currency exchange translations, Adjusted Operating Income increased 7% . The Bourjois acquisition negatively impacted operating margin by 20 basis points.

In fiscal 2014 , Adjusted Operating Income decreased 13% , or $72.2 , to $500.6 from $572.8 in fiscal 2013 . Adjusted operating margin decreased to 11.0% of net revenues in fiscal 2014 as compared to 12.3% in fiscal 2013 , primarily driven by higher selling, general and administrative expenses and cost of sales as a percentage of net revenues. Excluding the impact of foreign currency exchange translations, Adjusted Operating Income decreased 12.0%.

Restructuring and Other Business Realignment Costs

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In connection with the acquisition of the Bourjois brand, we recorded $15.3 of restructuring costs primarily related to distributor termination fees (“Acquisition Integration Program”), recorded in the Corporate segment. The related liability was $15.3 as of June 30, 2015. We currently estimate the total remaining accrual of $15.3 will result in cash expenditures of $10.1 and $5.2 in fiscal 2016 and 2017, respectively.

During the fourth quarter of fiscal 2014 , our Board of Directors approved a program associated with a new organizational structure (“Organizational Redesign”) that aims to reinforce our growth path and strengthen our position as a global leader in beauty. We anticipate pre-tax restructuring and related costs will be approximately $145.0 to $180.0, all of which will result in cash payments through fiscal 2018. We currently estimates that the total remaining accrual of $32.1 will result in cash expenditures of $27.1 , $4.5 , $0.5 and in fiscal 2016, 2017, and 2018, respectively. We anticipate that annual savings from the Organizational Redesign will be $160.0 by the end of fiscal 2017. During the fourth quarter of fiscal 2013, we implemented a number of business integration and productivity initiatives aimed at enhancing long-term operating margins (the “Productivity Program”). The Productivity Program is progressing as planned and we continue to estimate pre-tax charges of approximately $70.0, of which $65.0 is expected to result in cash payments through 2017. We expect our total remaining accrual of $7.0 will result in cash expenditures of approximately $6.7 and $0.3 in fiscal 2016 and 2017 , respectively. We anticipates annual savings of $65.0 by the end of fiscal 2017.

In fiscal 2015 , we incurred restructuring and other business structure realignment costs of $91.4 .

• We incurred restructuring costs of $76.0 , included in restructuring costs in the Consolidated Statements of Operations, which primarily relate to $58.6 of costs for the Organizational Redesign, $15.3 of costs for the Acquisition Integration Program, and $2.1 of costs related to the 2013 Productivity Program. These costs exclude $0.6 of income related to the refinement in estimates associated with China Optimization. See “China Optimization”.

• We incurred business structure realignment costs of $15.4 primarily related to our Organizational Redesign and the 2013 Productivity Program, which includes $1.3 of accelerated depreciation expense. All business structure realignment costs were included in selling, general and administrative expenses in the Consolidated Statements of Operations.

In fiscal 2014 , we incurred restructuring and other business structure realignment costs of $34.1 .

• We incurred restructuring costs of $27.5 , included in restructuring costs in the Consolidated Statements of Operations, which primarily relate to $13.0 of costs for the Organizational Redesign and $14.2 of costs primarily related to the 2013 Productivity Program. These costs exclude $9.8 of costs associated with the reorganization of our mass business in China. See “China Optimization Costs”.

• We incurred business structure realignment costs of $6.6 related to certain other programs that primarily includes $4.7 of program costs in North America , of which $0.4 consisted of accelerated depreciation, included in selling, general and administrative expenses in the Consolidated Statements of Operations.

In fiscal 2013 , we incurred restructuring and other business structure realignment costs of $36.1 .

• We incurred restructuring costs of $29.4 , included in restructuring costs in the Consolidated Statement of Operations, which primarily related to the Productivity Program which targeted the integration of supply chain and selling activities within the Skin & Body Care segment, as well as certain commercial organization re-design activities, primarily in Europe, productivity programs across our supply chain and optimization of selected administrative support functions.

• We incurred business structure realignment program costs of $6.7 which consist of costs related to position eliminations in certain administrative functions of $2.2, costs related to structural reorganization in Geneva related to the creation of a fragrance “Center of Excellence” for research and development and the centralization of global supply chain management in Geneva of $1.2 and costs related to certain other programs in North America of $3.3, of which $1.0 consisted of accelerated depreciation. All business structure realignment costs were included in selling, general and administrative expenses in the Consolidated Statements of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Acquisition-Related Costs

In fiscal 2015 , we incurred acquisition-related costs of $44.2 . These costs primarily consist of consulting and legal fees related to the acquisition of Procter & Gamble’s (“P&G”) fine fragrance, color cosmetics and hair color business (“P&G Business”) and the Bourjois acquisition of $30.2 and $3.9, respectively, included acquisition-related costs in the Consolidated Statements of Operations. Also included in connection with the Bourjois acquisition are $3.3 of costs related to acquisition accounting impacts of revaluation of acquired inventory and $0.9 of costs related to inventory obsolescence, included in cost of sales in the Consolidated Statements of Operations, and $2.5 of costs related to sales returns, included in net revenues in the

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Consolidated Statements of Operations. In addition, we incurred $3.4 of costs related to the revaluation of an inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market, included in cost of sales in the Consolidated Statements of Operations. Acquisition-related costs of $40.8 and $3.4 were reported in Corporate and the Color Cosmetics segment, respectively.

In fiscal 2014 , we incurred acquisition-related costs of $26.9 . These costs primarily include $15.2 of fees related to the termination of a pre-existing manufacturing and distribution contract in South Africa after forming our wholly-owned subsidiary in South Africa and $0.4 of costs related to certain completed or contemplated business combinations, included in selling, general and administrative expenses in the Consolidated Statements of Operations, $10.6 of costs related to acquisition accounting impacts of revaluation of acquired inventory, included in cost of sales in the Consolidated Statements of Operations, and $0.7 of costs related to certain completed or contemplated business combinations, included in acquisition-related costs in the Consolidated Statements of Operations.

In fiscal 2013 , we incurred acquisition-related costs of $9.6 . These costs primarily include $6.7 of an additional charge related to the settlement reached between us and the seller of TJoy and $2.2 of external costs directly related to completed or contemplated business combinations which are included in acquisition-related costs in the Consolidated Statements of Operations. Also included are internal integration costs of $0.7 in connection with the four acquisitions we acquired in 2011 included in selling, general and administrative expenses in the Consolidated Statements of Operations.

In all reported periods, all acquisition-related costs were reported in Corporate, except where otherwise noted.

Share-Based Compensation Adjustment

Share-based compensation expense adjustment included in the calculation of the Adjusted Operating Income was $18.3 , $27.6 and $120.3 in fiscal 2015 , 2014 and 2013 , respectively.

The decrease in the share-based compensation expense adjustment in fiscal 2015 compared to fiscal 2014 primarily reflects the impact of the vesting of special incentive awards associated with our initial public offering and an increase in the actual and expected forfeiture rate reflecting the impact of our recent Organizational Redesign, partially offset by $15.8 of costs associated with shares sold and shares repurchased related to the termination of an employment agreement with a potential CEO incurred by our controlling shareholder on our behalf, which are considered an incremental contribution to us.

The decrease in the share-based compensation expense adjustment in fiscal 2014 compared to fiscal 2013 primarily reflects the impact of the accounting modification from liability plan accounting to equity plan accounting as of June 12, 2013, the effective date of the share-based compensation plan amendments.

Senior management evaluates operating performance of our segments based on the share-based expense calculated under equity plan accounting for the recurring stock option awards, share-based awards, and director-owned and employee-owned shares, and calculated under liability plan accounting for the Series A Preferred Stock. We follow the same treatment of the share-based compensation for the financial covenant compliance calculations under our debt agreements. See “Overview—Non-GAAP Financial Measures.” Share-based compensation expense calculated under equity plan accounting for the recurring nonqualified stock option awards and director-owned and employee-owned shares, restricted shares, and RSUs, and calculated under liability plan accounting for the Series A Preferred Stock is reflected in the operating results of the segments. Share-based compensation adjustment is included in Corporate. See Note 3, “Segment Reporting” in our notes to Consolidated Financial Statements.

Asset Impairment Charges

In fiscal 2015 , we did not incur any asset impairment charges.

In fiscal 2014 , asset impairment charges of $316.9 were reported in the Consolidated Statements of Operations. The impairment represents the write-off of goodwill, identifiable intangible assets and certain tangible assets associated with the Beauty - Skin & Body Care reporting unit which is included in the Skin & Body Care segment. In fiscal 2014 , we had anticipated realizing significant improvements in cash flows in our Beauty - Skin & Body Care Reporting Units China operations beginning in the third quarter due to the reorganization of the management team and distribution network in China and the launch of new product offerings. In the course of evaluating the results for the third quarter and the preparation of third quarter financial statements, we noted the net cash outflows associated with the TJoy mass channel business in China were significantly in excess of previous expectations and management concluded that the results in China represented an indicator of impairment that warranted an interim impairment test for goodwill and certain other intangible assets in the Beauty - Skin & Body Care Reporting Unit.

In fiscal 2013 , we sold a manufacturing facility for $2.0, which had a net book value of $3.5 resulting in an asset impairment charge of $1.5 . These costs were recorded in asset impairment charges in the Consolidated Statements of Operations and were included in Corporate.

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Public Entity Preparedness Costs

In fiscal 2015 , we did not incur any public entity preparedness costs.

In fiscal 2014 , we incurred public entity preparedness costs of $1.2 primari ly consisting of a third-party expense reimbursement for legal fees and expense related to our IPO and the restatement of the Certificate of Incorporation, Bylaws and stockholders agreement to JAB Holdings B.V., which is the successor to JAB Holdings II B.V., Berkshire Partners LLC and Rhône Capital L.L.C. and remaining miscellaneous costs associated with our IPO.

In fiscal 2013 , we incurred public entity preparedness costs of $7.7 primarily consisting of consulting, audit, legal, filing and printing costs associated with preparation and filing of the registration statement.

In all reported periods, all public entity preparedness costs were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations and were included in Corporate.

Gain on Sale of Asset

In fiscal 2013 , we received $25.0 related to the termination of one of our licenses by mutual agreement with the original licensor. The license had a net book value of $5.7 and, therefore, we recorded a gain of $19.3 in the Consolidated Statements of Operations and included in Corporate.

Real Estate Consolidation Program Costs

In fiscal 2015 , we incurred $0.7 of income related to the refinement of lease loss expense estimates in connection with the consolidation of real estate in New York.

In fiscal 2014 , we incurred $32.3 of costs in connection with the consolidation of real estate in New York. The real estate consolidation program costs primarily consist of $21.4 of lease loss expense, $5.0 of duplicative rent expense and $4.1 of accelerated depreciation.

In fiscal 2013 , we incurred $22.5 of costs in connection with the consolidation of real estate in New York. The real estate consolidation program costs primarily consist of $16.5 of accelerated depreciation and $5.3 of duplicative rent expense.

In all reported periods, all real estate consolidation program costs were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations and were included in Corporate.

China Optimization Costs

During the fourth quarter of fiscal 2014, we entered into a distribution agreement with a third-party distributor for some of our brands sold through the mass distribution channel in China and announced that we are discontinuing our TJoy brand. In conjunction with these events, we commenced implementation of restructuring and product rationalization activities of our mass business in China (“China Optimization”) that are expected to generate operating efficiencies. We realized annual savings from the China Optimization of $45.0 as of June 30, 2015.

In fiscal 2015 , we incurred income of $19.4 related to China Optimization, of which $7.3, $7.2, $3.0, $1.3 and $0.6 was recorded in net revenues, gain on sale of asset, cost of sales, selling, general and administrative expenses and restructuring costs in the Consolidated Statements of Operations, respectively. Income of $11.6 was restructuring related primarily consisting of $5.3 due to the gain on sale of a facility of $7.2 net of real estate tax expense related to the sale of $1.9 and $5.7 due to a change in estimates related to inventory obsolescence and sales returns recorded in connection with the China Optimization at June 30, 2014. Income of $7.8 primarily reflects changes in estimates associated with pre-restructuring related activities. We primarily attribute the changes in estimates to the unanticipated sale of the TJoy brand and supporting production facility to a single buyer at the beginning of the third quarter, allowing the brand to remain viable in the marketplace. We believe that this resulted in lower than initially estimated returns, customer incentives payments and related costs. Income of $17.9, $0.9 and $0.6 related to China Optimization was reported in the Skin & Body Care segment, Color Cosmetics segment and Corporate, respectively.

In fiscal 2014 , we incurred costs associated with the reorganization of our mass business in China of $35.9 which consist of the one-time charge of $25.6 (as explained below), restructuring costs of $9.8 included in restructuring costs in the Consolidated Statements of Operations in Corporate and consulting costs of $0.5 included in selling, general and administrative expenses in the Consolidated Statements of Operations in Corporate. The one-time charge consists of the following: $15.4 of costs related to product returns included in net revenues in the Consolidated Statements of Operations of which $14.4 is reported in the Skin & Body Care segment and $1.0 is reported in the Color Cosmetics segment, $8.5 of costs related to inventory obsolescence included in cost of sales in the Consolidated Statements of Operations of which $6.9 is reported in the Skin & Body Care segment and $1.6 is reported in the Color Cosmetics segment, and $1.7 of costs primarily related to the write-off of marketing material and accelerated depreciation of building furniture included in selling, general and administrative expenses in the Consolidated Statements of Operations reported in the Skin & Body Care segment.

INTEREST EXPENSE, NET

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In fiscal 2015, net interest expense was $73.0 as compared with $68.5 in fiscal 2014. This increase is primarily due to increased amortization of deferred fees of $2.9 related to debt-refinancing, an increase of $1.3 in foreign exchange expense, net of derivative contracts, higher global borrowings incurring an additional $1.4 in interest expense and decreased interest income of $0.7. These items were offset by $1.8 reduced interest expense due to lower rates on average gross debt resulting from prepayment of Senior Notes.

In fiscal 2014, net interest expense was $68.5 as compared with $76.5 in fiscal 2013. This decrease is due to lower interest rates on our long-term debt partially offset by a higher year-over-year average debt balance for a total decrease of $3.9. Other factors include a $2.6 decrease in interest on third-party borrowings by our foreign subsidiaries and $3.9 lower deferred debt amortization, partially offset by an increase in losses related to foreign exchange of $2.5, net of derivative foreign exchange contracts.

LOSS ON EARLY EXTINGUISHMENT OF DEBT

In fiscal year ended June 30, 2015, we incurred $88.8 in losses on the early extinguishment of debt in conjunction with the repurchase of our Senior Notes as described in “—Financial Condition—Liquidity and Capital Resources” below.

INCOME TAXES

The following table presents our provision for income taxes, and effective tax rates for the periods presented



	2015			2014			2013
(Benefit) Provision for income taxes	$	(26.1	)	$	20.1		$	116.8
Effective income tax rate	(11.2		)%	(45.6		)%	36.6		%

The effective income tax rate for fiscal 2015 was (11.2)% as compared with (45.6)% in fiscal 2014 and 36.6% in fiscal 2013. The effective income tax rate in fiscal 2015 reflects a change in recognized tax benefit of $62.0 due to the settlement of tax audits in multiple foreign jurisdictions and the expiration of foreign and state statutes of limitation. The effective income tax rate in fiscal 2014 reflects tax expense of $36.1 in valuation allowances primarily due to TJoy’s ongoing operating losses and excess U.S. net deferred tax assets that cannot be recognized, asset impairment charges of $67.4 offset by a change in recognized tax benefit of $49.2 due to the settlement of tax audits in multiple foreign jurisdictions and the expiration of foreign and state statutes of limitation. The effective income tax rate in fiscal 2013 reflects tax expense of $18.2 in valuation allowances primarily due to TJoy’s ongoing operating losses, $16.0 associated with the non-deductibility of certain share-based compensation offset by a change in recognized tax benefit of $28.8 due to federal, state and foreign expirations in statutes of limitations and settlements.

During fiscal 2015, we transferred certain international intellectual property rights to our wholly owned subsidiary in Switzerland in order to align our ownership of these international intellectual property rights with our global operations. Although the transfer of foreign intellectual property rights between consolidated entities did not result in any gain in the consolidated results of operations, we generated a taxable gain in the U.S. that was offset by net operating loss carryforwards. Income taxes incurred related to the intercompany transactions are treated as a prepaid income tax in our Consolidated Balance Sheet and amortized to income tax expense over the life of the intellectual property. The prepaid income tax is included in the “Prepaid expenses and other current assets” and “Other noncurrent assets” lines of the Consolidated Balance Sheet in the amount of $7.6 and $143.4, respectively. The prepaid income taxes are amortized as a component of income tax expense over twenty years.

The effective rates vary from the U.S. federal statutory rate of 35% due to the effect of (1) jurisdictions with different statutory rates, (2) adjustments to our unrecognized tax benefits and accrued interest, (3) non-deductible expenses and (4) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:

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	Year Ended June 30, 2015							Year Ended June 30, 2014							Year Ended June 30, 2013
(in millions)	Income Before Income Taxes		Provision for Income Taxes			Effective Tax Rate		Income Before Income Taxes			Provision for Income Taxes		Effective Tax Rate		Income Before Income Taxes		Provision for Income Taxes		Effective Tax Rate
Reported Income (Loss) Before Income Taxes	$	233.3	(26.1		)	(11.2	)%	$	(44.1	)	20.1		(45.6	)%	$	318.7	116.8		36.6	%
Adjustments to Reported Operating Income ^(a)	133.8		60.4					474.9			61.3				178.4		23.2
Other adjustments ^(b)	88.8		34.0					—			—				—		—
Adjusted Income Before Income Taxes	$	455.9	$	68.3		15.0	%	$	430.8		$	81.4	18.9	%	$	497.1	$	140.0	28.2	%


^(a)	See the reconciliation included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Net Revenues — Operating Income — Adjusted Operating Income”.


^(b)	See the reconciliation included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations-Net Income Attributable to Coty Inc.”.

The adjusted effective tax rate was 15.0% compared to 18.9% in the prior-year period. The decrease was a result of reversal of certain unrecognized tax benefits associated with the settlement of tax audits in multiple foreign jurisdictions. Cash paid during the year ended June 30, 2015, 2014 and 2013, for income taxes of $ 104.8 , $84.1 and $84.0 represents 23.0%, 19.5% and 16.9% of Adjusted income before income taxes for the fiscal year ended, respectively.

NET INCOME ATTRIBUTABLE TO COTY INC.

In fiscal 2015 , net income attributable to Coty Inc. increased $329.9 , to $232.5 , from $(97.4) in fiscal 2014 . This increase primarily reflects higher operating income partially offset by loss on early extinguishment of debt, as described in “Loss of Early Extinguishment of Debt” above, and higher tax expense, as described in “Income Taxes” above.

In fiscal 2014 , net income attributable to Coty Inc. decreased $265.4 , to $(97.4) , from $168.0 in fiscal 2013 . This decrease primarily reflects lower operating income partially offset by lower interest expense and lower tax expense as described in “Interest Expense, Net” and “Income Taxes” above.

We believe that Adjusted Net Income Attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”



	Year Ended June 30,									Change %
(in millions)	2015			2014			2013			2015/2014		2014/2013
Reported Net Income (Loss) Attributable to Coty Inc.	$	232.5		$	(97.4	)	$	168.0		>100%		<(100%)
% of Net revenues	5.3		%	(2.1		%)	3.6		%
Adjustments to Reported Operating Income ^(a)	133.8			474.9			178.4			(72	%)	>100%
Loss on early extinguishment of debt ^(b)	88.8			—			—			N/A		N/A
Adjustments to noncontrolling interest expense ^(c)	(1.2		)	—			—			N/A		N/A
Change in tax provision due to adjustments to Reported Net Income (Loss) Attributable to Coty Inc.	(94.4		)	(61.3		)	(23.2		)	(54	%)	<(100%)
Adjusted Net Income Attributable to Coty Inc.	$	359.5		$	316.2		$	323.2		14	%	(2	%)
% of Net revenues	8.2		%	6.9		%	7.0		%
Per Share Data
Adjusted weighted-average common shares ^(d)
Basic	353.3			381.7			381.7
Diluted	362.9			390.7			396.4
Adjusted net income attributable to Coty Inc. per common share
Basic	$	1.02		$	0.83		$	0.85
Diluted	0.99			0.81			0.82

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^(a)	See the reconciliation included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Revenues—Operating Income-Adjusted Operating Income”.


^(b)	Loss on early extinguishment of debt associated with repurchase of our Senior Notes. Included in loss on early extinguishment of debt in the Consolidated Statements of Operations.


^(c)	Noncontrolling interest expense related to the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market. Included in net income attributable to noncontrolling interests in the Consolidated Statements of Operations.

^(d)

In fiscal 2015 and 2013 , respectively, the adjusted number of common shares used to calculate non-GAAP adjusted diluted net income attributable to Coty Inc. per common share was the same as the number of diluted shares used to calculate GAAP net income (loss) per common share. In fiscal 2014 using the treasury stock method, the number of adjusted diluted common shares to calculate non-GAAP adjusted diluted net income per common share was 9.0 higher than the number of common shares used to calculate GAAP diluted net loss per common share, due to the potentially dilutive effect of certain securities issuable under our share-based compensation plans, which were considered anti-dilutive for calculating GAAP diluted net loss per common share. In fiscal 2015 , 2014 , and 2013 , respectively, the adjusted number of common shares used to calculate non-GAAP adjusted basic net income attributable to Coty Inc. per common share was identical to the number of basic shares used to calculate GAAP net income (loss) per common share.

Quarterly Results of Operations Data

The following tables set forth our unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended June 30, 2015 . We have prepared the quarterly consolidated statements of operations data on a basis consistent with the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. In the opinion of management, the financial information reflects all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of this data. This information should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in this Annual Report. The results of historical periods are not necessarily

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indicative of the results of operations for any future period.



	Three Months Ended
	Fiscal 2015											Fiscal 2014
	June 30,			March 31,			December 31,		September 30,			June 30,			March 31,			December 31,		September 30,
(in millions, except per share data)	2015			2015			2014		2014			2014			2014			2013		2013
Consolidated Statements of Operations Data:
Net revenues	$	1,019.5		$	933.8		$	1,259.6	$	1,182.3		$	1,041.5		$	1,008.7		$	1,323.2	$	1,178.2
Gross profit	605.4			582.0			750.7		700.1			592.7			613.1			773.9		706.2
Asset impairment charges	—			—			—		—			—			316.9			—		—
Acquisition-related costs	32.2			0.3			1.6								0.5			0.1		0.1
Operating (loss) income	(23.4		)	114.7			183.7		120.1			(11.4		)	(272.0		)	143.5		165.6
Interest expense, net	16.7			17.6			19.1		19.6			17.1			17.3			16.7		17.4
Other expense (income), net	0.2			(0.5		)	0.3		—			3.6			(2.1		)	—		(0.2		)
(Loss) income before income taxes	(40.3		)	97.6			164.3		11.7			(32.1		)	(287.2		)	126.8		148.4
Provision (benefit) for income taxes	(65.9		)	15.4			29.4		(5.0		)	(19.3		)	(40.5		)	33.7		46.2
Net income (loss)	$	25.6		$	82.2		$	134.9	$	16.7		$	(12.8	)	$	(246.7	)	$	93.1	$	102.2
Net income attributable to noncontrolling interests	$	1.1		$	2.9		$	6.1	$	5.0		$	3.3		$	3.4		$	6.8	$	4.3
Net income attributable to redeemable noncontrolling interests	$	3.5		$	3.8		$	3.4	$	1.1		$	4.0		$	3.2		$	3.8	$	4.4
Net income (loss) attributable to Coty Inc.	$	21.0		$	75.5		$	125.4	$	10.6		$	(20.1	)	$	(253.3	)	$	82.5	$	93.5
Per Share Data:
Weighted-average common shares:
Basic	360.4			344.7			353.4		354.2			374.3			384.0			384.4		384.0
Diluted	369.4			354.8			362.6		364.3			374.3			384.0			393.3		393.5
Cash dividends declared per common share	$	—		$	—		$	—	$	0.20		$	—		$	—		$	—	$	0.20
Net income (loss) attributable to Coty Inc. per common share:
Basic	$	0.06		$	0.22		$	0.35	$	0.03		$	(0.05	)	$	(0.66	)	$	0.21	$	0.24
Diluted	0.05			0.21			0.35		0.03			(0.05		)	(0.66		)	0.21		0.24

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our cash and cash equivalents balances decreased by approximately $900.0 during fiscal 2015 primarily as a result of the repayment of the revolving loan facility. Our primary sources of funds include cash generated from operations, borrowings from issuance of debt and committed and uncommitted lines of credit provided by banks and lenders in the U.S. and abroad. As of June 30, 2015 , we had cash and cash equivalents of $341.3 compared with $1,238.0 at June 30, 2014 .

Our cash flows are subject to seasonal variation throughout the year, including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season. Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, acquisitions, dividends, share repurchases and any principal payments on debt. The working capital movements are based on the sourcing of materials related to the production of our Fragrances, Color Cosmetics, and Skin & Body Care products.

As a result of the cash on hand, our ability to generate cash from operations and through access to our revolving credit facility and other lending sources, we believe we have sufficient liquidity to meet our ongoing needs on both a near term and long-term basis.

Debt

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	June 30, 2015			June 30, 2014
Short-term debt	$	22.1		$	18.8
Credit Agreement due March 2018	800.0			—
Coty Inc. Credit Facility
2013 Term Loan due March 2018	1,050.0			1,250.0
Incremental Term Loan due April 2018	625.0			625.0
Revolving Loan Facility due April 2018	136.5			899.5
Senior Notes
5.12% Series A notes due June 2017	—			100.0
5.67% Series B notes due June 2020	—			225.0
5.82% Series C notes due June 2022	—			175.0
Other long-term debt and capital lease obligations	1.1			0.2
Total debt	2,634.7			3,293.5
Less: Short-term debt and current portion of long-term debt	(28.8		)	(33.4		)
Total Long-term debt	$	2,605.9		$	3,260.1

Short-Term Debt

We maintain short-term lines of credit with financial institutions around the world. Total available lines of credit were $127.7 and $141.4 , of which $22.1 and $18.8 were outstanding at June 30, 2015 and 2014 , respectively. Interest rates on these short-term lines of credit vary depending on market rates for borrowings within the respective geographic locations plus applicable spreads. Interest rates plus applicable spreads on these lines ranged from 0.7% to 18.0% and from 1.3% to 13.5% as of June 30, 2015 and 2014 , respectively. The weighted-average interest rate on short-term debt outstanding was 7.1% and 6.7% as of June 30, 2015 and 2014 , respectively. In addition, we had undrawn letters of credit of $4.1 and $3.6 as of June 30, 2015 and 2014 , respectively.

Long Term Debt

2015 Credit Agreement

On March 24, 2015, we entered into a Credit Agreement (the “2015 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., BNP Paribas, Credit Agricole Corporate & Investment Bank, ING Bank, N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. We used the proceeds of the 2015 Credit Agreement to repay in full the indebtedness outstanding on its then-existing 2014 Credit Agreement, as defined below, and to repay $200.0 million of indebtedness outstanding on the existing 2013 Term Loan under the 2013 Credit Agreement, each as defined below, resulting in a remaining $1,050.0 term loan. The 2015 Credit Agreement provides for a term loan of $800.0 million (the “2015 Term Loan”), payable in full on March 31, 2018. The terms of the 2015 Term Loan are substantially the same as those of the term loan existing under the 2013 Credit Agreement, after giving effect to the 2015 Amendment as discussed below.

Rates of interest on amounts borrowed under the 2015 Credit Agreement were based on the London Interbank Offered Rate (“LIBOR”), a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2015 Credit Agreement could range from 0.125% to 1.875% based on our consolidated leverage ratio, as defined in the 2015 Credit Agreement. The applicable spread under the 2015 Credit Agreement in effect as of June 30, 2015 was 1.63%. The 2015 Credit Agreement also contained affirmative and negative covenants that are substantially the same as those contained in the 2013 Credit Agreement, as amended, as discussed below. For the year ended June 30, 2015, we recorded deferred financing fees of $3.1 in Other noncurrent assets in the Consolidated Balance Sheet. Additionally, for the year ended June 30, 2015, we recorded a write-off of $0.9 of deferred financing fees related to the repayment of $200.0 million of indebtedness outstanding on the 2013 Credit Agreement.

Coty Inc. Credit Facility

On March 24, 2015, we entered into an amendment (“2015 Amendment”) to the 2013 Credit Agreement. The 2015 Amendment amends, among other things, the financial covenants in the 2013 Credit Agreement. After giving effect to the 2015 Amendment, the 2013 Credit Agreement permits us to maintain a quarterly base leverage ratio, as defined therein, equal to or less than 3.95 to 1.0 for each fiscal quarter through to December 31, 2015. After December 31, 2015, the quarterly base leverage ratio steps down to 3.75 to 1.0 through the period ending December 31, 2016, and to 3.50 to 1.0 through maturity of

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the facility. For the year ended June 30, 2015, we recorded deferred financing fees of $3.1 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2015 Amendment.

On September 29, 2014, we entered into an Amendment (the “2014 Amendment”) to our existing 2013 Credit Agreement. The 2014 Amendment permits us to maintain a consolidated leverage ratio equal to or less than 4.5 to 1.0 for the 12-month period following an acquisition, as defined in the 2013 Credit Agreement. During the year-ended June 30, 2015, we recorded deferred financing fees of $3.1 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2014 Amendment.

On June 25, 2014, we entered into the Incremental Term Loan Amendment (the “2014 Incremental Amendment”) to the 2013 Credit Agreement. The 2014 Incremental Amendment provides for an incremental term loan of $625.0 ( the “Incremental Term Loan”), and the Incremental Term Loan has substantially the same terms and conditions as those of the 2013 Term Loan, except with respect to principal repayments. The Incremental Term Loan is payable in full on April 2, 2018. We entered into the Incremental Term Loan in connection with the repurchase of shares from two related parties during fiscal 2014 and for general corporate purposes. Applicable spreads on the borrowings under the 2014 Incremental Amendment, as amended by the 2014 Amendment, may range from 0.0% to 1.75% based on our consolidated leverage ratio, as defined in the 2013 Credit Agreement. Deferred financing fees of $2.2 were recorded in Other noncurrent assets in the Consolidated Balance Sheet in connection with the amendment as of June 30, 2014 and there were no deferred financing fees written off as a result of the amendment.

On April 2, 2013, we refinanced our then-existing credit facility by entering into a Credit Agreement (the “2013 Credit Agreement”), with JP Morgan Chase Bank, N.A. as administrative agent and Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. The 2013 Credit Agreement provides a term loan of $1,250.0 (the “2013 Term Loan”), which expires on March 31, 2018. The amount outstanding on the 2013 Term Loan is $1,050.0 as of June 30, 2015. The 2013 Credit Agreement additionally provides a revolving loan facility of $1,250.0 (the “2013 Revolving Loan Facility”) expiring on April 2, 2018, which includes up to $80.0 in swingline loans. Rates of interest on amounts borrowed under the 2013 Credit Agreement are based on the London Interbank Offer Rate (“LIBOR”), a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2013 Credit Agreement, as amended by the 2014 Amendment, may range from 0.0% to 1.75% based on our consolidated leverage ratio, as defined in the 2013 Credit Agreement. In addition to interest on amounts borrowed under the 2013 Credit Agreement, as amended by the 2014 Amendment, we pay a quarterly commitment fee, as defined in the 2013 Credit Agreement, on the 2013 Revolving Loan Facility that can range from 0.15% to 0.25% based on our consolidated leverage ratio, as defined in the 2013 Credit Agreement. Quarterly repayments for the 2013 Term Loan will commence on October 1, 2016 and will total $175.0, and $875.0 in fiscal years 2017, and 2018 respectively. We used the proceeds from the 2013 Credit Agreement to repay in full all amounts outstanding under the Credit Agreement, dated August 22, 2011, with JPMorgan Chase Bank, N.A. as administrative agent and Bank of America, N.A. and Wells Fargo Bank, N.A., as co-syndication agents and for general corporate purposes. In April 2013, we wrote off $2.6 of deferred financing fees associated with the refinancing, which was included in interest expense, net in the Consolidated Statements of Operations in fiscal 2013. As of June 30, 2015, we had $1,113.5 available for borrowings under the 2013 Credit Agreement.

2014 Credit Agreement

On September 29, 2014, we entered into a Credit Agreement (the “2014 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. The 2014 Credit Agreement provided for a term loan of $600.0 scheduled to expire on September 28, 2015 at which time it was payable in full. Rates of interest on amounts borrowed under the 2014 Credit Agreement were based on LIBOR, a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2014 Credit Agreement could have ranged from 0.0% to 1.75% based on our consolidated leverage ratio, as defined in the 2014 Credit Agreement. We used the borrowings under the 2014 Credit Agreement to prepay the outstanding principal amount of the Senior Notes, as described below, prior to their maturity date. For the year-ended June 30, 2015, we recorded deferred financing fees of $1.9 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2014 Amendment.

On March 24, 2015, we used the proceeds of the 2015 Credit Agreement to repay in full the indebtedness outstanding under the 2014 Credit Agreement.

Interest

Interest is payable quarterly or on the last day of the interest period applicable to the borrowing under our long-term debt facilities. The weighted-average interest rates on our term loans were 1.7%, 1.6%, and 1.9% in fiscal 2015, 2014, and 2013

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respectively. The weighted-average interest rates on our revolving credit facilities was 1.4%, 1.3%, and 1.6% in fiscal 2015, 2014, and 2013.

Senior Notes

On September 29, 2014, we prepaid the Senior Notes. The prepayment included the principal amount of Senior Notes of $500.0, accrued interest of $8.0 and a make-whole amount of $84.6. In connection with the prepayment, we incurred a loss on early extinguishment of debt of $88.8, which included the make-whole amount and the write-off of $4.2 of deferred financing fees related to the Senior Notes.

On June 16, 2010, we issued $500.0 of Senior Secured Notes (the “Senior Notes”) in three series in a private placement transaction pursuant to a Note Purchase Agreement (the “NPA”): (i) $100.0 in aggregate principal amount of 5.12% Series A Senior Secured Notes due June 16, 2017, (ii) $225.0 in aggregate principal amount of 5.67% Series B Senior Secured Notes due June 16, 2020 and (iii) $175.0 in aggregate principal amount of 5.82% Series C Senior Secured Notes due June 16, 2022. Interest payments are payable semi-annually in December and June. In connection with the refinancing of the credit facility in August 2011, the liens that secured the Senior Notes were released as provided in the NPA.

Financial Covenants

As of June 30, 2015, we are required to comply with certain covenants contained within the 2013 Credit Agreement and the 2015 Credit Agreement (each, as amended, the “Credit Agreements”). These covenants within the Credit Agreements contain customary representations and warranties as well as customary affirmative and negative covenants, including but not limited to, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. Events of default permitting acceleration under the Credit Agreements include, among others, nonpayment of principal or interest, covenant defaults, material breaches of representations and warranties, bankruptcy and insolvency events and certain cross defaults. In addition, a change of control is a default under the Credit Agreements. The 2015 Amendment amends, among other things, the financial covenants in the 2013 Credit Agreement. After giving effect to the 2015 Amendment, the 2013 Credit Agreement permits us to maintain a quarterly base leverage ratio, as defined therein, equal to or less than 3.95 to 1.0 for each fiscal quarter through to December 31, 2015, subject to certain agreed step-downs thereafter as defined above, a consolidated interest coverage ratio, as these terms are defined in the Credit Agreements, equal to or greater than 3.0 to 1.0 for the previous 12-month period, except that the 2014 Amendment to the 2013 Credit Agreement permits us to maintain a consolidated leverage ratio equal to or less than 4.5 to 1.0 for the 12-month period following an acquisition, as defined in the 2013 Credit Agreement.

We are in compliance with all financial covenants within the Credit Agreements as of June 30, 2015 .

Business Combinations

Bourjois Acquisition

On April 1, 2015, we completed our purchase of 100% of the net assets of the Bourjois cosmetics brand (“Bourjois”) from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated as of March 12, 2015, between us and CHANEL (the “Stock Purchase Agreement”), in order to further strengthen our position in the global color market. We issued to our foreign subsidiaries 15.5 million shares of our Class A Common Stock for $376.8 in cash and subsequently exchanged these shares with CHANEL as consideration for Bourjois. The shares had an approximate value of $376.8 based on the closing value of our Class A Common Stock on the New York Stock Exchange on April 1, 2015.

The business purpose of having our foreign subsidiaries (rather than our parent company) exchange shares with CHANEL was to acquire the respective Bourjois foreign entities based in France, the Netherlands, Switzerland, and the U.K. by our foreign entity organized in the same countries, wherever feasible, in order to make the post-acquisition integration of Bourjois’ foreign businesses and Coty’s foreign businesses as efficient as possible. None of the Bourjois entities acquired from CHANEL were organized or operated as a business in the United States, and thus, none of the shares issued to CHANEL were issued by a U.S. subsidiary. Under applicable tax principals, exchanges between us and our affiliates do not result in a taxable gain loss for us or our foreign subsidiaries. We used the cash proceeds from its foreign subsidiaries to repay revolving debt, reducing the total debt from approximately $3,600.0 as of March 31, 2015 to $3,200.0 as of April 2, 2015. The purchase price and allocation are expected to be finalized during fiscal 2016.

Pending Transaction with P&G

On July 8, 2015, we announced the signing of a definitive agreement to merge P&G’s Beauty Business into our business through a tax-free Reverse Morris Trust transaction. The transaction is based on a proposal by us valuing the P&G Beauty Business at approximately $12,500.0 at the time the proposal was made. Following the transaction, P&G shareholders are expected to own 52% of all outstanding shares on a fully diluted basis (inclusive of all outstanding equity grants), while our existing shareholders would own 48% percent of the combined company. This transaction is expected to close in the second half of calendar year 2016, subject to regulatory clearances, works council consultations, and other customary conditions.

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Cash Flows



	Year Ended June 30,
	2015			2014			2013
Consolidated Statements of Cash Flows Data: (in millions)
Net cash provided by operating activities	$	526.3		$	536.5		$	463.9
Net cash used in investing activities	(171.2		)	(257.6		)	(229.9		)
Net cash (used in) provided by financing activities	(1,138.2		)	(5.7		)	69.0

Net cash provided by operating activities

Net cash provided by operating activities was $526.3 , $536.5 and $463.9 for fiscal 2015 , 2014 and 2013 , respectively. The decrease in operating cash flows in fiscal 2015 compared with fiscal 2014 of $10.2 is primarily due to an increase in net working capital of $46.5 primarily attributable to a decrease in cash inflows attributable to more favorable vendor terms negotiated in the prior years. Offsetting the increased cash outflows in the current year was the absence of an advance of royalty payments to a licensor that occurred in the prior year of $36.5. The increase in operating cash inflows in fiscal 2014 compared with fiscal 2013 is primarily due to an increase in accrued expenses and other current liabilities of $235.8 primarily due to the elimination of cash exercises related to share-based compensation programs of $154.5 as a result of shared-based compensation plan amendments upon our initial public offering at the end of fiscal 2013 and lower bonus payments of $56.8 and an increase in accounts payable of $70.0 as a result of our initiatives to obtain more favorable vendor payment terms. These inflows were partially offset by lower cash provided by net income of $84.1 which includes the reversal of certain unrecognized tax benefits associated with the settlement of tax audits in multiple foreign jurisdictions of $38.1, higher cash outflows for prepaid advertising-related items for fiscal 2014 launches and other miscellaneous items of $30.2, higher cash outflows from other noncurrent assets of $45.9 mainly attributable to timing of advance royalty payments made to a licensor during the second quarter of fiscal 2014 and higher cash outflows for inventory of $46.6 from acquisitions in fiscal 2014 and the buildup of inventory for future launches.

Net cash used in investing activities

Net cash used in investing activities was $(171.2) , $(257.6) and $(229.9) for fiscal 2015 , 2014 and 2013 , respectively. The decrease in cash outflows in fiscal 2015 as compared to fiscal 2014 of $86.4 is primarily driven by lower capital expenditures in the current year of $30.6, the use of equity to acquire a business in the current year, cash received from the Bourjois acquisition of $12.3 and the receipt of $14.8 primarily from the completion of the sale of assets in China. The increase in cash outflows in fiscal 2014 as compared to fiscal 2013 is primarily driven by a decrease in proceeds from the sale of an asset of $25.0, which occurred in fiscal 2013, related to the termination of one of our licenses by mutual agreement with the original licensor, and higher capital expenditure spending of $7.6 during fiscal 2014. During fiscal 2014 and 2013, we had similar cash outflows for two acquisitions in each of the fiscal years.

Net cash (used in) provided by financing activities

Net cash (used in) provided by financing activities was $(1,138.2) , $(5.7) and $69.0 for fiscal 2015 , 2014 and 2013 , respectively. The increase in fiscal 2015 as compared to fiscal 2014 of $1,132.5 is primarily attributable to higher net cash outflows from debt related transactions of $1,400.3 including higher net repayments on revolving loan facilities of $817.5 and repayment of Senior Secured Notes of $584.6 and higher net payments for foreign currency contracts of $35.8, partially offset by lower cash outflows for the repurchase of treasury stock of $306.2. The increase in financing cash outflows in fiscal 2014 as compared with fiscal 2013 is primarily due to a $569.3 cash outflow for our share repurchase program and share purchase agreement in fiscal 2014 and higher dividend payments of $19.5, offset by an increase in net proceeds from borrowings under our 2013 Credit Agreement of $488.0.

Dividends

On September 16, 2014, we announced a cash dividend of $0.20 per share, or $71.9 on its Class A and Class B Common Stock. Of the $71.9, $71.0 was paid on October 15, 2014 to holders of record of Class A and Class B Common Stock on October 1, 2014 and was recorded as a decrease to APIC in the Consolidated Balance Sheet as of June 30, 2015. The remaining $0.9 is payable upon settlement of the RSUs outstanding as of October 1, 2014, and is recorded as Other noncurrent liabilities in the Consolidated Balance Sheet.

Additionally, we reduced the dividend accrual recorded in a prior period by $0.3 to adjust for accrued dividends on RSUs no longer expected to vest, which was recorded as an increase to APIC in the Consolidated Balance Sheet as of June 30, 2015. Total accrued dividends on unvested RSUs of $1.4 are included in Other noncurrent liabilities in the Consolidated Balance Sheet as of June 30, 2015.

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Share Repurchase

In connection with our Class A Common Stock repurchase program announced on February 14, 2014 and June 3, 2014, we repurchased 13.4 million and 6.6 million shares of our Class A Common Stock during the year ended June 30, 2015 and 2014, respectively. The shares were repurchased in multiple transactions at prices ranging from $18.64 to $21.99 and $14.64 to $15.69 per share during the year ended June 30, 2015 and 2014, respectively. The fair value of all shares repurchased was $263.1 and $100.0 and was reflected as an increase to Treasury stock in our Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

On September 29, 2014, we entered into an agreement with Mr. Scannavini, our former Chief Executive Officer in connection with his resignation. The agreement required that we purchase on or before January 27, 2015 all Class A Common Stock Mr. Scannavini held directly or indirectly, including shares of Class A Common Stock obtained upon the exercise of certain stock options, for a share price of $17.21, which is the average closing value of the Class A Common Stock on the New York Stock Exchange over five business days immediately preceding September 29, 2014. As a result of the agreement, we purchased 2.4 million shares of its Class A Common Stock for $42.0 and reflected as an increase to Treasury stock in our Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests during the year ended June 30, 2015. We made a net payment to Mr. Scannavini of $29.5, which is the purchase amount of $42.0 net of the aggregate exercise price of his vested stock options of $12.5.

On June 12, 2014, in connection with the PE Stock Purchase Agreement, a related party transaction, we repurchased a total of 27.9 million and less than 0.1 million shares of Class B Common Stock and Class A Common Stock, respectively, for $16.78 per share, which was determined by calculating the volume weighted average price of our Class A Common Stock from May 30, 2014 through June 5, 2014, inclusive. The value of Class B shares and Class A shares repurchased was $468.0 and $1.0, respectively, and was reflected as an increase to Treasury stock in our Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

Contractual Obligations and Commitments

Our principal contractual obligations and commitments as of June 30, 2015 are presented below:



(in millions)	Total		Payments Due in Fiscal										Thereafter
(in millions)	Total		2016		2017		2018		2019		2020		Thereafter
Long-term debt obligations	$	2,611.5	$	6.5	$	175.0	$	2,430.0	$	—	$	—	$	—
Interest on long-term debt obligations ^(a)	213.0		73.0		78.0		62.0		—		—		—
Operating lease obligations	430.3		59.0		49.5		43.2		37.7		35.7		205.2
License agreements: ^(b)
Royalty payments	271.3		32.9		34.8		32.7		34.9		30.9		105.1
Advertising and promotional spend obligations	238.2		66.5		42.6		32.6		34.5		36.0		26.0
Other contractual obligations ^(c)	161.3		37.1		32.1		28.2		22.5		12.6		28.8
Other long-term obligations:
Pension obligations (mandated) ^(d)	17.8		4.1		3.8		3.4		3.3		3.2		—
Total	$	3,943.4	$	279.1	$	415.8	$	2,632.1	$	132.9	$	118.4	$	365.1

^(a)

Interest costs on our variable rate debt are determined based on an interest rate forecast using the forward interest rate curve and assumptions of the amount of debt outstanding. A 25 basis-point increase in our variable interest rate debt would have increased our interest costs by $17.0 over the term of our long-term debt.

^(b)

Obligations under license agreements relate to royalty payments and required advertising and promotional spending levels for our products bearing the licensed trademark. Royalty payments are typically made based on contractually defined net sales. However, certain licenses require minimum guaranteed royalty payments regardless of sales levels. Minimum guaranteed royalty payments and required minimums for advertising and promotional spending have been included in the table above. Actual royalty payments and advertising and promotional spending are expected to be higher. Furthermore, early termination of any of these license agreements could result in potential cash outflows that have not been reflected above.

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^(c)

Other contractual obligations primarily represent advertising/marketing, manufacturing, logistics and capital improvements commitments. Additionally, we have included the mandatorily redeemable financial instruments arising out of our joint ventures as discussed in Note 6, “Joint Venture Arrangements”. We also maintain several distribution agreements for which early termination could result in potential future cash outflows that have not been reflected above.

^(d)

Represents future contributions to our pension plans mandated by local regulations or statutes. See Note 18, “Employee Benefit Plans” in our notes to Consolidated Financial Statements for additional information on our benefit plans’ investment strategies and expected contributions and for information regarding our total underfunded pension and post-employment benefit plans of $214.3 at June 30, 2015.

The table above excludes obligations for uncertain tax benefits, including interest and penalties, of $182.9 as of June 30, 2015, as we are unable to predict when, or if, any payments would be made. See Note 15, “Income Taxes” in our notes to Consolidated Financial Statements for additional information on our uncertain tax benefits.

Pursuant to our fiscal 2006 acquisition of Unilever Cosmetics International, we were contractually obligated to make annual contingent purchase price consideration payments for a 10-year period following the acquisition to the seller. Payments were based on contractually agreed upon sales targets and could range up to $30.0 per year. We paid $30.0 during the third quarter of fiscal 2015, 2014 and 2013 for such contingent consideration. The March 2015 payment was the final contingent purchase price payment due under the contract.

We have a 33% and 45% redeemable noncontrolling interest in our consolidated subsidiaries in the UAE and Hong Kong, respectively. We have the right to purchase the noncontrolling interests in these subsidiaries from the noncontrolling interest holders (“call right”) and the noncontrolling interest holders have the right to sell their noncontrolling interests (“put right”) to us at certain points in time. Given the provisions of the put and call rights, the entire noncontrolling interests are redeemable outside of our control and are recorded in temporary equity at the estimated redemption value of $86.3 and $106.2 as of June 30, 2015 and 2014 respectively. See Note 21, “Noncontrolling Interests and Redeemable Noncontrolling Interests” in our notes to Consolidated Financial Statements for further discussion related to the calculation of the redemption value for each of these noncontrolling interests.

Derivative Financial Instruments and Hedging Activities

We are exposed to foreign currency exchange fluctuations and interest rate volatility through our global operations. We utilize natural offsets to the fullest extent possible in order to identify net exposures. In the normal course of business, established policies and procedures are employed to manage these net exposures using a variety of financial instruments. We do not enter into derivative financial instruments for trading or speculative purposes.

Foreign Currency Exchange Risk Management

We operate in multiple functional currencies and are exposed to the impact of foreign currency fluctuations. For foreign currency exposures, which primarily relate to receivables, inventory purchases and sales, payables and intercompany loans, derivatives are used to better manage the earnings and cash flow volatility arising from foreign currency exchange rate fluctuations. We recorded foreign currency gains (losses) of $7.9 , $(18.7) and $0.1 in fiscal 2015 , 2014 and 2013 , respectively, resulting from non-financing foreign currency exchange transactions which are included in their associated expense type and are included in the Consolidated Statements of Operations. In addition, we recorded foreign currency losses of $4.1 , $2.8 and $0.2 in fiscal 2015 , 2014 and 2013 , respectively, resulting from financing foreign currency exchange transactions that have been included within interest expense, net and other (income) expense, net. These expenses are net of hedging impact.

Exchange gains or losses are also partially offset through the use of qualified derivatives under hedge accounting, for which we record accumulated gains or losses in Accumulated other comprehensive income until the underlying transaction occurs at which time the gain or loss is reclassified into the respective account in the Consolidated Statements of Operations. The accumulated loss on these derivative instruments in AOCI, net of tax, was $0.1 and $8.9 as of June 30, 2015 and June 30, 2014 , respectively.

We have experienced and will continue to experience fluctuations in our net income as a result of balance sheet transactional exposures. As of June 30, 2015, a 10.0% unfavorable change in the exchange rate of the U.S. dollar against the prevailing market rates of foreign currencies involving balance sheet transactional exposures are estimated to result in a pretax gain of approximately $54.4. In the view of management, these hypothetical gains resulting from an assumed change in foreign currency exchange rates are not material to our consolidated financial statement position or results of operations. This gain does not include the impact on our underlying foreign currency exposures.

Interest Rate Risk Management

We are exposed to interest rate risk that relates primarily to our indebtedness, which is affected by changes in the general level of the interest rates in the United States. We periodically enter into interest rate swap agreements to facilitate our interest rate management activities. In some instances, we have designated some of these agreements as cash flow hedges and,

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accordingly, applied hedge accounting. The effective changes in fair value of these agreements are recorded in accumulated other comprehensive income (loss) (“AOCI/(L)”), net of tax, and ineffective portions are recorded in current- period earnings. Amounts in AOCI/(L) are subsequently reclassified to earnings as interest expense when the hedged transactions are settled. For interest rate swap agreements not designated as hedge accounting instruments, the changes in fair value from period to period are recorded in current-period earnings in the Consolidated Statements of Operations.

We expect that both at the inception and on an ongoing basis, the hedging relationship between any designated interest rate hedges and underlying variable rate debt will be highly effective in achieving offsetting cash flows attributable to the hedged risk during the term of the hedge. If it is determined that a derivative is not highly effective, or that it has ceased to be a highly effective hedge, we will be required to discontinue hedge accounting with respect to that derivative prospectively. The corresponding gain or loss position of the ineffective hedge recorded to AOCI/(L) will be reclassified to current-period earnings.

If interest rates had been 10% higher/lower and all other variables were held constant, operating income in fiscal 2015 and 2014 would decrease/increase by $5.1 and $3.2, respectively.

Credit Risk Management

We attempt to minimize credit exposure to counterparties by generally entering into derivative contracts with counterparties that have an “A” (or equivalent) credit rating. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the fair value of contracts in net asset positions, which totaled $12.4 and $2.1 as of June 30, 2015 and 2014 , respectively. Accordingly, management believes risk of material loss under these hedging contracts is remote.

Inflation Risk

To date, we do not believe inflation has had a material effect on our business, financial condition or results of operations. However, if our costs were to become subject to significant inflationary pressures in the future, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Off-Balance Sheet Arrangements

We had undrawn letters of credit of $4.1 and $3.6 as of June 30, 2015 and 2014 , respectively.

Critical Accounting Policies

We prepare our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles. The preparation of these Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses related disclosures. These estimates and assumptions can be subjective and complex and, consequently, actual results may differ from those estimates that would result in material changes to our operating results and financial condition. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our most critical accounting policies relate to revenue recognition, goodwill, other intangible and long-lived assets, pension and other post-employment benefit costs, share-based compensation and income taxes.

Our management has discussed the selection of significant accounting policies and the effect of estimates with the Audit and Finance Committee of our Board of Directors.

Revenue Recognition

Revenue is recognized when realized or realizable and earned. Our policy is to recognize revenue when risk of loss and title to the product transfers to the customer, which usually occurs upon delivery. Net revenues comprise gross revenues less customer discounts and allowances, actual and expected returns (estimated based on returns history and position in product life cycle) and various trade spending activities. Trade spending activities relate to advertising, product promotions and demonstrations, some of which involve cooperative relationships with customers. Returns represent 3.3% , 3.9% and 3.7% of gross revenue after customer discounts and allowances in fiscal 2015 , 2014 and 2013 , respectively. Trade spending activities represent 9.3% , 9.4% and 9.4% in fiscal 2015 , 2014 and 2013 , respectively.

Our sales return accrual, which primarily relates to our Fragrances and Skin & Body Care segments, reflects seasonal fluctuations, including those related to the holiday season in our second quarter. This accrual is a subjective critical estimate that has a direct impact on reported net revenues, and is calculated based on history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels. In addition, as necessary, specific accruals may be established for significant future known or anticipated events. The types of known or anticipated events that we have considered, and will continue to consider, include, but are not limited to, the financial condition of our customers, store closings

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by retailers, changes in the retail environment, and our decision to continue to support new and existing brands. If the historical data we use to calculate these estimates does not approximate future returns, additional allowances may be required.

Goodwill, Other Intangible Assets and Long-Lived Assets

Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets. Other intangible assets consist of indefinite-lived trademarks. Goodwill and other indefinite-lived intangible assets are not amortized.

We assess goodwill at least annually as of May 1 for impairment, or more frequently, if certain events or circumstances warrant. We test goodwill for impairment at the reporting unit level, which is the same level as our reportable segments. We identify our reporting units by assessing whether the components of our reporting segments constitute businesses for which discrete financial information is available and management of each reporting unit regularly reviews the operating results of those components.

During the fourth quarter of fiscal 2014, our Board of Directors approved a program associated with a new organizational structure (“Organizational Redesign”) that aims to reinforce our growth path and strengthen its position as a global leader in beauty. We evaluated the impact of the Organizational Redesign on the determination of our operating segments and reporting units. We concluded that our operating and reportable segments continue to be Fragrances, Color Cosmetics and Skin & Body Care (also referred to as “segments”). As a result of Organizational Redesign and the new structure we have identified three reporting units: Fragrances, Color Cosmetics and Skin & Body Care as compared to five reporting units in fiscal 2014 where Color Cosmetics was considered an operating segment and a reporting unit and the Fragrances and Skin & Body Care operating segments each included two reporting units (Prestige and Beauty). Commencing July 1, 2014, Color remained a stand-alone reporting unit and Fragrances and Skin & Body Care combined Prestige and Beauty to create two reporting units, respectively.

Impairment testing for goodwill is performed in two steps: (i) the determination of possible impairment, based upon the fair value of a reporting unit as compared to its carrying value; and (ii) if there is a possible impairment indicated, this step measures the amount of impairment loss, if any, by comparing the implied fair value of goodwill with the carrying amount of that goodwill. We make certain judgments and assumptions in allocating assets and liabilities to determine carrying values for our reporting units.

Testing goodwill for impairment requires us to estimate fair values of reporting units using significant estimates and assumptions. The assumptions made will impact the outcome and ultimate results of the testing. We use industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we engage independent third-party valuation specialists for advice. To determine fair value of the reporting unit, we used a combination of the income and market approaches, giving heavier weighting to the income approach. We believe the blended use of both models compensates for the inherent risk associated with either model if used on a stand-alone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation.

Under the income approach, we determine fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. Under the market approach, we utilize information from comparable publicly traded companies with similar operating and investment characteristics as the reporting units, which creates valuation multiples that are applied to the operating performance of the reporting units being tested, to value the reporting unit.

The key estimates and factors used in these approaches include, but are not limited to, revenue growth rates and profit margins based on our internal forecasts, our specific weighted-average cost of capital used to discount future cash flows, and comparable market multiples for the industry segment as well as our historical operating trends. Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in actual and expected consumer consumption and demands, could result in changes to these assumptions and judgments. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values. We would then perform the second step of the goodwill impairment test to determine the amount of any non-cash impairment charge. Such charge could have a material effect on the Consolidated Statements of Operations and Balance Sheets.

There were no impairments of goodwill at our reporting units in fiscal year 2015.

In fiscal 2014, we anticipated realizing significant improvements in cash flows in our Beauty - Skin & Body Care Reporting Units China operations beginning in the third quarter due to the reorganization of our management team and distribution network in China and the launch of new product offerings. In the course of evaluating the results for the third quarter and the preparation of third quarter financial statements, we noted the net cash outflows associated with the TJoy mass channel business in China were significantly in excess of previous expectations and management concluded that the results in China represented an indicator of impairment that required an interim impairment test for goodwill and certain other intangible assets in the Beauty - Skin & Body Care Reporting Unit.

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In step one of the goodwill impairment test, we identified that the carrying value of the reporting unit exceeded its fair value based on a re-evaluation of discounted cash flows and confirmed by using a market approach to value the reporting unit. The main drivers of the decline were a decrease in average net sales growth rates for the reporting unit from high-single digits to mid-single digits and an increase in weighted average cost of capital, each based on management's recent estimates.

In step two of the test, the implied fair value of goodwill was determined by comparing the fair value of the other assets in the reporting unit to the fair value of the reporting unit. Predominantly as a result of the fair value of the adidas license, the implied fair value of goodwill was determined to be nil. Consequently, goodwill was fully impaired, resulting from a reduction in fair value of the Beauty - Skin & Body Care reporting unit of 43.4% from the May 1, 2013 fair value and total non-cash impairment charge of $316.9, of which $256.4 related to goodwill and $60.5 to other assets.

Using an income approach, we prepared projections for two distinct turn-around options and applied a weighted-average probability expectation to these options. The options considered were (i) a significant reduction in the number of sales representatives with a corresponding reduction in sales of TJoy products and a shift in focus to larger distributors and accounts and (ii) discontinuing distribution of the TJoy brand and outsourcing adidas through a single distributor in China. The most significant assumptions utilized in our model included a range of revenue growth rates of 1.2% to 5.0%; a perpetual growth rate in the terminal year of 4.0%; blended federal and local tax rate of 30%; and a market-based weighted average cost of capital of 13.0%. Based on this analysis, we determined that the carrying value of the reporting unit exceeded its fair value and therefore recorded an impairment charge, resulting in a full write off of the remaining goodwill balance for this reporting unit. We believe that the assumptions used in the projections are reasonable. If we had used average and perpetual growth rates that were approximately 200 basis points higher than the rate assumptions used in the projections, goodwill would not have been impaired.

There were no impairments of goodwill at our reporting units in fiscal year 2013.

Based on the annual impairment test performed at May 1, 2015, we determined that the fair values our reporting units significantly exceeded their respective carrying values at that date by a range of approximately 68% to greater than 100%. To determine the fair value of our reporting units, we have used expected growth rates that are in line with expected market growth rates for the respective product categories and include a discount rate of 9.5%.

We believe the assumptions used in calculating the estimated fair value of the reporting units are reasonable and attainable. However, we can provide no assurances that we will achieve such projected results. Further, we can provide no assurances that we will not have to recognize additional impairment of goodwill in the future due to other market conditions or changes in our interest rates. Recognition of additional impairment of a significant portion of our goodwill would negatively affect our reported results of our operations and total capitalization.

Other Intangible Assets

We assess indefinite-lived other intangible assets (trademarks) at least annually as of May 1 for impairment, or more frequently if certain events occur or circumstances change that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying value. Trademarks are tested for impairment on a brand level basis.

The trademarks’ fair values are based upon the income approach, primarily utilizing the relief from royalty methodology. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. An impairment loss is recognized when the estimated fair value of the intangible asset is less than the carrying value. Fair value calculation requires significant judgments in determining both the assets’ estimated cash flows as well as the appropriate discount and royalty rates applied to those cash flows to determine fair value. Variations in the economic conditions or a change in general consumer demands, operating results estimates or the application of alternative assumptions could produce significantly different results.

On May 1, 2015, we performed our annual impairment testing of indefinite-lived other intangible assets and determined that no adjustments to carrying values were required.

The carrying value of our indefinite-lived other intangible assets was $1,274.0 as of June 30, 2015, and is comprised of trademarks for the following brands: OPI of $660.0, philosophy of $265.3, Sally Hansen of $182.2, Bourjois of $112.0 and three other brands totaling $54.5. As of May 1, 2015, we determined that the fair value of our philosophy brand exceeded its fair value by approximately 11% using projections that assumed weighted average growth rates of approximately 3.9% and a discount rate of 10.5%. The fair value of the philosophy trademark would fall below its carrying value if the weighted average annual growth rate decreased by approximately 70 basis points or the discount rate increased by 75 basis points. The remaining indefinite-lived trademarks exceeded their carrying values by amounts ranging from 36% to greater than 100%.

In the course of evaluating the results for the third quarter fiscal 2014 and the preparation of third quarter financial statements, we noted the net cash outflows associated with the TJoy mass channel business in China were significantly in excess of previous expectations and management concluded that the results in China represented an indicator of impairment

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that required an interim impairment test for goodwill and certain other intangible assets in the Beauty - Skin & Body Care Reporting Unit.

Concurrent with the evaluation of future cash flows of the reporting unit, we also re-evaluated future cash flows from other long lived assets in China, consisting of the TJoy trademark, customer relationships and a manufacturing facility, with a total carrying value of $69.1. It was determined that the carrying value of this asset group exceeded its fair value resulting in an impairment charge of $60.5 . The TJoy trademark and customer relationships of $21.0 and $33.5, respectively, were fully impaired and the remaining $6.0 impairment charge was attributable to the reduction of the carrying value of a manufacturing facility.

We believe the assumptions used in calculating the estimated fair value of the trademarks are reasonable and attainable. However, we can provide no assurances that we will not have to recognize additional impairment of indefinite-lived intangible assets in the future due to other market conditions or changes in our interest rates. Recognition of additional impairment of a significant portion of our indefinite-lived intangible assets would negatively affect our reported results of operations and total capitalization.

Long-Lived Assets

Long-lived assets, including tangible and intangible assets with finite lives, are amortized over their respective lives to their estimated residual values and are also reviewed for impairment whenever certain triggering events may indicate impairment. When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. If the projected undiscounted cash flows are less than the carrying value, an impairment would be recorded for the excess of the carrying value over the fair value, which is determined by discounting future cash flows.

There were no impairments of long-lived assets in fiscal 2015.

During fiscal 2014, we recorded a $6.0 impairment charge in asset impairment charges in the Consolidated Statements of Operations related to a manufacturing facility in China as discussed above in "Other Intangible Assets". Subsequently in October 2014, we agreed to sell certain TJoy assets for cash of 86.0 million RMB ($14.1) in conjunction with China Optimization. As a result, we recognized a gain of $7.2 in Selling, general and administrative expenses in the Consolidated Statements of Operations during fiscal 2015.

During fiscal 2013, we sold a manufacturing facility for $2.0. The manufacturing facility had a net book value of $3.5, resulting in an asset impairment charge of $1.5.

Pension and Other Post-Employment Benefit Costs

We sponsor both funded and unfunded pension and other post-employment plans in various forms covering employees who meet the applicable eligibility requirements. We use several statistical and other factors in an attempt to estimate future events in calculating the liability and expense related to these plans. Certain significant variables require us to make assumptions that are within our control such as anticipated discount rate, expected rate of return on plan assets and future compensation levels. We evaluate these assumptions with our actuarial advisors and select assumptions that we believe reflect the economics underlying our pension and post-employment obligations. While we believe these assumptions are within accepted industry ranges, an increase or decrease in the assumptions or economic events outside our control could have a direct impact on reported net income.

The discount rates used to measure the benefit obligations at the measurement date and the net periodic benefit cost for the subsequent fiscal year are reset annually using data available at the measurement date.

The long-term rates of return on our pension plan assets are based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the assets in which the plan is invested, as well as current economic and market conditions. The difference between actual and expected return on plan assets is reported as a component of accumulated other comprehensive income (loss). Those gains or losses that are subject to amortization over future periods will be recognized as a component of the net periodic benefit cost in such future periods. In fiscal 2015, our pension plans had actual returns on assets of $4.8 as compared with expected return on assets of $4.2, which resulted in a net deferred gain of $0.6, substantially all of which is currently subject to be amortized over periods ranging from approximately 6 to 32 years. The actual return on assets was primarily related to the performance of equity markets during the past fiscal year.

The rate of future compensation increases is another assumption used by our third-party actuarial consultants for pension accounting.

The weighted-average assumptions used to determine our projected benefit obligation were as follows:

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	Pension Plans				Other Post-Employment Benefits
	U.S.		International		Other Post-Employment Benefits
	2015	2014	2015	2014	2015	2014
Discount rates	4.1%-4.5%	3.1%-4.4%	1.0%-2.7%	1.8%-3.2%	4.1%-4.6	4.8%
Future compensation growth rates	N/A	N/A	1.5%-2.5%	2.0%-2.5%	N/A	N/A

The weighted-average assumptions used to determine our net periodic benefit cost during the fiscal year were as follows:



	Pension Plans						Other Post- Employment Benefits
	U.S.			International			Other Post- Employment Benefits
	2015	2014	2013	2015	2014	2013	2015	2014	2013
Discount rates	3.1%-4.5%	3.6%-5.0%	3.4%-4.6%	1.8%-3.2%	2.3%-3.8%	2.2%-4.5%	4.2%-4.8%	5.4%	4.9%
Future compensation growth rates	N/A	N/A	N/A	2.0%-2.5%	2.0%-2.5%	2.5%-3.0%	N/A	N/A	N/A
Expected long-term rates of return on plan assets	6.5%	6.5%	6.5%	2.8%-4.3%	3.3%-4.3%	3.3%-4.3%	N/A	N/A	N/A

Our post-employment plans comprise health care plans that could be impacted by health care cost trend rates, which may have a significant effect on the amounts reported. A one-percentage point change in assumed health care cost trend rates would have the following effects:



	One Percentage Point Increase			One Percentage Point Decrease
Effect on total service cost and interest cost		$	6.1		$	(5.6	)
Effect on post-employment benefit obligation		0.6			(0.5		)

In addition, our actuarial consultants use other factors such as withdrawal and mortality rates. The actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants, among other things. Differences from these assumptions could significantly impact the actual amount of net periodic benefit cost and liability recorded by us.

Share-Based Compensation

We account for its share-based compensation plans for common stock as equity plans. The share-based compensation for equity plans is estimated and fixed at the grant date, based on the estimated fair value of the award. Series A Preferred Stock is accounted for using the liability accounting method to the extent the award is required to be settled in cash. Accordingly, share-based compensation expense for the liability was measured at the end of each reporting period based on the fair value of the award on each reporting date and was recognized as an expense to the extent earned.

Prior to June 12, 2013, our share-based compensation plans were accounted for as liability plans as they allowed for cash settlement or contained put features to sell shares back to us for cash. Accordingly, share-based compensation expense was measured at the end of each reporting period based on the fair value of the award on each reporting date and was recognized as an expense to the extent vested until the award was settled. If the award was settled for shares, the shares were included in the number of shares of common stock outstanding and the fair value of the shares was re-measured at each reporting period date through Selling, general and administrative expense as share-based compensation expense if the shares were classified as Accrued expenses and other current liabilities. Once the holders had retained the risks and rewards of share ownership by holding the shares for a reasonable period of time after they were vested and issued, generally a period of six months from vesting and issuance, the liability was reclassified, in the Consolidated Balance Sheets, between liabilities and equity as Redeemable common stock at fair value. Subsequent changes in fair value of the shares classified as Redeemable common stock were recognized in Retained earnings or, in the absence of Retained earnings, in Additional paid-in capital.

On June 12, 2013 in conjunction with our IPO, our outstanding share-based plans, consisting solely of common stock plans, were amended to eliminate the ability to settle the awards for cash and the put features to sell the shares back to us for cash and provided only a share settlement option and, as such, the plans are accounted for as equity plans. Accordingly, share-based compensation was estimated and fixed based on the fair value of outstanding share-based instruments on June 12, 2013, net of estimated forfeitures and recognized over the requisite service period.

The fair value of our outstanding Series A Preferred Stock liability as of June 30, 2015 and stock option liability at June 12, 2013 were estimated using the Black-Scholes valuation model with the following assumptions:

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	2015		2014	2013
Expected life	5.79 years		N/A	4.03 years
Risk-free interest rate	1.96	%	N/A	0.84% - 1.51%
Expected volatility	26.14	%	N/A	32.53% - 33.01%
Expected dividend yield	0.63	%	N/A	0.86% - 0.97%

Our stock options generally become exercisable 5 years from the date of the grant.

The fair value of our outstanding nonqualified stock options accounted for as equity plans granted during the year ended June 30, 2015 was estimated using the Black-Scholes valuation model with the assumptions in the table below. There were no stock options accounted for under equity plans granted during 2014 and 2013.



	2015
Expected life	7.50 years
Risk-free interest rate	1.79	%
Expected volatility	31.73	%
Expected dividend yield	0.80	%

Share-based compensation expense totaled $35.9 , $46.8 and $144.4 in fiscal 2015 , 2014 and 2013 , respectively. Share-based compensation expense is recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Share-based Compensation Expense Adjustment

Prior to June 12, 2013, management evaluated the impact of share-based compensation on operating income by comparing the expense that was recorded under liability plan accounting to the expense that would have been recorded if the plans had been accounted for as equity plans. This evaluation was relevant to management for the following reasons:

•

several of our main competitors account for their share-based compensation plans as equity plans;

•

our share-based compensation plans would be accounted for as equity plans in connection with our IPO, because the participants would no longer be able to settle the awards under the plan in cash or sell the shares back to us for cash; and

•

certain financial covenant calculations for our debt agreements were derived from calculations including share-based compensation expenses based on the equity method of accounting.

The following table compares the impact of share-based compensation expense in total to the sum of a) share-based compensation expense under equity plan accounting based on grant date fair value and b) share-based compensation expense for Series A Preferred Stock, which is used to measure the performance of segments:



	Year Ended June 30,
	2015		2014		2013
Share-based compensation expense:
Expense under liability plan accounting prior to June 12, 2013	$	—	$	—	$	142.2
Expense under liability plan accounting Series A Preferred Stock	0.4
Expense under liability plan accounting for special transactions ^(d)	15.8
Expense under equity plan accounting	19.7		46.8		2.2
Total share-based compensation expense ^(a)	35.9		46.8		144.4
Expense under equity plan accounting based on grant date fair value ^(b) and expense for Series A Preferred Stock ^(b)	17.6		19.2		24.1
Share-based compensation expense adjustment for pre-IPO grants ^(c) and special transactions ^(d)	$	18.3	$	27.6	$	120.3

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^(a)

See Note 23, “Share-Based Compensation Plans,” in our notes to the Consolidated Financial Statements.

^(b)

Share-based compensation expense calculated as if we had applied equity plan accounting since the grant date of the award for our Pre-IPO share-based compensation plans for common stock.

^(c)

Share-based compensation adjustment for Pre-IPO grants in fiscal 2015, 2014, and 2013 of $2.5, $27.6 and $120.3, respectively, consisted of (i) the difference between share-based compensation expense accounted for under equity plan accounting based on the grant date fair value and total share-based compensation expense, which was accounted for under liability plan accounting prior to June 12, 2013 and equity plan accounting subsequent to the IPO based on the fair value on June 12, 2013, for the recurring nonqualified stock option awards and director-owned and employee-owned shares, restricted shares and restricted stock units and (ii) all costs associated with the special incentive awards granted in fiscal 2012 and 2011. Vesting of the special incentive awards was dependent upon the occurrence of (i) an initial public offering by September 14, 2015, or (ii) if an initial public offering has not occurred by September 14, 2015, upon achievement of a target fair value of our share price and the completion of the service period on September 14, 2015. On June 13, 2013, the date our Class A common stock began trading on the New York Stock Exchange, 50% of the special incentive awards vested.

The remaining 50% of the special incentive awards vested on June 13, 2014 the one-year anniversary of the IPO. Prior to the IPO, we used liability plan accounting to measure share-based compensation expense in the Consolidated Statements of Operations on common stock issued to employees and directors to the extent the holders have not retained the risks and rewards of share ownership for a reasonable period of time, as determined under applicable accounting guidance. Once the holders have retained these risks and rewards for a reasonable period of time, generally deemed to be a period of six months from vesting and issuance, the liability recorded in our Consolidated Balance Sheets was reclassified as Redeemable common stock at fair value. Subsequent changes in fair value of the shares classified as Redeemable common stock were recognized in retained earnings or, in the absence of retained earnings, in additional paid-in capital. We use equity plan accounting based on grant date fair value to measure the performance of the segments.

^(d)

The adjustment also includes $15.8 million related to special transactions our parent company JABC has conducted with a related party as explained at Note 22 “Equity,” in our notes to the Consolidated Financial Statements. This expense is excluded from our segments and operating income as management views the discounted sale of shares and subsequent probable repurchase as outside the normal course of business.

As a result of the transition from liability plan accounting to equity plan accounting for our pre-IPO grants a final “mark to market” of the liability related to such awards was recorded. Based on our IPO price, in fiscal 2013 we recorded share-based compensation expense of $34.0, reclassified $188.9 from Accrued expenses and other current liabilities and $256.5 from Redeemable common stock to Additional paid in capital which reflects the change in the pre-IPO carrying amount and the estimated fair value of outstanding share-based awards and other share-based compensation activity as of June 12, 2013. The expense was recorded as an increase in share-based compensation expense and included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Income Taxes

We are subject to income taxes in the U.S. and various foreign jurisdictions. We account for income taxes under the asset and liability method. Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of temporary differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. Deferred taxes are recorded at currently enacted statutory tax rates and are adjusted as enacted tax rates change.

Classification of deferred tax assets and liabilities corresponds with the classification of the underlying assets and liabilities, giving rise to the temporary differences or the period of expected reversal, as applicable. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized based on currently available evidence. We consider how to recognize, measure, present and disclose in financial statements uncertain tax positions taken or expected to be taken on a tax return.

We are subject to tax audits in various jurisdictions. We regularly assess the likely outcomes of such audits in order to determine the appropriateness of liabilities for unrecognized tax benefits. We classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

For unrecognized tax benefits, we first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. As the determination of liabilities related to unrecognized tax benefits, associated interest and penalties requires significant estimates to be made by us, there can be no assurance that we will accurately predict the outcomes of these audits, and thus the eventual outcomes could have a material impact on our operating results or financial condition.

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Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of examinations by tax authorities, developments in case law and closing of statute of limitations. Such adjustments are reflected in the provision for income taxes as appropriate. In addition, we are present in over 35 tax jurisdictions and we are subject to the continuous examination of our income tax returns by the Internal Revenue Service (IRS) and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

It is our intention to permanently reinvest undistributed earnings and profits from our foreign operations that have been generated through June 30, 2015 and future plans do not demonstrate a need to repatriate the foreign amounts to fund U.S. operations. Accordingly, no provision has been made for U.S. income taxes on undistributed earnings of foreign subsidiaries as of June 30, 2015. It is not practicable for us to determine the amount of additional income and withholding taxes that may be payable in the event the remaining undistributed earnings are repatriated.

The balance of cumulative undistributed earnings of non-U.S. subsidiaries was $2,138.7 and $1,879.1 as of June 30, 2015 and 2014 , respectively. Our cash and cash equivalents balance at June 30, 2015 and 2014 , includes $337.7 and $1,233.1, respectively, of cash held by foreign operations associated with our permanent reinvestment strategy.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We have operations both within the U.S. and internationally, and we are exposed to market risks in the ordinary course of our business, including the effect of foreign currency fluctuations, interest rate changes ad inflation. Information relating to quantitative and qualitative disclosures about these market risks is set forth in under the captions “Foreign Currency Exchange Risk Management,” “Interest Rate Risk Management,” and “Credit Risk Management” within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and is incorporated in this Item 7A by reference.

Item 8. Financial Statements and Supplementary Data.

The information required by this Item appears beginning on page F-1 of this Annual Report on Form 10-K and is incorporated in this Item 8 by reference.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2015 . Based on the evaluation of our disclosure controls and procedures as of June 30, 2015 , our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

We have included our Management Report over Internal Control over Financial Reporting in “Item 15. Exhibits, Financial Statement Schedules” and is incorporated in this Item 9A by reference.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act during the year that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving our objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived

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and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors

Information regarding directors is incorporated by reference to the “Directors” and “Corporate Governance” sections of our proxy statement on Schedule 14A for the 2015 Annual Meeting of Shareholders (“2015 Proxy Statement”).

Executive Officers

Information regarding executive officers is incorporated by reference to the “Executive Officers” section of our 2015 Proxy Statement.

Section 16(a) Beneficial Ownership Reporting Compliance

This information is incorporated by reference to the “Section 16(a) Beneficial Ownership Reporting Compliance” section of our 2015 Proxy Statement.

Code of Ethics

T his information is incorporated by reference to the “Corporate Governance Guidelines and Code of Business Conduct” section of our 2015 Proxy Statement.

Item 11. Executive Compensation.

This information is incorporated by reference to the “Executive Compensation” and “Director Compensation” sections of our 2015 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

This information is incorporated by reference to the “Security Ownership of Certain Beneficial Owners and Management” section of our 2015 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

This information is incorporated by reference to the “Certain Relationships and Transactions of Related Persons” and “Corporate Governance” section of our 2015 Proxy Statement.

Item 14. Principal Accounting Fees and Services .

This information is incorporated by reference to the “Audit Fees and Other Fees” section of our 2015 Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

List of documents filed as part of this Report:


(1)	Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firm included herein: See Index on page F-1.


(2)	Financial Statement Schedule: See S-1.

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(3)	All other schedules are omitted as they are inapplicable or the required information is furnished in the Company’s Consolidated Financial Statements or the Notes thereto.


(4)	List of Exhibits:



Exhibit Number			Document
2.1			Stock Purchase Agreement, dated March 12, 2015, between the registrant and Chanel International B.V. (previously filed on March 13, 2015 as Exhibit 2.1 to the registrant’s report on Form 8-K)
2.2			Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, the registrant, Galleria Co. and Green Acquisition Sub Inc.*
2.3			Repurchase Letter Agreement dated August 13, 2015 among The Procter & Gamble Company, the registrant, Galleria Co. and Green Acquisition Sub Inc.
3.1			Form of Amended and Restated Certificate of Incorporation (previously filed on May 14, 2013 as Exhibit 3.1 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
3.2			Amended and Restated By-Laws (previously filed on April 24, 2013 as Exhibit 3.2 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
4.1			Specimen Class A Common Stock Certificate of the registrant (previously filed on May 28, 2013 as Exhibit 4.1 to Amendment No. 6 to the registrant’s Registration Statement on Form S-1)
4.2			Specimen Class B Common Stock Certificate of the registrant (previously filed on May 28, 2013 as Exhibit 4.1 to Amendment No. 6 to the registrant’s Registration Statement on Form S-1)
4.3			Certificate of Designations of Preferred Stock, Series A, dated April 17, 2015 (previously filed on April 20, 2015 as Exhibit 4.1 to the registrant’s report on Form 8-K)
10.1			Form of Phantom Unit Award Terms and Conditions (previously filed on December 5, 2014 as Exhibit 10.1 to the registrant’s report on Form 8-K)
10.2			Credit Agreement, dated as of April 2, 2013, among the registrant, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A. as Syndication Agents, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Merrill Lynch Pierce, Fenner & Smith Incorporated, Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Securities, LLC as Lead Arrangers and Joint Bookrunners, and the lenders party thereto (previously filed on April 24, 2013 as Exhibit 10.1 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.3			Third Amendment, dated March 24, 2015, to the Credit Agreement, dated April 2, 2013, among the registrant, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A. as Syndication Agents, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Merrill Lynch Pierce, Fenner & Smith Incorporated, Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Securities, LLC as Lead Arrangers and Joint Bookrunners, and the lenders party thereto (previously filed on March 24, 2015 as Exhibit 10.1 to the registrant’s current report on Form 8-K)
10.4			Credit Agreement, dated as of March 24, 2015, among the registrant, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A. as Syndication Agents, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Merrill Lynch Pierce, Fenner & Smith Incorporated, Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Securities, LLC as Lead Arrangers and Joint Bookrunners, and the lenders party thereto (previously filed on March 24, 2015 as Exhibit 10.2 to the registrant’s current report on Form 8-K)

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10.5			Incremental Term Loan Amendment, dated as of June 25, 2014, to the Credit Agreement among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders listed on the signature page thereto (previously filed on June 25, 2014 as Exhibit 10.1 to the registrant's current report on Form 8-K)
10.6			Registration Rights Agreement, dated April 1, 2015, between the registrant and Mousseluxe S.a.r.l. (previously filed on April 1, 2015 as Exhibit 10.1 to the registrant’s report on Form 8-K)
10.7			Lease Agreement, dated as of July 14, 2008 and amended as of March 17, 2009, May 19, 2011 and April 6, 2012, between the registrant and Empire State Building Company L.L.C. (previously filed on January 24, 2013 as Exhibit 10.4 to Amendment No. 2 to the registrant’s Registration Statement on Form S-1)
10.8			Lease Agreement, dated as of July 12, 2013, between Coty France S.A.S. and Patrizia Gewerbeinvest KAG MBH (previously filed on November 8, 2013 as Exhibit 10.8 to the registrant’s Annual Report on Form 10-K)
10.9			Lease Agreement, dated as of January 22, 2014, between the Company and Westinvest Gesellschaft Für Ivesmentfonds mbH (previously filed on May 14, 2014 as Exhibit 10.8 to the registrant's quarterly report on Form 10-Q)
10.10			Lease Agreement, dated as of November 12, 1992 and amended as of February 4, 1994, March 10, 1997, January 23, 2000, March 31, 2000, August 1, 2006, January 28, 2008 and August 14, 2012 between Baker-Properties Limited Partnership and Coty US LLC (previously filed on January 24, 2013 as Exhibit 10.9 to Amendment No. 2 to the registrant’s Registration Statement on Form S-1)
10.11			Lease Agreement, entered into as of March 31, 2000 and amended as of August 1, 2006, September 8, 2009, August 16, 2010 and August 14, 2012 between WU/LH 100 American L.L.C., as successor to Baker Properties Limited Partnership, and Coty US LLC (previously filed on January 24, 2013 as Exhibit 10.10 to Amendment No. 2 to the registrant’s Registration Statement on Form S-1)
10.12			Lease Agreement, dated as of July 25, 2011, between Terinvest SA and Coty Geneva S.A. (previously filed on January 24, 2013 as Exhibit 10.11 to Amendment No. 2 to the registrant’s Registration Statement on Form S-1)
10.13			Lease Agreement, dated August 14, 2012 between WU/LH 500 American L.L.C. and Coty US LLC (previously filed on January 24, 2013 as Exhibit 10.12 to Amendment No. 2 to the registrant’s Registration Statement on Form S-1)
10.14			Lease Agreement, dated April 17, 2014 between Coty Lancaster S.A.M. and Catherine Matthyssens (previously filed on August 28, 2014 as Exhibit 10.10 to the registrant’s Annual Report on Form 10-K)
10.15			Employment Agreement, dated September 25, 2012, between Coty Italia S.P.A. and Michele Scannavini (previously filed on May 14, 2013 as Exhibit 10.14 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
10.16			Employment Agreement, dated November 19, 2007, between the registrant and Jules Kaufman (previously filed on May 14, 2013 as Exhibit 10.15 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
10.17			Employment Agreement, dated February 18, 1998, between Coty S.A. and Géraud-Marie Lacassagne (previously filed on May 14, 2013 as Exhibit 10.16 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
10.18			Employment Agreement, dated September 15, 2013, between Coty Inc. and Darryl McCall (previously filed on September 17, 2013 as Exhibit 10.17 to the registrant's Annual Report on Form 10-K)
10.19			Employment Agreement, dated October 1, 2012, between Coty S.A.S. and Jean Mortier (previously filed on May 14, 2013 as Exhibit 10.19 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
10.20			Rider, dated October 15, 2012, to Employment Agreement, dated July 20, 2006, between Coty S.A.S. and Jean Mortier (previously filed on May 14, 2013 as Exhibit 10.20 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)
10.21			Employment Agreement, dated July 4, 2012, between Coty Geneva S.A. Versoix. and Renato Semerari (previously filed on May 14, 2013 as Exhibit 10.22 to Amendment No. 5 to the registrant’s Registration Statement on Form S-1)

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10.22			Employment Agreement, dated December 3, 2013, between the registrant and Patrice de Talhouët (previously filed on December 6, 2013 as Exhibit 10.1 to the registrant's current report on Form 8-K)
10.23			Employment Agreement, dated January 22, 2014, between Coty Geneva S.A. Versoix and Catia Cesari (previously filed on May 14, 2014 as Exhibit 10.48 to the registrant's quarterly report on Form 10-Q)
10.24			Employment Agreement, dated January 2014, between Coty Geneva S.A. Versoix and Mario Reis (previously filed on August 28, 2014 as Exhibit 10.22 to the registrant’s Annual Report on Form 10-K)
10.25			Employment Agreement, dated January 18, 2008 between Coty S.A.S. and Thomas Muench (previously filed on May 16, 2014 as Exhibit 10.1 to the registrant's current report on Form 8-K)
10.26			Short Term Transfer Agreement Letter, dated May 5, 2014, between the registrant and Thomas Muench (previously filed on May 16, 2014 as Exhibit 10.2 to the registrant's current report on Form 8-K)
10.27			Employment Agreement, dated April 7, 2015, between Coty Services U.K. Limited and Camillo Pane
10.28			Employment Agreement, dated April 17, 2015, between the registrant and Elio Leoni Sceti (previously filed on April 20, 2015 as Exhibit 99.1 to the registrant’s report on Form 8-K)
10.29			Separation Agreement, dated July 21, 2014, between the registrant and Ralph Macchio (previously filed on August 28, 2014 as Exhibit 10.25 to the registrant’s Annual Report on Form 10-K)
10.30			Separation Agreement Amendment, dated January 21, 2015, between the registrant and Ralph Macchio
10.31			Settlement Agreement, dated between Coty Italia S.p.A. and Michele Scannavini (previously filed on November 6, 2014 as Exhibit 10.47 to the registrant’s quarterly report on Form 10-Q)
10.32			Settlement Agreement, dated December 18, 2014, between Coty Geneva S.A. Versoix and Catia Cesari (previously filed on February 5, 2015 as Exhibit 10.48 to the registrant’s quarterly report on Form 10-Q)
10.33			Separation Agreement, dated April 30, 2015, between Coty Geneva SA Versoix and Renato Semerari
10.34			Dissolution Agreement, dated June 22, 2015, between the registrant and Elio Leoni Sceti
10.35			Form of Indemnification Agreement between the registrant and its directors and officers (previously filed on April 24, 2013 as Exhibit 10.24 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.36			Coty Inc. Annual Performance Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.27 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.37			Coty Inc. Long-Term Incentive Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.28 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.38			Nonqualified Stock Option Award Terms and Conditions Under Coty Inc. Long-Term Incentive Plan, as amended April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.29 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.39			Form of IPO Unit Incentive Award Under Coty Inc. Long-Term Incentive Plan (previously filed on April 24, 2013 as Exhibit 10.30 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.40			Restricted Stock Unit Award Terms and Conditions Under Coty Inc. Long-Term Incentive Plan, as amended April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.31 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)

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10.41			Coty Inc. Executive Ownership Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.32 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.42			Adoption of Amendments to Restricted Stock Units Under the Coty Inc. Executive Ownership Plan (applicable to awards outstanding on September 14, 2010) (previously filed on April 24, 2013 as Exhibit 10.33 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.43			Adoption of Amendments to Restricted Stock Units Under the Coty Inc. Executive Ownership Plan (applicable to awards outstanding on December 7, 2012) (previously filed on April 24, 2013 as Exhibit 10.34 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.44			Form of Restricted Stock Agreement Under Coty Inc. Executive Ownership Plan, as amended on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.35 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.45			Matching Option Award Terms and Conditions Under Coty Inc. Executive Ownership Plan, as amended on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.36 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.46			Coty Inc. Stock Plan for Non-Employee Directors (previously filed on April 24, 2013 as Exhibit 10.37 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.47			Form of Nonqualified Stock Option Award Agreement Under Coty Inc. Stock Plan for Non-Employee Directors (previously filed on April 24, 2013 as Exhibit 10.38 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.48			Coty Inc. 2007 Stock Plan for Directors, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.39 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.49			Adoption of Amendments to Pre-2008 Stock Options Granted Under the Coty Inc. 2007 Stock Plan for Directors Or the Coty Inc. Stock Plan for Non-Employee Directors (applicable to awards outstanding on September 14, 2010) (previously filed on April 24, 2013 as Exhibit 10.40 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.50			Form of Restricted Stock Unit Award under Coty Inc. 2007 Stock Plan for Directors, as amended on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.41 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.51			Coty Inc. Stock Purchase Program for Directors, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.42 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.52			Coty Inc. Equity and Long-Term Incentive Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.43 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.53			Restricted Stock Unit Award Terms and Conditions Under Coty Inc. Equity and Long-Term Incentive Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.44 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.54			Restricted Stock and Restricted Stock Unit Tandem Award Terms and Conditions under the Coty Inc. Equity and Long-Term Incentive Plan, as amended and restated on April 8, 2013 (previously filed on April 24, 2013 as Exhibit 10.45 to Amendment No. 4 to the registrant’s Registration Statement on Form S-1)
10.55			Form of Subscription Agreement for Series A Preferred Stock

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10.56		Second Amendment, dated September 29, 2014, to the Credit Agreement, dated April 2, 2013, among the registrant, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A. as Syndication Agents, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Merrill Lynch Pierce, Fenner & Smith Incorporated, Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Securities, LLC as Lead Arrangers and Joint Bookrunners, and the lenders party thereto (previously filed on October 2, 2014 as Exhibit 10.1 to the registrant’s current report on Form 8-K)
21.1		List of significant subsidiaries
23.1		Consent of Deloitte & Touche LLP
24.1		Power of Attorney (included in signature page)
31.1		Certification of Chief Executive Officer, pursuant to Rules 13a-14a and15d-14(a)
31.2		Certification of Chief Financial Officer, pursuant to Rules 13a-14(d) and 15d-14(d)
32.1		Certification of Chief Executive Officer, pursuant to 18 U.S. C. Section 1350
32.2		Certification of Chief Financial Officer, pursuant to 18 U.S. C. Section 1350
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
*	Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementary to the Securities and Exchange Commission a copy of any omitted schedule or similar attachment upon request.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, New York on August 17, 2015.



		COTY INC.
		By:	/s/Patrice de Talhouët
			Name: Patrice de Talhouët
			Title: Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jules P. Kaufman, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



Signature	Title	Date

/s/Lambertus J.H. Becht	Interim Chief Executive Officer and Chairman of the Board of Director (Principal Executive Officer)	August 17, 2015
(Lambertus J.H. Becht)		August 17, 2015
/s/Patrice de Talhouët	Chief Financial Officer (Principal Financial Officer)	August 17, 2015
(Patrice de Talhouët)	Chief Financial Officer (Principal Financial Officer)	August 17, 2015
/s/Thomas Muench	Senior Vice President, Group Controller (Principal Accounting Officer)	August 17, 2015
(Thomas Muench)		August 17, 2015
/s/Joachim Faber	Director	August 17, 2015
(Joachim Faber)	Director	August 17, 2015
/s/Olivier Goudet	Director	August 17, 2015
(Olivier Goudet)	Director	August 17, 2015
/s/Peter Harf	Director	August 17, 2015
(Peter Harf)	Director	August 17, 2015
/s/Paul Michaels	Director	August 17, 2015
(Paul Michaels)	Director	August 17, 2015
/s/Erhard Schoewel	Director	August 17, 2015
(Erhard Schoewel)	Director	August 17, 2015
/s/Robert Singer	Director	August 17, 2015
(Robert Singer)	Director	August 17, 2015
/s/Jack Stahl	Director	August 17, 2015
(Jack Stahl)	Director	August 17, 2015

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MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Coty’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) of the Securities Exchange Act of 1934) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Coty’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets; and

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Coty’s management evaluated the effectiveness of internal control over financial reporting as of June 30, 2015 based on the criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation, management has concluded that Coty maintained effective internal control over financial reporting as of June 30, 2015.

The Company's internal control over financial reporting as of June 30, 2015 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which appears herein.

/s/ Lambertus J.H. Becht /s/Patrice deTalhouët

Lambertus J.H. Becht Patrice deTalhouët

Interim Chief Executive Officer and Chief Financial Officer

Chairman of the Board of Directors

August 17, 2015

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Coty Inc.,

New York, New York

We have audited the internal control over financial reporting of Coty Inc. and its subsidiaries (the "Company") as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended June 30, 2015 of the Company and our report dated August 17, 2015 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

New York, New York

August 17, 2015

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Coty Inc.,

New York, New York

We have audited the accompanying consolidated balance sheets of Coty Inc. and its subsidiaries (the "Company") as of June 30, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), equity, redeemable common stock and redeemable noncontrolling interests, and cash flows for each of the three years in the period ended June 30, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Coty Inc. and subsidiaries as of June 30, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 17, 2015, which expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP

New York, New York

August 17, 2015

Table of Contents

COTY INC. & SUBSIDIARIES

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS




Consolidated Statements of Operations		F-1
Consolidated Statements of Comprehensive Income (Loss)		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Equity, Redeemable Common Stock and Redeemable Noncontrolling Interests and Consolidated Statements of Equity and Redeemable Noncontrolling Interests		F-4
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-9
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts		S-1

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data )



	Year Ended June 30,
	2015			2014			2013
Net revenues	$	4,395.2		$	4,551.6		$	4,649.1
Cost of sales	1,757.0			1,865.7			1,860.3
Gross profit	2,638.2			2,685.9			2,788.8
Selling, general and administrative expenses	2,066.1			2,219.6			2,283.7
Amortization expense	74.7			85.7			90.2
Restructuring costs	75.4			37.3			29.4
Acquisition-related costs	34.1			0.7			8.9
Asset impairment charges	—			316.9			1.5
Gain on sale of asset	(7.2		)	—			(19.3		)
Operating income	395.1			25.7			394.4
Interest expense, net	73.0			68.5			76.5
Loss on early extinguishment of debt	88.8			—			—
Other expense (income), net	—			1.3			(0.8		)
Income (loss) before income taxes	233.3			(44.1		)	318.7
(Benefit) provision for income taxes	(26.1		)	20.1			116.8
Net income (loss)	259.4			(64.2		)	201.9
Net income attributable to noncontrolling interests	15.1			17.8			15.7
Net income attributable to redeemable noncontrolling interests	11.8			15.4			18.2
Net income (loss) attributable to Coty Inc.	$	232.5		$	(97.4	)	$	168.0
Net income (loss) attributable to Coty Inc. per common share:
Basic	$	0.66		$	(0.26	)	$	0.44
Diluted	0.64			(0.26		)	0.42
Weighted-average common shares outstanding:
Basic	353.3			381.7			381.7
Diluted	362.9			381.7			396.4

See notes to Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)



	Year Ended June 30,
	2015			2014			2013
Net income (loss)	$	259.4		$	(64.2	)	$	201.9
Other comprehensive income (loss):
Foreign currency translation adjustment	(228.4		)	63.8			19.9
Net unrealized derivative gain (loss) on cash flow hedges, net of taxes of $(1.6), $1.6 and nil, respectively	8.8			(8.9		)	—
Pension and other post-employment benefits adjustment, net of tax of $(17.6), $9.8 and $(6.0), respectively	30.1			(21.3		)	7.5
Total other comprehensive (loss) income, net of tax	(189.5		)	33.6			27.4
Comprehensive income (loss):	69.9			(30.6		)	229.3
Comprehensive income attributable to noncontrolling interests:
Net income	15.1			17.8			15.7
Foreign currency translation adjustment	(0.4		)	0.3			(0.2		)
Total comprehensive income attributable to noncontrolling interests	14.7			18.1			15.5
Comprehensive income attributable to redeemable noncontrolling interests:
Net income	11.8			15.4			18.2
Foreign currency translation adjustment	(0.2		)	(0.2		)	(1.0		)
Total comprehensive income attributable to redeemable noncontrolling interests	11.6			15.2			17.2
Comprehensive income (loss) attributable to Coty Inc.	$	43.6		$	(63.9	)	$	196.6

See notes to Consolidated Financial Statements.

F-2

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data )



	June 30, 2015			June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	341.3		$	1,238.0
Trade receivables—less allowances of $19.6 and $16.7, respectively	679.6			664.8
Inventories	557.8			617.4
Prepaid expenses and other current assets	191.0			201.2
Deferred income taxes	86.7			63.4
Total current assets	1,856.4			2,784.8
Property and equipment, net	500.2			540.3
Goodwill	1,530.7			1,342.8
Other intangible assets, net	1,913.6			1,837.1
Deferred income taxes	10.4			11.4
Other noncurrent assets	207.6			76.1
TOTAL ASSETS	$	6,018.9		$	6,592.5
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	748.4		$	810.2
Accrued expenses and other current liabilities	719.2			723.6
Short-term debt and current portion of long-term debt	28.8			33.4
Income and other taxes payable	22.4			29.4
Deferred income taxes	7.4			0.7
Total current liabilities	1,526.2			1,597.3
Long-term debt	2,605.9			3,260.1
Pension and other post-employment benefits	206.5			272.5
Deferred income taxes	352.6			273.3
Other noncurrent liabilities	256.7			228.7
Total liabilities	4,947.9			5,631.9
COMMITMENTS AND CONTINGENCIES (Note 25)
REDEEMABLE NONCONTROLLING INTERESTS	86.3			106.2
EQUITY:
Preferred stock, $0.01 par value; 20.0 shares authorized; 1.9 and none issued and outstanding, respectively, at June 30, 2015 and 2014	—			—
Class A Common Stock, $0.01 par value; 800.0 shares authorized, 134.0 and 125.1 issued, respectively, and 98.8 and 90.2 outstanding, respectively, at June 30, 2015 and 2014	1.3			1.2
Class B Common Stock, $0.01 par value; 262.0 and 263.7 shares authorized, issued and outstanding, respectively, at June 30, 2015 and 2014	2.6			2.6
Additional paid-in capital	2,044.4			1,926.9
Accumulated deficit	(193.9		)	(426.4		)
Accumulated other comprehensive loss	(274.0		)	(85.1		)
Treasury stock—at cost, shares: 35.2 and 34.9 at June 30, 2015 and 2014, respectively	(610.6		)	(575.4		)
Total Coty Inc. stockholders’ equity	969.8			843.8
Noncontrolling interests	14.9			10.6
Total equity	984.7			854.4
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,018.9		$	6,592.5

See notes to Consolidated Financial Statements.

F-3

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY, REDEEMABLE COMMON STOCK

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)



	Common Stock					Class A Common Stock			Class B Common Stock			Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock					Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Common			Redeemable Noncontrolling
	Shares		Amount			Shares	Amount		Shares	Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Equity			Interests			Equity			Stock			Interests
BALANCE—July 1, 2012	399.4		$	4.0								$	1,496.2		$	(390.3	)	$	(147.2	)	17.5		$	(105.5	)	$	857.2		$	12.0		$	869.2		$	172.4		$	95.9
Issuance of Common Stock	1.0		—									15.6														15.6						15.6
Reclassification of Common Stock to liability												(15.6		)												(15.6		)				(15.6		)
Reclassification of liability to redeemable Common Stock																										—						—			131.2
Fair value adjustment of redeemable Common Stock												(47.1		)												(47.1		)				(47.1		)	47.1
Transfer of redeemable Common Stock to JAB												93.5														93.5						93.5			(93.5		)
Purchases of redeemable Common Stock												2.5									0.2		(2.5		)	—						—			(0.7		)
Retirement of Treasury Stock	(17.6	)	(0.2		)										(106.7		)				(17.6	)	106.9			—						—
Conversion of Common Stock to Class A and Class B Common Stock	(382.8	)	(3.8		)	72.2	0.7		310.6	3.1																—						—
Reclassification of redeemable Common Stock to APIC												256.5														256.5						256.5			(256.5		)
Reclassification of liability to APIC												188.9														188.9						188.9
Settlement of employee IPO restricted stock units						1.2						21.0														21.0						21.0
Purchase of Class A Common Stock																					0.3		(5.0		)	(5.0		)				(5.0		)
Exercise of employee stock options						0.2						1.2														1.2						1.2
Share-based compensation expense												2.2														2.2						2.2
Dividends ($0.15 per common share)												(57.8		)												(57.8		)				(57.8		)
Net income															168.0											168.0			15.7			183.7						18.2
Other comprehensive income (loss)																		28.6								28.6			(0.2		)	28.4						(1.0		)
Distribution to noncontrolling interests, net																										—			(11.8		)	(11.8		)				(20.5		)
Adjustment of redeemable noncontrolling interests to redemption value												(13.2		)												(13.2		)				(13.2		)				13.2
BALANCE—June 30, 2013	—		$	—		73.6	$	0.7	310.6	$	3.1	$	1,943.9		$	(329.0	)	$	(118.6	)	0.4		$	(6.1	)	$	1,494.0		$	15.7		$	1,509.7		$	—		$	105.8

F-4

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)



	Class A Common Stock			Class B Common Stock					Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock				Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares	Amount		Shares		Amount			Capital			Deficit)			Income (Loss)			Shares	Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2013	73.6	$	0.7	310.6		$	3.1		$	1,943.9		$	(329.0	)	$	(118.6	)	0.4	$	(6.1	)	$	1,494.0		$	15.7		$	1,509.7		$	105.8
Conversion of Class B to Class A Common Stock	46.9	0.5		(46.9	)	(0.5		)														—						—
Purchase of Class A Common Stock									0.3									34.5	(569.3		)	(569.0		)				(569.0		)
Exercise of employee stock options	4.6	—							21.9													21.9						21.9
Share-based compensation expense									41.9													41.9						41.9
Dividends ($0.20 per common share)									(77.4		)											(77.4		)				(77.4		)
Net (loss) income												(97.4		)								(97.4		)	17.8			(79.6		)	15.4
Other comprehensive income															33.5							33.5			0.3			33.8			(0.2		)
Distribution to noncontrolling interests, net																									(23.0		)	(23.0		)	(14.3		)
Noncontrolling interest purchase adjustment									(4.2		)											(4.2		)	(0.2		)	(4.4		)
Adjustment of redeemable noncontrolling interests to redemption value									0.5													0.5						0.5			(0.5		)
BALANCE—June 30, 2014	125.1	$	1.2	263.7		$	2.6		$	1,926.9		$	(426.4	)	$	(85.1	)	34.9	$	(575.4	)	$	843.8		$	10.6		$	854.4		$	106.2

F-5

Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(In millions)



	Preferred Stock			Class A Common Stock			Class B Common Stock				Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock					Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares	Amount		Shares	Amount		Shares		Amount		Capital			Deficit)			(Loss)			Shares		Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2014	—	$	—	125.1	$	1.2	263.7		$	2.6	$	1,926.9		$	(426.4	)	$	(85.1	)	34.9		$	(575.4	)	$	843.8		$	10.6		$	854.4		$	106.2
Issuance of Preferred Stock	1.9	—																							—						—
Conversion of Class B to Class A Common Stock				1.7	—		(1.7	)	—																—						—
Purchase of Class A Common Stock											—									13.4		(263.1		)	(263.1		)				(263.1		)
Reissuance of Treasury Stock for Bourjois Acquisition											106.9									(15.5	)	269.9			376.8						376.8
Reclassification of common stock and stock options to liability											(29.5		)												(29.5		)				(29.5		)
Reclassification of Class A Common Stock from liability to APIC											29.5														29.5						29.5
Exercise of former CEO stock options				1.4	—						12.5														12.5						12.5
Purchase of Class A Common Stock from former CEO																				2.4		(42.0		)	(42.0		)				(42.0		)
Discount of Class A Common Stock											1.9														1.9						1.9
Exercise of employee stock options and settlement of restricted stock units				5.8	0.1						48.4														48.5						48.5
Share-based compensation expense											14.3														14.3						14.3
Dividends ($0.20 per common share)											(71.6		)												(71.6		)				(71.6		)
Net income														232.5											232.5			15.1			247.6			11.8
Other comprehensive loss																	(188.9		)						(188.9		)	(0.4		)	(189.3		)	(0.2		)
Proceeds from noncontrolling interests																												1.8			1.8			—
Distribution to noncontrolling interests																												(12.2		)	(12.2		)	(9.1		)
Dividend payable to redeemable noncontrolling interest holder																																		(1.5		)
Redeemable noncontrolling interest purchase																																		(15.8		)
Adjustment of redeemable noncontrolling interests to redemption value											5.1														5.1						5.1			(5.1		)
BALANCE—June 30, 2015	1.9	$	—	134.0	$	1.3	262.0		$	2.6	$	2,044.4		$	(193.9	)	$	(274.0	)	35.2		$	(610.6	)	$	969.8		$	14.9		$	984.7		$	86.3

See notes to Consolidated Financial Statements.

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Table of Contents

COTY INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Year Ended June 30,
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	259.4		$	(64.2	)	$	201.9
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	230.9			250.7			259.6
Asset impairment charges	—			316.9			1.5
Deferred income taxes	(87.2		)	(38.4		)	29.9
Provision for bad debts	4.5			3.2			3.2
Provision for pension and other post-employment benefits	16.2			17.9			16.1
Share-based compensation	30.6			46.8			144.4
Gain on sale of asset	(7.2		)	—			(19.3		)
Loss on extinguishment of debt	88.8			—			—
Other	20.5			15.0			(5.3		)
Change in operating assets and liabilities, net of effects from purchase of acquired companies:
Trade receivables	(43.5		)	(31.1		)	(36.7		)
Inventories	29.4			2.2			48.8
Prepaid expenses and other current assets	6.0			(2.3		)	27.9
Accounts payable	7.0			72.4			2.4
Accrued expenses and other current liabilities	16.1			20.3			(215.5		)
Tax accruals	127.7			(31.9		)	(6.7		)
Other noncurrent assets	(136.7		)	(34.4		)	11.5
Other noncurrent liabilities	(36.2		)	(6.6		)	0.2
Net cash provided by operating activities	526.3			536.5			463.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(170.9		)	(201.5		)	(193.9		)
Payments for business combinations, net of cash acquired	(0.6		)	(29.5		)	(31.0		)
Additions of goodwill	(30.0		)	(30.0		)	(30.0		)
Proceeds from sale of assets	14.8			3.4			25.0
Cash acquired from business combination	12.3			—			—
Other	3.2			—			—
Net cash used in investing activities	(171.2		)	(257.6		)	(229.9		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt, original maturity more than three months	652.2			39.4			43.1
Repayments of short-term debt, original maturity more than three months	(655.0		)	(48.1		)	(55.5		)
Net proceeds from (repayments of) short-term debt, original maturity less than three months	11.6			(8.4		)	(10.7		)
Proceeds from revolving loan facilities	853.0			750.0			1,148.5
Repayments of revolving loan facilities	(1,616.0		)	(695.5		)	(957.0		)
Proceeds from term loans	800.0			625.0			1,250.0
Repayments of term loans	(200.0		)	—			(1,250.0		)
Proceeds from issuance of long term debt	0.9			—			—
Repayment of Senior Notes	(584.6		)	—			—
Dividend payment	(71.0		)	(76.9		)	(57.4		)
Net proceeds from issuance of Common Stock	48.5			21.9			6.2
Net proceeds from issuance of Common Stock to former CEO	12.5			—			—
Purchase of Class A Common Stock from former CEO	(42.0		)	—			—
Payments for purchases of related party Common Stock held as Treasury Stock	—			(469.0		)	—
Payments for purchases of Common Stock held as Treasury Stock	(263.1		)	(100.3		)	(7.5		)
Net (payments for) proceeds from foreign currency contracts	(37.9		)	(2.1		)	1.5
Payment for business combinations – contingent consideration	(0.8		)	(1.1		)	—
Proceeds from mandatorily redeemable noncontrolling interests	—			3.8			—
Proceeds from noncontrolling interests	1.8			—			1.7
Distributions to noncontrolling interests	(12.2		)	(23.0		)	(13.5		)
Purchase of additional noncontrolling interests	—			(4.4		)	—
Distributions to redeemable noncontrolling interests	(9.1		)	(14.3		)	(20.5		)
Purchase of additional redeemable noncontrolling interests	(15.8		)	—			—
Payment of deferred financing fees	(11.2		)	(2.7		)	(9.9		)
Net cash (used in) provided by financing activities	(1,138.2		)	(5.7		)	69.0
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(113.6		)	44.4			8.0
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(896.7		)	317.6			311.0
CASH AND CASH EQUIVALENTS—Beginning of period	1,238.0			920.4			609.4

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Table of Contents



CASH AND CASH EQUIVALENTS—End of period	$	341.3	$	1,238.0	$	920.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the year for interest	$	64.7	$	63.7	$	71.0
Cash paid during the year for income taxes, net of refunds received	104.8		84.1		84.0
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Accrued capital expenditure additions	$	41.2	$	59.2	$	56.7
Issuance of Treasury stock for Bourjois acquisition	$	376.8	$	—	$	—

See notes to Consolidated Financial Statements.

F-8

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

1. DESCRIPTION OF BUSINESS

Coty Inc. and its subsidiaries (collectively, the “Company” or “Coty”) engage in the manufacturing, marketing and distribution of fragrances, color cosmetics and skin & body care related products in numerous countries throughout the world.

The Company operates on a fiscal year basis with a year-end of June 30 . Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2015 ” refer to the fiscal year ending June 30, 2015 .

The Company’s revenues generally increase during the second fiscal quarter as a result of increased demand associated with the holiday season. Accordingly, the Company’s financial performance, working capital requirements, cash flow and borrowings experience seasonal variability during the three to six months preceding this season.

In June 2013 , the Company completed an initial public offering (“IPO”) in a secondary offering on the New York Stock Exchange (“NYSE”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying financial statements of the Company are presented on a consolidated basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

The Company also consolidates majority-owned entities in the United Arab Emirates, Kingdom of Saudi Arabia, Malaysia, Indonesia, Philippines, Singapore, Hong Kong, China, Japan, South Korea, Thailand, Taiwan and Brazil where the Company has the ability to exercise controlling influence. Ownership interests of noncontrolling parties are presented as noncontrolling interests or redeemable noncontrolling interests, as applicable.

Related Parties

During fiscal 2015, JAB Holdings B.V. (“JAB”) transferred all of its Coty Inc. Class B shares to JAB Cosmetics B.V. (“JABC”). As of June 30, 2015 , the Company is a majority-owned subsidiary of JABC. Lucresca SE, Agnaten SE and JAB indirectly control JABC and the shares of the Company held by JABC. The Company does not generally enter into transactions with related parties other than certain share transactions with JABC and certain executives as described in Note 22 and 23.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the market value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of share-based compensation, pension and other post-employment benefit costs, the fair value of the Company's reporting units and the assessment of goodwill, other intangible assets and long-lived assets for impairment, income taxes, derivatives and redeemable noncontrolling interests when calculating the impact on Earnings Per Share (“EPS”). Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the Consolidated Financial Statements in future periods.

Cash Equivalents

Cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase.

Trade Receivables

Trade receivables are stated net of the allowance for doubtful accounts and cash discounts, which is based on the evaluation of the accounts receivable aging, specific exposures, and historical trends. The Company reviews its allowances by assessing factors such as an individual trade receivable aging and liquidity. Trade receivables are written off on a case-by-case basis, net of any amounts that may be collected.

F-9

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Inventories

Inventories include items which are considered salable or usable in future periods, and are stated at the lower of cost or market value, with cost being based on standard cost which approximates actual cost on a first-in, first-out basis. Costs include direct materials, direct labor and overhead (e.g., indirect labor, rent and utilities, depreciation, purchasing, receiving, inspection and quality control) and in-bound freight costs. The Company classifies inventories into various categories based upon their stage in the product life cycle, future marketing sales plans and the disposition process.

The Company also records an inventory obsolescence reserve, which represents the excess of the cost of the inventory over its estimated realizable value, based on various product sales projections. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, and requirements to support forecasted sales. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.

Property and Equipment and Other Long-lived Assets

Property and equipment is stated at cost less accumulated depreciation or amortization. The cost of renewals and betterments is capitalized and depreciated. Expenditures for maintenance and repairs are expensed as incurred. Property and equipment that is disposed of through sale, trade-in, donation, or scrapping is written off, and any gain or loss on the transaction, net of costs to dispose, is recorded in Gain (loss) on sale of assets. Depreciation and amortization are computed principally using the straight-line method over the following estimated useful lives:



Description		Estimated Useful Lives
Buildings		20-40 years
Marketing furniture and fixtures		3-5 years
Machinery and equipment		2-15 years
Computer equipment and software		2-5 years
Property and equipment under capital leases and leasehold improvements		Lesser of lease term or economic life

Intangible assets with finite lives are amortized principally using the straight-line method over the following estimated useful lives:



Description		Estimated Useful Lives
License agreements		Lesser of agreement term or economic life
Customer relationships		5-20 years
Trademarks		5-20 years
Product formulations		3-7 years

Long-lived assets, including tangible and intangible assets with finite lives, are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. If the projected undiscounted cash flows are less than the carrying value, an impairment charge would be recorded for the excess of the carrying value over the fair value. The Company estimates fair value based on the best information available, including discounted cash flows and/or the use of third-party valuations.

Goodwill and Other Indefinite-lived Intangible Assets

Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets. Indefinite-lived other intangible assets principally consist of trademarks. Goodwill is allocated and evaluated at the reporting units level which are the Company’s operating segments. The Company identifies its operating segments, which are also its reportable segments, by assessing whether the components of the Company’s reportable segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. The Company has identified three reporting units. Fragrance, Skin & Body Care, and Color Cosmetics are considered operating segments and each a reporting unit. The Company allocates goodwill to one or more reporting units that are expected to benefit from synergies of the business combination.

Goodwill and other intangible assets with indefinite lives are not amortized, but are evaluated for impairment annually as of May 1 or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Impairment testing for goodwill is performed in two steps: (i) the determination of possible impairment, based upon the fair

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

value of a reporting unit as compared to its carrying value; and (ii) if there is a possible impairment indicated, this step measures the amount of impairment loss, if any, by comparing the implied fair value of goodwill with the carrying amount of that goodwill.

The fair values of indefinite-lived other intangible assets are estimated and compared to their respective carrying values. The trademarks’ fair values are based upon the income approach, utilizing the relief from royalty or excess earnings methodology. An impairment loss is recognized when the estimated fair value of the intangible asset is less than its carrying value.

Deferred Financing Fees

The Company capitalizes costs related to the issuance of debt instruments, as applicable. Such costs are amortized over the contractual term of the related debt instrument in interest expense, net using the straight line method, which approximates the effective interest method, in the Consolidated Statements of Operations.

Noncontrolling Interests and Redeemable Noncontrolling Interests

Interests held by partners in consolidated majority-owned subsidiaries are presented as noncontrolling interests, which represents the noncontrolling stockholders’ interests in the underlying net assets of the Company’s consolidated majority-owned subsidiaries. Noncontrolling interests that are not redeemable are reported in the equity section of the Consolidated Balance Sheets.

Noncontrolling interests, where the Company may be required to repurchase the noncontrolling interest under a put option or other contractual redemption requirement are reported in the Consolidated Balance Sheets between liabilities and equity, as redeemable noncontrolling interests. The Company adjusts the redeemable noncontrolling interests to the redemption values on each balance sheet date with changes recognized as an adjustment to retained earnings, or in the absence of retained earnings, as an adjustment to additional paid-in capital.

Revenue Recognition

Revenue is recognized when realized or realizable and earned. The Company’s policy is to recognize revenue when risk of loss and title to the product transfers to the customer, which usually occurs upon delivery. Net revenues comprise gross revenues less customer discounts and allowances, actual and expected returns (estimated based on returns history and position in product life cycle) and various trade spending activities. Trade spending activities primarily relate to advertising, product promotions and demonstrations, some of which involve cooperative relationships with customers. Returns represent 3.3% , 3.9% and 3.7% of gross revenue after customer discounts and allowances in fiscal 2015 , 2014 and 2013 , respectively. Trade spending activities recorded as a reduction to gross revenue after customer discounts and allowances represent 9.3% , 9.4% and 9.4% in fiscal 2015 , 2014 and 2013 , respectively.

Cost of Sales

Cost of sales includes all of the costs to manufacture the Company’s products. For products manufactured in the Company’s own facilities, such costs include raw materials and supplies, direct labor and factory overhead. For products manufactured for the Company by third-party contractors, such costs represent the amounts invoiced by the contractors. Cost of sales also includes royalty expense associated with license agreements as discussed in Note 11. Additionally, shipping costs and depreciation and amortization expenses related to manufacturing equipment and facilities are included in Cost of sales in the Consolidated Statements of Operations.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include advertising and promotional costs and research and development costs. Also included in Selling, general and administrative expenses are share-based compensation, certain warehousing fees, non-manufacturing overhead, personnel and related expenses, rent on operating leases, and professional fees.

Advertising and promotional costs are expensed as incurred and totaled $1,007.7 , $1,070.0 and $1,072.3 in fiscal 2015 , 2014 and 2013 , respectively. Included in advertising and promotional costs are $69.8 , $67.5 , and $65.2 of depreciation of marketing furniture and fixtures, such as product displays, in fiscal 2015 , 2014 and 2013 , respectively. Research and development costs are expensed as incurred and totaled $47.4 , $46.5 and $44.6 in fiscal 2015 , 2014 and 2013 , respectively.

Share-Based Compensation

Common Stock

Common shares are available to be awarded for the exercise of vested stock options, the settlement of restricted stock units (“RSUs”), and the conversion of Series A Preferred Stock.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

As of June 12, 2013, the effective date of the amendment and restatement of the share-based compensation plans, the Company’s share-based compensation plans for common shares are accounted for as equity plans, as the plans no longer allow for cash settlement or contain put features to sell shares back to the Company. Share-based compensation expense is measured and fixed at the grant date, based on the estimated fair value of the award and is recognized on a straight-line basis, net of estimated forfeitures, over the employee’s requisite service period.

The fair value of stock options is determined using the Black-Scholes valuation model using the assumptions discussed in Note 23. The fair value of RSUs is determined on the date of grant based on the Company’s stock price.

Prior to June 12, 2013, the Company’s Pre-IPO share-based compensation plans for common stock were accounted for as liability plans as they allowed for cash settlement or contained put features to sell shares back to the Company for cash. Accordingly, share-based compensation expense was measured based on the fair value of the award on each reporting date and was recognized as an expense to the extent vested until the award was settled. If the award was settled for shares, the shares were included in the number of shares of common stock outstanding and the fair value of the shares was re-measured at each reporting period date through Selling, general and administrative expense as share-based compensation expense if the shares were classified as Accrued expenses and other current liabilities. Once the holders had retained the risks and rewards of share ownership by holding the shares for a reasonable period of time after they were vested and issued, generally a period of six months from vesting and issuance, the liability was reclassified, in the Consolidated Balance Sheets, between liabilities and equity as Redeemable common stock at fair value. Subsequent changes in fair value of the shares classified as Redeemable common stock were recognized in Retained earnings or, in the absence of Retained earnings, in Additional paid-in capital.

Preferred Stock

The Company has issued Series A Preferred Stock that can be converted into Class A Common Stock or settled in cash. Series A Preferred Stock is accounted for using liability plan accounting to the extent the award is expected to be settled in cash. Accordingly, share-based compensation expense for the liability plans is measured based on the fair value of the award on each reporting date and recognized as an expense to the extent earned. Share-based compensation expense for the portion of the grants that the Company is not required to settle in cash is measured based on the estimated fair value of the award at the time it is known that they are going to be settled in shares and is recognized on a straight-line basis, net of estimated forfeitures, over the employee’s requisite service period. All Series A Preferred Stock amounts as of June 30, 2015 are presented as liabilities. Only the number of outstanding shares is presented under Preferred Stock in Equity.

The fair value of Series A Preferred Stock is determined using the Black-Scholes valuation model using the weighted-average assumptions discussed in Note 23.

Treasury Stock

The Company accounts for treasury stock under the cost method. When shares are reissued or retired from treasury stock they are accounted for at an average price. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital in the Company’s Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a reduction of additional paid-in-capital to the extent that there are treasury stock gains to offset the losses. If there are no treasury stock gains in additional paid-in-capital, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in the Company’s Consolidated Balance Sheets.

Income Taxes

The Company is subject to income taxes in the U.S. and various foreign jurisdictions. The Company accounts for income taxes under the asset and liability method. Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities that are recognized for financial reporting purposes and the carrying amounts that are recognized for income tax purposes. Classification of deferred tax assets and liabilities corresponds with the classification of the underlying assets and liabilities, giving rise to the temporary differences or the period of expected reversal, as applicable. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized based on currently available evidence.

The Company is subject to tax audits in various jurisdictions. The Company regularly assesses the likely outcomes of such audits in order to determine the appropriateness of liabilities for unrecognized tax benefits (“UTBs”). The Company classifies interest and penalties related to UTBs as a component of the provision for income taxes.

For UTBs, the Company first determines whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

to be realized upon effective settlement with a taxing authority. As the determination of liabilities related to UTBs and associated interest and penalties requires significant estimates to be made by the Company, there can be no assurance that the Company will accurately predict the outcomes of these audits, and thus the eventual outcomes could have a material impact on the Company’s operating results or financial condition and cash flows.

It is the Company’s intention to permanently reinvest undistributed earnings and profits from the Company’s foreign operations that have been generated through June 30, 2015 , and future plans do not demonstrate a need to repatriate the foreign amounts to fund U.S. operations. Accordingly, no provision has been made for U.S. income taxes on undistributed earnings of foreign subsidiaries as of June 30, 2015 . It is not practicable for the Company to determine the amount of additional income and withholding taxes that may be payable in the event the remaining undistributed earnings are repatriated.

Restructuring Costs

Charges incurred in connection with plans to restructure and integrate acquired businesses or in connection with cost-reduction initiatives that are initiated from time to time are included in Restructuring costs in the Consolidated Statements of Operations if such costs are directly associated with an exit or disposal activity, a reorganization, or with integrating an acquired business.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Payments made for contingent consideration recorded as part of an acquisition’s purchase price are reflected as financing activities in the Company’s Consolidated Statements of Cash Flows, if paid more than three months after the acquisition date. If paid within three months of the acquisition date, these payments are reflected as investing activities in the Company’s Consolidated Statements of Cash Flows.

The Company remeasures the fair value of contingent consideration at each reporting period using a probability-adjusted discounted cash flow method based on significant inputs not observable in the market and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in earnings. Contingent consideration payments that exceed the acquisition date fair value of the contingent consideration are reflected as an operating activity in the Consolidated Statements of Cash Flows.

For acquisitions completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of the closing of the acquisition and reflected as an investing activity in the Consolidated Statements of Cash Flows.

Acquisition-related costs, such as banking, legal, accounting and other costs incurred in connection with an acquisition are expensed as incurred. The Company includes the results of all acquisitions in its Consolidated Financial Statements from the date of acquisition.

Fair Value Measurements

The following fair value hierarchy is used in selecting inputs for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The Company evaluates these inputs and recognizes transfers between levels, if any, at the end of each reporting period. The hierarchy consists of three levels:

Level 1 - Valuation based on quoted market prices in active markets for identical assets or liabilities;

Level 2 - Valuation based on inputs other than Level 1 inputs that are observable for the assets or liabilities either directly or indirectly;

Level 3 - Valuation based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and supported by little or no observable market activity.

The Company has not elected the fair value measurement option for any financial instruments or other assets not required to be measured at fair value on a recurring basis.

Derivative Instruments and Hedging Activities

The Company utilizes derivative instruments to manage certain foreign currency and interest rate exposures. The Company may also utilize derivative instruments to hedge anticipated transactions where there is a high probability that anticipated exposures will materialize. Derivative financial instruments are recorded as either assets or liabilities on the balance sheet and

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

are measured at fair value. For derivatives not designated as hedging instruments, changes in fair value are recorded in the line item in the Consolidated Statements of Operations to which the derivative relates. For derivatives designated as hedging instruments, changes in the fair value are recorded in Accumulated other comprehensive income (loss) (“AOCI/(L)”). Gains and losses deferred in AOCI/(L) are then recognized in net income (loss) in a manner that matches the timing of the actual income or expense related to the hedging instruments with the hedged transaction or if it is determined that the derivatives are not highly effective or have ceased to be highly effective. The gains and losses related to designated hedging instruments are also recorded in the line item in the Consolidated Statements of Operations to which the derivative relates.

Foreign Currency

Exchange gains or losses incurred on transactions conducted by one of the Company’s operations in a currency other than the operation’s functional currency are reflected in Cost of sales or operating expenses. Net gains (losses) of $7.9 , $(18.7) and $0.1 in fiscal 2015 , 2014 and 2013 , respectively resulting from non-financing foreign exchange currency transactions are included in the Consolidated Statements of Operations.

Assets and liabilities of foreign operations are translated into U.S. dollars at the rates of exchange in effect at the end of the reporting period. Income and expense items are translated at the average exchange rates prevailing during each reporting period presented. Translation gains or losses are reported as cumulative adjustments in AOCI/(L).

Net losses of $4.1 , $2.8 and $0.2 in fiscal 2015 , 2014 and 2013 , respectively, resulting from financing foreign exchange currency transactions are included in Interest expense, net and Other expense (income), net in the Consolidated Statements of Operations.

Recently Adopted Accounting Pronouncements

In March 2013, the FASB issued authoritative guidance to resolve the diversity in practice concerning the release of the cumulative translation adjustment (“CTA”) into net income (i) when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign entity, and (ii) in connection with a step acquisition of a foreign entity. This amended guidance requires that CTA be released in net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, and that a pro rata portion of the CTA be released into net income upon a partial sale of an equity method investment in a foreign entity only. In addition, the amended guidance clarifies the definition of a sale of an investment in a foreign entity to include both events that result in the loss of a controlling financial interest in a foreign entity and events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately prior to the date of acquisition. The CTA should be released into net income upon the occurrence of such events. This guidance became effective prospectively for the Company’s fiscal 2015 first quarter. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In July 2015, the FASB issued authoritative guidance related to Defined Benefits Pension Plans, Defined Contribution Pension Plans, and Health and Welfare Benefit Plans: I. Fully Benefit-Responsive Investment Contracts; II. Plan Investment Disclosures; and III. Measurement Date Practical Expedient. This three-part guidance simplifies current benefit plan accounting and requires (i) fully benefit responsive investment contracts to be measured, presented, and disclosed only at contract value and accordingly removes the requirement to reconcile their contract value to fair value; (ii) benefit plans to disaggregate their investments measured using fair value by general type, either on the face of the financial statements or in the notes to the financial statements; (iii) the net appreciation or depreciation in investments for the period to be presented in the aggregate rather than by general type, and removes certain disclosure requirements relevant to individual investments that represent five percent or more of net assets available for benefits. Further, the amendments eliminate the requirement to disclose the investment strategy for certain investments that are measured using Net Asset Value (“NAV”) per share using the practical expedient. Part III of the amendment provides a practical expedient to permit employee benefit plans to measure investments and investment-related accounts as of the month-end that is closest to the plan’s fiscal year-end, when the fiscal period does not coincide with a month-end, while requiring certain additional disclosures. The guidance in Parts I and II of this standard are effective retrospectively for fiscal year 2017 and early adoption is permitted. The guidance in Part III of this standard are effective prospectively for fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In July 2015, the FASB issued authoritative guidance for simplifying the measurement of inventory. The amendment requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This amendment will not apply to inventories that are measured using either the last-in, first-out (LIFO) method or the retail inventory method. This amendment

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

will be effective for the Company in fiscal 2018 and early adoption is permitted. The Company is evaluating the impact this amendment will have on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued authoritative guidance to clarify the accounting treatment for fees paid by a customer in cloud computing arrangements. Under the revised guidance, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The revised guidance will not change a customer’s accounting for service contracts. The guidance becomes effective for the Company’s fiscal 2017 first quarter, with early adoption permitted. Upon adoption, a reporting entity can elect to apply the new guidance prospectively after the effective date, or retrospectively. The Company is currently evaluating the impact of adoption of this standard on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued authoritative guidance on the treatment of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2017 using a retrospective approach. The Company is evaluating the impact this amendment will have on the Company’s Consolidated Financial Statements.

In February 2015, the FASB issued authoritative guidance on a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities. All legal entities will be subject to reevaluation under this revised consolidation model. The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2017 using either a modified retrospective, or a retrospective approach. The Company is evaluating the impact this amended guidance will have on the Company’s Consolidated Financial Statements.

In June 2014, the FASB issued authoritative guidance that implements a common revenue model that will enhance comparability across industries and require enhanced disclosures. The new standard introduces a five step principles based process to determine the timing and amount of revenue ultimately expected to be received by the customer. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2019 with either retrospective or modified retrospective treatment applied, and the Company is evaluating the impact this will have on the Company’s Consolidated Financial Statements upon implementation.

In May 2014, the FASB issued authoritative guidance on the treatment of a stock-based compensation award issued with a performance target that could be achieved subsequent to the requisite service period. The guidance will require the performance target to be treated as a performance condition that effects vesting or as a non-vesting condition that affects the grant-date fair value of the award. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2017 with either prospective or retrospective treatment applied, and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In April 2014, the FASB issued authoritative guidance that modified the criteria utilized to determine discontinued operations. In accordance with the new guidance, only disposals of a component that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results are considered discontinued operations. The modified guidance also requires expanded disclosures about discontinued operations and disposals of a significant part of an entity that does not qualify for discontinued operations reporting. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2016 with early adoption permitted, but only for disposals (or classifications as held for sale) that have not been reported in previously-issued financial statements. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

3. SEGMENT REPORTING

Operating segments (referred to as “segments”) include components of the enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has designated its Chief Executive Officer as the CODM.

The Company has determined that its operating and reportable segments are Fragrances, Color Cosmetics and Skin & Body Care (also referred to as “segments”). The reportable segments also represent the Company’s product groupings. In addition to reflecting the Company’s business model, these segments also reflect how the CODM reviews operating results when making decisions about resources to be allocated to the segments and when assessing their performance. Fragrances products include a

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

variety of men’s and women’s products and include fashion designer, celebrity and lifestyle brands. Color Cosmetics products include nail and other color cosmetics, consisting of lip, eye and other facial color products. Skin & Body Care products include shower gels, deodorants, skin care and sun treatment products.

During the first quarter of fiscal 2015, the Company evaluated the impact of the Organizational Redesign restructuring program (see Note 7) on the determination of its operating segments and reporting units. The Company concluded that its operating and reportable segments continue to be Fragrances, Color Cosmetics and Skin & Body Care. However, based on the organizational changes that result from the Organizational Redesign and the impact on the information used by the CODM, the Company reclassified the revenues and costs associated with one brand from the Fragrances to the Skin & Body Care operating segment. The revenues and costs associated with the reclassification of one brand from Fragrances to Skin & Body Care have been reflected for the fiscal years ending 2015, 2014, and 2013. Further, the Company has reclassified amounts presented for depreciation and amortization to reflect the fully allocated amounts included in Operating income (loss) of the segments. Revenue and cost relating to a brand that generates revenues from more than one of the Company’s product categories are allocated in their entirety to one of the operating segments based on the information used by the CODM, its organizational structure, and the product category that is deemed to be the strategic priority for the brand.

The Company evaluates segment performance based on several factors, including Operating income (loss). The Company uses Operating income (loss) as a measure of the segment performance as it excludes the impact of corporate-driven decisions related to interest expense and income taxes.

The items within Corporate relate to corporate-based responsibilities and decisions and are not used by the CODM to measure the underlying performance of the segments. Corporate primarily includes a component of share-based compensation expense, restructuring costs and certain other expense items not attributable to ongoing operating activities of the segments.

For grants issued prior to June 12, 2013, the effective date of the share-based compensation plan amendments, the component of share-based compensation included in Corporate represents the difference between the grant date fair value and the fair value at June 12, 2013 using equity plan accounting. Corporate also includes share-based compensation expense related to the Special Share Purchase Transaction as discussed in Note 23.

With the exception of goodwill and acquired intangible assets, the Company does not identify or monitor assets by segment. The Company does not present assets by reportable segment since various assets are shared between reportable segments. The allocation of goodwill and acquired intangible assets by segment is presented in Note 11.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Year Ended June 30,
SEGMENT DATA	2015			2014			2013
Net revenues:
Fragrances	$	2,178.3		$	2,324.0		$	2,312.8
Color Cosmetics	1,445.0			1,366.2			1,468.5
Skin & Body Care	771.9			861.4			867.8
Total	$	4,395.2		$	4,551.6		$	4,649.1
Depreciation and amortization ^(a) :
Fragrances	$	90.5		$	102.8		$	96.3
Color Cosmetics	99.9			92.6			91.3
Skin & Body Care	39.2			50.8			54.5
Corporate	1.3			4.5			17.5
Total	$	230.9		$	250.7		$	259.6
Operating income (loss):
Fragrances	$	352.7		$	341.2		$	354.9
Color Cosmetics	158.5			154.2			208.8
Skin & Body Care	33.1			(337.3		)	9.1
Corporate	(149.2		)	(132.4		)	(178.4		)
Total	$	395.1		$	25.7		$	394.4
Reconciliation:
Operating income	$	395.1		$	25.7		$	394.4
Interest expense, net	73.0			68.5			76.5
Loss on early extinguishment of debt	88.8			—			—
Other expense (income), net	—			1.3			(0.8		)
Income (loss) before income taxes	$	233.3		$	(44.1	)	$	318.7

^(a)

S ubsequent to the issuance of the Company’s fiscal 2014 financial statements, the Company determined that amounts presented under depreciation and amortization by operating segment for 2014 and 2013 did not include allocations for corporate depreciation and amortization. The depreciation and amortization for the operating segments was restated by allocating total Corporate depreciation and amortization of $34.5 and $31.9 in fiscal 2014 and 2013, respectively, from Corporate to the three operating segments, consistent with the allocation method used in fiscal 2015. There was no effect on total depreciation and amortization or segment operating income as previously presented.



	Year Ended June 30,
	2015		2014		2013
GEOGRAPHIC DATA
Net revenues:
Americas ^(a)	$	1,696.0	$	1,703.8	$	1,914.8
EMEA ^(b)	2,166.0		2,302.9		2,188.9
Asia Pacific ^(c)	533.2		544.9		545.4
Total	$	4,395.2	$	4,551.6	$	4,649.1


^(a)	includes North & South America


^(b)	includes Europe, Middle East and Africa

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

^(c) includes Asia and Australia



	Year Ended June 30,
	2015		2014		2013
Net revenues:
U.S.	$	1,343.1	$	1,338.6	$	1,537.4
Switzerland ^(a) :
Travel Retail and Export	482.9		497.8		500.6
United Kingdom	402.5		415.1		388.1
Netherlands	83.2		93.8		98.1
Domestic	30.2		34.8		36.3
Total Switzerland	998.8		1,041.5		1,023.1
All other	2,053.3		2,171.5		2,088.6
Total	$	4,395.2	$	4,551.6	$	4,649.1

Long-lived assets:
U.S.	$	2,713.9	$	2,921.2	$	2,924.3
All other	1,230.6		799.0		1,076.2
Total	$	3,944.5	$	3,720.2	$	4,000.5


^(a)	The Company’s subsidiaries in Switzerland generate revenues from sales in the United Kingdom (“U.K.”), the Netherlands and domestic sales in Switzerland as well as the Travel Retail and Export business (which sells to a large number of travel outlets, including duty free shops, airlines and other tax-free zones in several countries), as specified separately in the table above.

For Net revenues, a major country is defined as a group of subsidiaries in a country with combined revenues greater than 10% of consolidated net revenues or as otherwise deemed significant.

For Long-lived assets, a major country is defined as a group of subsidiaries within a country with combined long-lived assets greater than 10% of consolidated long-lived assets or as otherwise deemed significant. Long-lived assets include property and equipment, goodwill and other intangible assets.

No customer or group of affiliated customers accounted for more than 10% of the Company’s Net revenues in fiscal 2015 , 2014 and 2013 or are otherwise deemed significant.

Within the Company’s reportable segments, product categories exceeding 5% of consolidated net revenues are presented below:



	Year Ended June 30,
PRODUCT CATEGORY	2015		2014		2013
Fragrances:
Designer	36.9	%	37.4	%	35.8	%
Lifestyle	7.4		7.6		6.9
Celebrity	5.3		6.0		7.0
Total	49.6	%	51.0	%	49.7	%
Color Cosmetics:
Nail Care	14.9	%	14.0	%	16.1	%
Other Color Cosmetics	18.0		16.0		15.5
Total	32.9	%	30.0	%	31.6	%
Skin & Body Care:
Body Care	10.9	%	12.6	%	12.3	%
Skin Care	6.6		6.4		6.4
Total	17.5	%	19.0	%	18.7	%
Total	100.0	%	100.0	%	100.0	%

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

4. BUSINESS COMBINATIONS

The company completed one acquisition during fiscal 2015:



Acquired entity	Date acquired	Purchase Price		Segment
Bourjois cosmetics brand ("Bourjois")	April 1, 2015	$	376.8	Color Cosmetics

Bourjois

On April 1, 2015, the Company completed its purchase of 100% of the net assets of Bourjois from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated March 12, 2015, between the Company and CHANEL (the “Stock Purchase Agreement”), in order to further strengthen its position in the global color market.

The Company issued to its foreign subsidiaries 15.5 million shares of the Company’s Class A Common Stock for $376.8 in cash and subsequently exchanged these shares with CHANEL as consideration for Bourjois. The shares had a fair value of $376.8 based on the closing price of the Company’s Class A Common Stock on the New York Stock Exchange on April 1, 2015.

The business purpose of having the Company’s foreign subsidiaries (rather than the parent company) exchange shares with CHANEL was to acquire the respective Bourjois foreign entities based in France, the Netherlands, Switzerland, and the United Kingdom by the Company’s foreign entity organized in the same countries, wherever feasible, in order to make the post-acquisition integration of Bourjois’ foreign businesses and Coty’s foreign businesses as efficient as possible. None of the Bourjois entities acquired from CHANEL were organized or operated as a business in the United States, and thus, none of the shares issued to CHANEL were issued by a U.S. subsidiary. Under applicable tax principles, exchanges of shares between the Company and its affiliates do not result in a taxable gain or loss for the Company or its foreign subsidiaries.

The fair value of assets acquired and liabilities assumed from our acquisition of Bourjois was based on a preliminary valuation and the Company’s estimates and assumptions are subject to change within the measurement period. In particular, the Company is still evaluating the fair value of certain intangible assets and finalizing the accounting for income taxes. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in fiscal 2016.

The following table summarizes the preliminary consideration and the allocation of the purchase price to the net assets acquired in the Bourjois acquisition:



Consideration:
Fair Value of Coty Inc. Class A Stock	$	376.8
Purchase price	$	376.8

Recognized amounts of identifiable assets and liabilities assumed:



	Estimated fair value		Estimated useful life (in years)
Cash	$	12.3
Inventories	31.5
Property and equipment	9.0
Goodwill	194.8
Trademark	112.0		Indefinite
Customer relationships	66.0		13-14
Product formulations	1.1		3
Net working capital	10.7
Net other assets/(liabilities)	(3.9)
Deferred tax liability, net	(56.7)
Total identifiable net assets:	$	376.8

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Goodwill is deductible for tax purposes and is attributable to expected synergies. Goodwill of $148.7 , $11.1 , and $35.0 is allocated to the Color Cosmetics, Skin & Body Care, and Fragrances segments, respectively.

For the year ended June 30, 2015, Net revenues and Net loss of Bourjois included in the Company’s Consolidated Statements of Operations from the date of acquisition were $46.1 and $(16.1) , respectively.

Transaction-related costs associated with this acquisition of $ 3.9 during fiscal 2015 were expensed as incurred and included in Acquisition-related costs in the Consolidated Statements of Operations.

Unaudited Pro Forma Information

The unaudited historical Consolidated Statements of Operations in the table below summarizes the combined results of operations of Bourjois on a pro forma basis, as though the companies had been combined on July 1, 2013, and gives effect to pro forma events that are: (1) directly attributable to the transaction, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The unaudited pro forma results include adjustments for non-recurring transaction costs (including distributor termination fees, transaction specific costs, and the amortization of the inventory step-up) and incremental intangible asset amortization to be incurred on a recurring basis, based on preliminary values of each identifiable intangible asset. Pro forma adjustments were tax-effected at the Company’s statutory rates. The pro forma Consolidated Statements of Operations is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place on July 1, 2013 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings. The pro forma Consolidated Statements of Operations for fiscal 2015 and 2014 are as follows:



	Year Ended June 30,
	2015		2014
Pro forma Net revenues	$	4,553.2	$	4,788.7
Pro forma Operating income	420.2		17.4
Pro forma Net income (loss)	275.3		(77.0)
Pro forma Net income (loss) attributable to Coty Inc.	248.4		(110.2)
Pro forma Net income (loss) attributable to Coty Inc. per common share
Basic	$	0.68	$	(0.28	)
Diluted	$	0.66	$	(0.28	)

The Company completed two acquisitions during fiscal 2014:



Acquired entity	Date acquired	Purchase Price		Segment
Lena White, Ltd. (“Lena White”)	January 2, 2014	$	11.6	Color Cosmetics
StarAsia Group Pte Ltd. (“StarAsia”)	July 1, 2013	$	23.5	All segments

Lena White

On January 2, 2014, the Company executed a Share Purchase Agreement (“Lena White SPA”) and acquired 100% of the shares of Lena White, a U.K. distribution business for approximately £7.0 million ( $11.6 ), after post-closing adjustments, which allowed the Company to integrate sales and distribution of certain Color Cosmetic products in the U.K. The acquisition allowed the Company to integrate sales and distribution of certain Color Cosmetic products in the U.K. Included in the consideration paid is £0.5 million ( $0.8 ) that the Company deposited into escrow under the Lena White SPA, which will be released to the seller subject to subsequent adjustments for indemnities against the seller’s warranties. Also included in the consideration paid is £0.7 million ( $1.1 ) of estimated contingent consideration calculated using a pre-determined formula in the SPA, payable upon completion of a three -year period following the execution of the Lena White SPA and was subject to adjustments based on final calculations. During December 2014, the Company settled a portion of the contingent consideration for £0.5 ($0.8) and recorded an adjustment of £0.4 ($0.6) which was recorded in Selling, general, and administrative expenses in the Consolidated Statements of Operations. The remaining contingent consideration will range between nil and £0.6 million ( $0.9 ).

The following table summarizes the consideration and purchase price allocation of net assets acquired in the Lena White acquisition:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Consideration:



Cash paid	$	8.3
Net cash paid to seller for net working capital adjustments	0.3
Noncash consideration for pre-acquisition trade receivables	1.9
Contingent consideration payable	1.1
Purchase price	$	11.6



	Estimated fair value		Estimated useful life (in years)
Goodwill	$	2.0
Customer relationships	4.2		7
Other net assets	5.4
Total identifiable net assets	$	11.6

The goodwill is not deductible for tax purposes and represents expected benefits associated with the Company’s control over future expansion in the U.K. and the Color Cosmetics segment. Goodwill of $2.0 was allocated to the Color Cosmetics segment.

For the year ended June 30, 2014, Net revenues and Net loss of Lena White included in the Company’s Consolidated Statements of Operations from the date of acquisition were $7.8 and $(1.7) , respectively.

Transaction-related costs associated with this acquisition of $0.1 during the year ended June 30, 2014 were expensed as incurred and included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

StarAsia

On July 1, 2013, the Company executed a Share Purchase Agreement and acquired 100% of the shares of StarAsia for net consideration of $23.5 , after final post-closing adjustments. StarAsia is a regional distribution company that acted as a third party distributor of the Company’s fragrance, color cosmetics and skin & body care products in South East Asia, as well as beauty products supplied by parties other than the Company.

The following tables summarize the consideration and purchase price allocation to the net assets acquired in the StarAsia acquisition:



Consideration:

Cash paid	$	25.0
Noncash consideration for pre-acquisition trade receivables	2.0
Net working capital adjustment received from seller	(3.5		)
Purchase price	$	23.5



	Estimated fair value		Estimated useful life (in years)
Goodwill	$	11.5
Customer relationships	7.4		12
Other net assets	4.6
Total identifiable net assets	$	23.5

The goodwill is not deductible for tax purposes and represents expected benefits associated with the Company’s control over future expansion in Asia and all of the Company's segments. Goodwill of $7.0 , $3.8 , and $0.7 is allocated to the Skin & Body Care, Fragrances and Color Cosmetics segments, respectively.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

For the year ended June 30, 2014, Net revenues and Net loss included in the Company’s Consolidated Statements of Operations from the date of acquisition were $24.6 and $(4.4) , respectively.

Transaction-related costs associated with this acquisition of $0.4 and $1.1 during fiscal 2014 and 2013 were expensed as incurred and included in Selling, general, and administrative expenses in the Consolidated Statements of Operations. No transaction-related costs were incurred in fiscal 2015 for the StarAsia acquisition.

5. ACQUISITION-RELATED COSTS

Acquisition-related costs for fiscal 2015, 2014, and 2013 are presented below:



	2015		2014		2013
Transaction-related costs	$	34.1	$	0.7	$	8.9
	$	34.1	$	0.7	$	8.9

Transaction-related costs -Transaction-related costs represent external costs directly related to acquiring a company, for both completed and/or contemplated acquisition offers and can include finder’s fees, legal, accounting, valuation and other professional or consulting fees. Transaction-related costs in fiscal 2015 primarily represents costs incurred for the acquisition of Bourjois for $3.9 as described in Note 4, and costs related for the planned merger with Procter & Gamble’s fine fragrance, color cosmetics, and hair color businesses (the “P&G Beauty Business”) for $30.2 . Transaction-related costs in fiscal 2014 primarily represent costs incurred for the acquisitions of StarAsia for $0.4 , and Lena White and $0.1 as described in Note 4. Transaction-related costs in fiscal 2013 primarily relate to additional charges of $6.7 resulting from the outcome of the arbitration proceeding associated with the TJoy acquisition and costs directly related to contemplated business combinations.

6. JOINT VENTURE ARRANGEMENTS

Saudi Arabia

Effective December 28, 2014, the Company entered into an agreement through a majority-owned subsidiary and a third party to create a new entity in Saudi Arabia (See Note 21).

United Arab Emirates

On January 1, 2014, the Company, through a majority-owned subsidiary Coty Middle East and two third parties, entered into a shareholders agreement (“U.A.E. Shareholders Agreement”) to create a new subsidiary (“U.A.E. JV”) in the United Arab Emirates (“U.A.E”). In connection with the capitalization of the JV, the Company contributed 18.0 million AED ( $4.9 ) in cash and the third parties contributed 6.0 million AED ( $1.6 ). The U.A.E. JV focuses on the sale, promotion and distribution of fragrances, skin and body care and color cosmetics products in the local markets of the U.A.E. The Company guaranteed up to 18.0 million AED ( $4.9 ) in bank financing to support initial operation requirements if required and as a result of this additional financing requirement, the U.A.E. JV was determined to be a VIE during the fiscal year ending June 30, 2015 and 2014. The Company was considered the primary beneficiary with 49% ownership since the Company has: (a) the power to direct, supervise, and manage the activities of the VIE that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Accordingly, the Company includes the assets and liabilities and results of operations of the U.A.E. JV in its consolidated financial statements.

The Company is required under the U.A.E. Shareholders Agreement to purchase all of the shares held by one of the third parties equal to 25% of the outstanding shares of the U.A.E. JV at the termination of the agreement. The Company has determined such shares to be a mandatorily redeemable financial instrument that is recorded as a liability in Other noncurrent liabilities on the Consolidated Balance Sheet. The liability is calculated based upon a pre-determined formula in accordance with the shareholders agreement. As of June 30, 2015 and 2014, the liability amounted to $6.1 and $3.7 , of which $5.1 and $3.7 , respectively, was recorded in Other noncurrent liabilities and $1.0 and nil , respectively, was recorded in Accrued expenses and other current liabilities, respectively.

The assets of the JV are restricted in that they are not available for general business use outside the context of the U.A.E. JV and the creditors (or beneficial interest holders) do not have recourse to the Company or to its other assets. The U.A.E. JV has total assets and total liabilities of $20.1 and $10.4 as of June 30, 2015, and $18.0 and $10.5 as of June 30, 2014, respectively.

Table of Contents

Brazil

On April 4, 2013, the Company entered into agreements with a third party to establish an entity that exclusively markets and sells beauty products in retail channels in Brazil. The third party provided 4.9 million Brazilian reais ( $2.2 ) of funding for 49% of the shares of the entity during the year ended June 30, 2014. The funding is classified as Other noncurrent liabilities as of June 30, 2015 and 2014 since the Company is obligated to repay the funding to the third party on April 4, 2023, which is the maximum contract term. The liability is calculated as the combination of contributed capital and the pro-rata share of income less dividends paid to the third party and was $0.0 and $1.8 at June 30, 2015, and 2014, respectively. The third party is entitled to its proportionate share of the earnings of the Brazil entity, payable annually for the expected life of the contract.

7. RESTRUCTURING COSTS

Restructuring costs for the years ended June 30, 2015 , 2014 and 2013 are presented below:



	Year Ended June 30,
	2015			2014		2013
Organizational Redesign	$	58.6		$	13.0	$	—
Acquisition Integration Program	15.3			—		—
Productivity Program	2.1			14.2		25.3
China Optimization	(0.6		)	9.8		—
Other restructuring programs	—			0.3		4.1
Total	$	75.4		$	37.3	$	29.4

Organizational Redesign

During the fourth quarter of fiscal 2014, the Company’s Board of Directors approved a program associated with an organizational structure (“Organizational Redesign”) that aims to reinforce the Company’s growth path and strengthen its position as a global leader in beauty. The Company anticipates that the Organizational Redesign will result in pre-tax restructuring and related costs of $145.0 to $180.0 , all of which will result in cash payments. The Company anticipates substantial completion of all project activities by the end of fiscal 2017, with the remaining costs primarily charged to Corporate.

The Company incurred $71.6 of restructuring costs life-to-date as of June 30, 2015 in Corporate.

The related liability balance and activity for the restructuring costs are presented below:



	Severance and Employee Benefits			Other Exit Costs			Total Program Costs
Balance—July 1, 2014	$	9.1		$	1.9		$	11.0
Restructuring Charges	63.3			2.5			65.8
Payments	(28.7		)	(3.8		)	(32.5		)
Changes in estimates ^(a)	(7.2		)	—			(7.2		)
Effects of exchange rates	(4.5		)	(0.3		)	(4.8		)
Payables	—			(0.2		)	(0.2		)
Balance—June 30, 2015	$	32.0		$	0.1		$	32.1


^(a)	The decrease in severance and employee benefits is primarily attributable to employees who have voluntarily left positions that were later eliminated.

The Company currently estimates that the total remaining accrual of $32.1 will result in cash expenditures of $27.1 , $4.5 , $0.5 and in fiscal 2016, 2017, and 2018, respectively.

Acquisition Integration Program

In connection with the acquisition of the Bourjois brand, the Company recorded $15.3 of restructuring costs primarily related to distributor termination fees, recorded in the Corporate segment. The related liability was $15.3 as of June 30, 2015. The Company currently estimates the total remaining accrual of $15.3 will result in cash expenditures of $10.1 and $5.2 in fiscal 2016 and 2017, respectively.

China Optimization

F-23

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

During the fourth quarter of fiscal 2014, the Company entered into a distribution agreement with a third-party distributor for certain of the Company’s brands sold through the mass distribution channel in China and announced the discontinuation of the Company’s TJoy brand. In conjunction with these events, during fiscal 2015 the Company completed a restructuring and product rationalization of the Company's mass business in China (“China Optimization”) that are aimed at generating operating efficiencies. The China Optimization pre-tax restructuring costs were $9.2 all of which have or will result in cash payments and were charged to Corporate.

The related liability balance and activity for the restructuring costs are presented below:



	Restructuring Costs
	Severance and Employee Benefits			Other Exit Costs			Total Restructuring Costs
Balance—July 1, 2014	$	9.6		$	0.2		$	9.8
Restructuring charges	—			—			—
Payments	(8.7		)	—			(8.7		)
Changes in estimate	(0.6		)	—			(0.6		)
Effects of exchange rates	0.1			(0.2		)	(0.1		)
Balance—June 30, 2015	$	0.4		$	—		$	0.4

The Company currently estimates that the total remaining restructuring accrual of $ 0.4 will result in cash expenditures in fiscal 2016.

Productivity Program

During the fourth quarter of fiscal 2013 , the Company’s Board of Directors approved a number of business integration and productivity initiatives aimed at enhancing long-term operating margins (the “Productivity Program”). Such activities primarily relate to integration of supply chain and selling activities within the Skin & Body Care segment, as well as certain commercial organization re-design activities, primarily in Europe and optimization of selected administrative support functions.

The Company anticipates that the Productivity Program will result in pre-tax restructuring and related costs of approximately $70.0 . The Company anticipates completing the implementation of all project activities by the end of fiscal 2016. The Company incurred $41.6 of restructuring costs life-to-date as of June 30, 2015 in Corporate.

The related liability balance and activity for the restructuring costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations			Other Exit Costs			Total Program Costs
Balance—July 1, 2014	$	15.8		$	0.2		$	0.2		$	16.2
Restructuring charges	2.2			—			1.6			3.8
Payments	(8.8		)	—			(1.6		)	(10.4		)
Changes in estimates ^(a)	(1.7		)	—			—			(1.7		)
Effect of exchange rates	(0.5		)	(0.2		)	(0.2		)	(0.9		)
Balance—June 30, 2015	$	7.0		$	—		$	—		$	7.0

^(a) The decrease in severance and employee benefits is primarily attributable to employees who have voluntarily left positions that were later eliminated.

The Company currently estimates that the total remaining accrual of $7.0 will result in cash expenditures of approximately $6.7 and $0.3 in fiscal 2016 and 2017 , respectively.

8. TRADE RECEIVABLES—FACTORING

The Company factors a portion of its trade receivables with unrelated third-party factoring companies on a non-recourse basis. Trade receivables factored throughout the year with the factoring companies amounted to $379.8 and $401.7 in fiscal 2015 and 2014 , respectively. Remaining balances due from factors amounted to $16.6 and $5.6 as of June 30, 2015 and 2014 , respectively, and are included in Trade receivables, net in the Consolidated Balance Sheets. Factoring fees paid under these

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

arrangements were $0.6 , $0.8 and $0.9 in fiscal 2015 , 2014 and 2013 , respectively, which were recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

9. INVENTORIES

Inventories as of June 30, 2015 and 2014 are presented below:



	June 30, 2015		June 30, 2014
Raw materials	$	160.9	$	189.3
Work-in-process	8.4		12.3
Finished goods	388.5		415.8
Total inventories	$	557.8	$	617.4

10. PROPERTY AND EQUIPMENT, NET

Property and equipment, net as of June 30, 2015 and 2014 are presented below:



	June 30, 2015			June 30, 2014
Land, buildings and leasehold improvements	$	232.4		$	230.7
Machinery and equipment	471.3			492.8
Marketing furniture and fixtures	267.7			278.1
Computer equipment and software	325.5			339.8
Construction in progress	48.7			45.4
	1,345.6			1,386.8
Accumulated depreciation and amortization	(845.4		)	(846.5		)
Property and equipment, net	$	500.2		$	540.3

Depreciation and amortization expense of property and equipment totaled $156.2 , $165.0 and $169.4 in fiscal 2015 , 2014 and 2013 , respectively, and is recorded in Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Operations.

In fiscal 2015 , 2014 and 2013 , the Company recorded asset impairment charges of $0.0 , $6.0 and $1.5 , respectively, primarily relating to the disposal of various manufacturing facilities. In October 2014, the Company agreed to sell certain TJoy assets for cash of 86.0 million RMB ( $14.1 ) in conjunction with China Optimization. As a result, the Company recognized a gain of $7.2 in Gain on sale of asset in the Consolidated Statement of Operations during fiscal 2015.

During fiscal 2015 and 2014, the Company removed certain fully depreciated assets from service that had original costs of $71.2 and $175.2 , respectively.

11. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The Company tests goodwill and indefinite lived intangible assets for impairment at least annually as of May 1, or more frequently, if certain events or circumstances warrant. There were no impairments of goodwill at the Company’s reporting units in fiscal year 2015.

In the first half of fiscal 2014, the Company anticipated realizing significant improvements in cash flows in the China operations of its Beauty - Skin & Body Care Reporting Units beginning in the third quarter due to the reorganization of the management team and distribution network in China and the launch of new product offerings. In the course of evaluating the results for the third quarter and the preparation of third quarter financial statements, the Company noted the net cash outflows associated with the TJOY Holdings Co., Ltd. (“TJoy”) mass channel business in China were significantly in excess of previous expectations and management concluded that the results in China represented an indicator of impairment that warranted an interim impairment test for goodwill and certain other intangible assets in the Beauty - Skin & Body Care Reporting Unit of $316.9 , of which $256.4 related to goodwill and $60.5 to other long lived assets, as described below and recorded in Asset impairment charges in the Consolidated Statements of Operations.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

In step one of the goodwill impairment test, the Company identified that the carrying value of the reporting unit exceeded its fair value based on a re-evaluation of discounted cash flows and confirmed by using a market approach to value the reporting units. The main drivers of the decline were a decrease in average net sales growth rates for the reporting unit from high-single digits to mid-single digits and an increase in weighted average cost of capital, based on management's recent estimates.

In step two of the test, the implied fair value of goodwill was determined by comparing the fair value of the other assets in the reporting unit to the fair value of the reporting unit. Predominantly as a result of the fair value of the adidas license, the implied fair value of goodwill was determined to be nil. As a result, goodwill for the Beauty - Skin & Body Care reporting unit was fully impaired, resulting from a reduction in fair value of the Beauty - Skin & Body Care reporting unit of 43.4% from the May 1, 2013 fair value and a total non-cash impairment charge of $316.9 , of which $256.4 related to goodwill and $60.5 to other assets.

The Company believes the assumptions used in calculating the estimated fair values of its reporting units are reasonable and attainable. However, the Company can provide no assurances that it will achieve such projected results. Further, the Company can provide no assurances that it will not have to recognize additional impairment of goodwill in the future due to other market conditions or changes in interest rates in its reporting units. Recognition of additional impairment of a significant portion of the Company’s goodwill would negatively affect the Company’s reported results of operations and total capitalization.

Goodwill as of June 30, 2015 and June 30, 2014 is presented below:



	Fragrances			Color Cosmetics			Skin & Body Care			Total
Gross balance at June 30, 2014	$	751.9		$	538.2		$	693.5		$	1,983.6
Accumulated impairments ^(a)	—			—			(640.8		)	(640.8		)
Net balance at June 30, 2014	$	751.9		$	538.2		$	52.7		$	1,342.8

Changes during the year ended June 30, 2015:
Acquisition contingent payment ^(b)	$	30.0		$	—		$	—		$	30.0
Acquisitions ^(c)	35.0			148.7			11.1			194.8
Foreign currency translation	(27.0		)	(9.6		)	(0.3		)	(36.9		)
Reclassification ^(d)	(69.1		)	—			69.1			—

Gross balance at June 30, 2015	$	720.8		$	677.3		$	773.4		$	2,171.5
Accumulated impairments	—			—			(640.8		)	(640.8		)
Net balance at June 30, 2015	$	720.8		$	677.3		$	132.6		$	1,530.7

^(a) Prior to June 30, 2013, the Company recorded pre-tax non-cash impairment in the Skin & Body Care reporting unit of $384.4 . In fiscal 2014, the Company recorded pre-tax non-cash impairment in the Skin & Body Care reporting unit of $256.4 .

^(b) Pursuant to the Company's fiscal 2006 acquisition of Unilever Cosmetics International, the Company was contractually obligated to make annual contingent purchase price consideration payments for a 10 -year period following the acquisition to the seller. Payments are based on contractually agreed upon sales targets and can range up to $30.0 per year. The Company paid $30.0 during the third quarter of fiscal 2015, 2014 and 2013 for such contingent consideration. The March 2015 payment was the final contingent purchase price payment due under the contract.

^(c) During the year ended June 30, 2015 , the Company acquired 100% of the assets of Bourjois. This transaction was accounted for as business combinations (See Note 4).

^(d) As a result of the Company’s Organizational Redesign program announced on July 9, 2014, a certain brand and its attributable goodwill of $69.1 was reclassified from the Fragrances segment to the Skin & Body Care segment. The Company calculated the fair value of the brand relative to the reporting unit using the same methodology utilized in the annual impairment analysis.

Other Intangible Assets

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

In fiscal 2015, there were no impairments of Other intangible assets. Other intangible assets, net as of June 30, 2015 and June 30, 2014 are presented below:



	June 30, 2015		June 30, 2014
Indefinite-lived other intangible assets ^(a)	$	1,274.0	$	1,167.8
Finite-lived other intangible assets, net ^(b)	639.6		669.3
Total Other intangible assets, net	$	1,913.6	$	1,837.1

^(a) Net of accumulated impairments of $188.6 as of June 30, 2015 and June 30, 2014 .

^(b) Net of accumulated impairments of $21.0 and $33.5 related to the TJoy trademark and customer relationships, respectively, recorded in fiscal 2014.

The changes in the carrying amount of indefinite-lived other intangible assets are presented below:



	Fragrances			Color Cosmetics			Skin & Body Care			Total
Gross balance at June 30, 2014	$	25.2		$	886.5		$	453.9		$	1,365.6
Accumulated impairments ^(a)	—			(9.2		)	(188.6		)	(197.8		)
Balance—June 30, 2014	25.2			877.3			265.3			1,167.8

Changes during the period ended June 30, 2015
Acquisitions ^(b)	—			112.0			—			112.0
Foreign currency translation	(4.5		)	(1.3		)	—			(5.8		)

Gross balance at June 30, 2015	20.7			997.2			453.9			1,471.8
Accumulated impairments	—			(9.2		)	(188.6		)	(197.8		)
Net balance at June 30, 2015	$	20.7		$	988.0		$	265.3		$	1,274.0

^(a) Impairment charges of $197.8 were recorded prior to June 30, 2013.

^(b) During the year ended June 30, 2015, the Company acquired 100% of the assets of Bourjois. This transaction was accounted for as business combinations (See Note 4).

Intangible assets subject to amortization are presented below:



	Cost		Accumulated Amortization			Accumulated Impairment			Net
June 30, 2014
License agreements	$	835.0	$	(490.8	)	$	—		$	344.2
Customer relationships	510.8		(169.4		)	(33.5		)	307.9
Trademarks	125.8		(90.1		)	(21.0		)	14.7
Product formulations	31.8		(29.3		)	—			2.5
Total	$	1,503.4	$	(779.6	)	$	(54.5	)	$	669.3
June 30, 2015
License agreements	$	800.7	$	(501.1	)	$	—		$	299.6
Customer relationships ^(c)	559.1		(232.8		)	—			326.3
Trademarks ^(c)	119.1		(108.2		)	—			10.9
Product formulations	32.7		(29.9		)	—			2.8
Total	$	1,511.6	$	(872.0	)	$	—		$	639.6

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

^(c) The cost, accumulated amortization and accumulated impairment related to the TJoy customer relationship and trademark was eliminated as of June 30, 2015 due to disposition of the business.

In fiscal 2014, concurrently with the evaluation of future cash flows of the reporting unit, the Company also re-evaluated future cash flows from other long lived assets in China, consisting of the TJoy trademark, customer relationships and a manufacturing facility, with a total carrying value of $69.1 . It was determined that the carrying value of this asset group exceeded its fair value resulting in an impairment charge of $60.5 . The TJoy trademark and customer relationships of $21.0 and $33.5 , respectively, were fully impaired and the remaining $6.0 impairment charge was attributable to the reduction of the carrying value of a manufacturing facility.

Intangible assets subject to amortization are amortized principally using the straight-line method and have the following weighted-average remaining lives:



Description
License agreements	10.4 years
Customer relationships	8.8 years
Trademarks	12.4 years
Product formulations	2.6 years

As of June 30, 2015 , the remaining weighted-average life of all intangible assets subject to amortization is 9.6 years .

Amortization expense totaled $74.7 , $85.7 and $90.2 for the fiscal years ended June 30, 2015 , 2014 and 2013 , respectively. The estimated aggregate amortization expense for each of the following fiscal years ending June 30 is presented below:



2016	$	78.6
2017	77.8
2018	77.3
2019	76.4
2020	75.0

License Agreements

The Company records assets for license agreements (“licenses”) acquired in transactions accounted for as business combinations. These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or regional basis, certain of the Company’s products which comprise a significant portion of the Company’s revenues. These licenses have initial terms covering various periods. Certain licenses provide for automatic extensions ranging from 3 to 10 -year terms, contingent upon attaining specified sales levels. Based on the current sales and the time until renewal, management cannot determine whether specified sales levels will be attained, which will permit extensions.

There were no licenses acquired during fiscal 2015 and 2014.

12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of June 30, 2015 and 2014 are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	June 30, 2015		June 30, 2014
Advertising, marketing and licensing	$	179.1	$	194.8
Customer returns, discounts, allowances and bonuses	168.2		196.4
Other compensation and related benefits	132.0		129.3
VAT, sales and other non-income taxes	46.7		41.1
Restructuring costs	44.3		32.9
Acquisition-related costs	31.3		—
Payroll and payroll related taxes	21.2		23.2
Share-based compensation liability	13.9		—
Unfavorable lease contracts	7.1		18.6
Derivative liabilities	6.3		11.5
Auditing and consulting fees	5.5		8.7
Deferred income	4.1		8.3
Interest	3.5		3.9
Rent	3.1		3.7
Other	52.9		51.2
Total accrued expenses and other current liabilities	$	719.2	$	723.6

13. DEBT



	June 30, 2015			June 30, 2014
Short-term debt	$	22.1		$	18.8
2015 Credit Agreement due March 2018	800.0			—
Coty Inc. Credit Facility
2013 Term Loan due March 2018	1,050.0			1,250.0
Incremental Term Loan due April 2018	625.0			625.0
Revolving Loan Facility due April 2018	136.5			899.5
Senior Notes:
5.12% Series A notes due June 2017	—			100.0
5.67% Series B notes due June 2020	—			225.0
5.82% Series C notes due June 2022	—			175.0
Other long-term debt and capital lease obligations	1.1			0.2
Total debt	2,634.7			3,293.5
Less: Short-term debt and current portion of long-term debt	(28.8		)	(33.4		)
Total Long-term debt	$	2,605.9		$	3,260.1

Short-Term Debt

The Company maintains short-term lines of credit with financial institutions around the world. Total available lines of credit were $127.7 and $141.4 , of which $22.1 and $18.8 were outstanding at June 30, 2015 and 2014 , respectively. Interest rates on these short-term lines of credit vary depending on market rates for borrowings within the respective geographic locations plus applicable spreads. Interest rates plus applicable spreads on these lines ranged from 0.7% to 18.0% and from 1.3% to 13.5% as of June 30, 2015 and 2014 , respectively. The weighted-average interest rate on short-term debt outstanding was 7.1% and 6.7% as of June 30, 2015 and 2014 , respectively. In addition, the Company had undrawn letters of credit of $4.1 and $3.6 as of June 30, 2015 and 2014 , respectively.

Long Term Debt

2015 Credit Agreement

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

On March 24, 2015, the Company entered into a Credit Agreement (the “2015 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., BNP Paribas, Credit Agricole Corporate & Investment Bank, ING Bank, N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. The Company used the proceeds of the 2015 Credit Agreement to repay in full the indebtedness outstanding on its then-existing 2014 Credit Agreement, as defined below, and to repay $200.0 million of indebtedness outstanding on the existing 2013 Term Loan under the 2013 Credit Agreement, each as defined below, resulting in a remaining $1,050.0 term loan. The 2015 Credit Agreement provides for a term loan of $800.0 million (the “2015 Term Loan”), payable in full on March 31, 2018. The terms of the 2015 Term Loan are substantially the same as those of the term loan existing under the 2013 Credit Agreement, after giving effect to the 2015 Amendment as discussed below.

Rates of interest on amounts borrowed under the 2015 Credit Agreement were based on the London Interbank Offered Rate (“LIBOR”), a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2015 Credit Agreement could range from 0.125% to 1.875% based on the Company’s consolidated leverage ratio, as defined in the 2015 Credit Agreement. The applicable spread under the 2015 Credit Agreement in effect as of June 30, 2015 was 1.63% . The 2015 Credit Agreement also contained affirmative and negative covenants that are substantially the same as those contained in the 2013 Credit Agreement, as amended, as discussed below. For the year ended June 30, 2015, deferred financing fees of $3.1 were recorded in Other noncurrent assets in the Consolidated Balance Sheet. Additionally, for the year ended June 30, 2015, the Company recorded a write-off of $0.9 of deferred financing fees related to the repayment of $200.0 million of indebtedness outstanding on the 2013 Credit Agreement.

Coty Inc. Credit Facility

On March 24, 2015, the Company entered into an amendment (“2015 Amendment”) to the 2013 Credit Agreement. The 2015 Amendment amends, among other things, the financial covenants in the 2013 Credit Agreement. After giving effect to the 2015 Amendment, the 2013 Credit Agreement permits the Company to maintain a quarterly base leverage ratio, as defined therein, equal to or less than 3.95 to 1.0 for each fiscal quarter through to December 31, 2015. After December 31, 2015, the quarterly base leverage ratio steps down to 3.75 to 1.0 through the period ending December 31, 2016, and to 3.50 to 1.0 through maturity of the facility. For the year ended June 30, 2015, the Company recorded deferred financing fees of $3.1 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2015 Amendment.

On September 29, 2014, the Company entered into an Amendment (the “2014 Amendment”) to its existing 2013 Credit Agreement. The 2014 Amendment permits the Company to maintain a consolidated leverage ratio equal to or less than 4.5 to 1.0 for the 12-month period following an acquisition, as defined in the 2013 Credit Agreement. During the year-ended June 30, 2015, the Company recorded deferred financing fees of $3.1 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2014 Amendment.

On June 25, 2014, the Company entered into the Incremental Term Loan Amendment (“Incremental Amendment”) to the 2013 Credit Agreement. The 2014 Incremental Amendment provides for an incremental term loan of $625.0 ( the “Incremental Term Loan”), and the Incremental Term Loan has substantially the same terms and conditions as those of the 2013 Term Loan, except with respect to principal repayments. The Incremental Term Loan is payable in full on April 2, 2018. The Company entered into the Incremental Term Loan in connection with the repurchase of shares from two related parties during fiscal 2014 and for general corporate purposes. Applicable spreads on the borrowings under the 2014 Incremental Amendment, as amended by the 2014 Amendment may range from 0.0% to 1.75% based on the Company’s consolidated leverage ratio, as defined in the 2013 Credit Agreement. Deferred financing fees of $2.2 were recorded in Other noncurrent assets in the Consolidated Balance Sheet in connection with the amendment as of June 30, 2014 and there were no deferred financing fees written off as a result of the amendment.

On April 2, 2013, the Company refinanced its then-existing credit facility by entering into a Credit Agreement (the “2013 Credit Agreement”), with JP Morgan Chase Bank, N.A. as administrative agent and Bank of America, N.A., BNP Paribas, Crédit Agricole Corporate & Investment Bank, Deutsche Bank Securities Inc., ING Bank N.V., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. The 2013 Credit Agreement provides a term loan of $1,250.0 (the “2013 Term Loan”), which expires on March 31, 2018. The amount outstanding on the 2013 Term Loan is $1,050.0 as of June 30, 2015. The 2013 Credit Agreement additionally provides a revolving loan facility of $1,250.0 (the “2013 Revolving Loan Facility”) expiring on April 2, 2018, which includes up to $80.0 in swingline loans. Rates of interest on amounts borrowed under the 2013 Credit Agreement are based on the London Interbank Offer Rate (“LIBOR”), a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2013 Credit Agreement, as amended by the 2014 Amendment, may range from 0.0% to 1.75% based on the Company’s consolidated leverage ratio, as defined in the 2013 Credit Agreement. In addition to interest on amounts borrowed under the 2013 Credit

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Agreement, as amended by the 2014 Amendment, the Company pays a quarterly commitment fee, as defined in the 2013 Credit Agreement, on the 2013 Revolving Loan Facility that can range from 0.15% to 0.25% based on the Company’s consolidated leverage ratio, as defined in the 2013 Credit Agreement. Quarterly repayments for the 2013 Term Loan will commence on October 1, 2016 and will total $175.0 , and $875.0 in fiscal years 2017, and 2018 respectively. The Company used the proceeds from the 2013 Credit Agreement to repay in full all amounts outstanding under the Credit Agreement, dated August 22, 2011, with JPMorgan Chase Bank, N.A. as administrative agent and Bank of America, N.A. and Wells Fargo Bank, N.A., as co-syndication agents and for general corporate purposes. In April 2013, the Company wrote off $2.6 of deferred financing fees associated with the refinancing, which was included in interest expense, net in the Consolidated Statements of Operations in fiscal 2013. As of June 30, 2015, the Company had $1,113.5 available for borrowings under the 2013 Credit Agreement.

2014 Credit Agreement

On September 29, 2014, the Company entered into a Credit Agreement (the “2014 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as syndication agents. The 2014 Credit Agreement provided for a term loan of $600.0 scheduled to expire on September 28, 2015 at which time it was payable in full. Rates of interest on amounts borrowed under the 2014 Credit Agreement were based on LIBOR, a qualified Eurocurrency LIBOR, an alternative base rate, or a qualified local currency rate, as applicable to the borrowings, plus applicable spreads determined by the consolidated leverage ratio. Applicable spreads on the borrowings under the 2014 Credit Agreement could have ranged from 0.0% to 1.75% based on the Company’s consolidated leverage ratio, as defined in the 2014 Credit Agreement. The Company used the borrowings under the 2014 Credit Agreement to prepay the outstanding principal amount of the Senior Notes, as described below, prior to their maturity date. For the year-ended June 30, 2015, the Company recorded deferred financing fees of $1.9 in Other noncurrent assets in the Consolidated Balance Sheet in connection with the 2014 Amendment.

On March 24, 2015, the Company used the proceeds of the 2015 Credit Agreement to repay in full the indebtedness outstanding under the 2014 Credit Agreement.

Interest

Interest is payable quarterly or on the last day of the interest period applicable to the borrowing under the Company’s long-term debt facilities. The weighted-average interest rates on the Company’s Term Loans were 1.7% , 1.6% , and 1.9% in fiscal 2015, 2014, and 2013 respectively. The weighted-average interest rates on the Company’s Revolving credit facility was 1.4% , 1.3% , and 1.6% in fiscal 2015, 2014, and 2013.

Senior Notes

On September 29, 2014, the Company prepaid the Senior Notes. The prepayment included the principal amount of Senior Notes of $500.0 , accrued interest of $8.0 and a make-whole amount of $84.6 . In connection with the prepayment, the Company incurred a loss on early extinguishment of debt of $88.8 , which included the make-whole amount and the write-off of $4.2 of deferred financing fees related to the Senior Notes.

On June 16, 2010, the Company issued $500.0 of Senior Secured Notes (the “Senior Notes”) in three series in a private placement transaction pursuant to a Note Purchase Agreement (the “NPA”): (i) $100.0 in aggregate principal amount of 5.12% Series A Senior Secured Notes due June 16, 2017, (ii) $225.0 in aggregate principal amount of 5.67% Series B Senior Secured Notes due June 16, 2020 and (iii) $175.0 in aggregate principal amount of 5.82% Series C Senior Secured Notes due June 16, 2022. Interest payments are payable semi-annually in December and June. In connection with the refinancing of the credit facility in August 2011, the liens that secured the Senior Notes were released as provided in the NPA.

Financial Covenants

As of June 30, 2015 , the Company is required to comply with certain covenants contained within the 2013 Credit Agreement and the 2015 Credit Agreement (each, as amended, the “Credit Agreements”). These covenants within the Credit Agreements contain customary representations and warranties as well as customary affirmative and negative covenants, including but not limited to, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. Events of default permitting acceleration under the Agreements include, among others, nonpayment of principal or interest, covenant defaults, material breaches of representations and warranties, bankruptcy and insolvency events and certain cross defaults. In addition, a change of control is a default under the Credit Agreements. The 2015 Amendment amends, among other things, the financial covenants in the 2013 Credit Agreement. After giving effect to the 2015 Amendment, the 2013 Credit Agreement permits Coty to maintain a quarterly base leverage ratio, as defined therein, equal to or less than 3.95 to 1.0 for each fiscal quarter through to December 31, 2015, subject to certain agreed step-downs thereafter as defined above, a consolidated interest coverage ratio, as these terms are defined in the Credit Agreements, equal to or greater than 3.0 to 1.0 for the previous 12-month period, except that the 2014 Amendment to the

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

2013 Credit Agreement permits us to maintain a consolidated leverage ratio equal to or less than 4.5 to 1.0 for the 12-month period following an acquisition, as defined in the 2013 Credit Agreement.

The Company is in compliance with all financial covenants within the Credit Agreements as of June 30, 2015 .

Repayment Schedule

Aggregate maturities of all long-term debt, including current portion of long-term debt and excluding capital lease obligations as of June 30, 2015 , are presented below:



Fiscal Year Ending June 30
2016	$	6.5
2017	175.0
2018	2,430.0
2019	—
2020	—
Thereafter	—
Total	$	2,611.5

14. LEASE COMMITMENTS

The Company has various buildings and equipment under leasing arrangements. The leases generally provide for payment of additional rent based upon increases in items such as real estate taxes and insurance. Certain lease agreements have renewal options for periods typically ranging between two and five years . Certain lease agreements have escalation clauses, which have been straight-lined over the life of the respective lease agreements. The minimum rental lease commitments for non-cancellable operating leases as of June 30, 2015 are presented below:



Fiscal Year Ending June 30
2016	$	59.0
2017	49.5
2018	43.2
2019	37.7
2020	35.7
Thereafter	205.2
	430.3
Less: sublease income	(41.1		)
Total minimum payments required	$	389.2

Rent expense relating to operating leases in fiscal 2015 , 2014 and 2013 is presented below:



	Year Ended June 30,
	2015			2014			2013
Rent expense	$	87.1		$	112.5		$	89.7
Less: sublease income	(4.3		)	(1.4		)	(1.2		)
Total	$	82.8		$	111.1		$	88.5

Reflected in total rent expense above are estimated net future minimum lease payments and related costs for facilities no longer used in operations of $(0.7) , $ 21.4 and nil and duplicative rent expenses of nil , $5.0 and $ 5.3 in fiscal 2015, 2014 and 2013, respectively. In addition, the Company incurred accelerated depreciation of nil , $4.1 and $16.5 , in fiscal 2015, 2014 and 2013, respectively. These costs relate to the New York real estate consolidation program and were recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and included in Corporate (Note 3).

15. INCOME TAXES

Income (loss) from operations before income taxes in fiscal 2015 , 2014 and 2013 is presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Year Ended June 30,
	2015			2014			2013
United States	$	(173.7	)	$	(119.1	)	$	(53.5	)
Foreign	407.0			75.0			372.2
Total	$	233.3		$	(44.1	)	$	318.7

The components of the Company’s total (benefit) provision for income taxes during fiscal 2015 , 2014 and 2013 are presented below:



	Year Ended June 30,
	2015			2014			2013
(Benefit) provision for income taxes:
Current:
Federal	$	3.7		$	5.6		$	(26.5	)
State and local	3.3			2.1			2.8
Foreign	54.1			50.8			110.6
Total	61.1			58.5			86.9
Deferred:
Federal	(71.0		)	(30.6		)	8.3
State and local	(12.0		)	(0.7		)	2.6
Foreign	(4.2		)	(7.1		)	19.0
Total	(87.2		)	(38.4		)	29.9
(Benefit) provision for income taxes	$	(26.1	)	$	20.1		$	116.8

During fiscal 2015, the Company transferred certain international intellectual property rights to its wholly owned subsidiary in Switzerland in order to align the Company’s ownership of these international intellectual property rights with its global operations. Although the transfer of foreign intellectual property rights between consolidated entities did not result in any gain in the consolidated results of operations, the Company generated a taxable gain in the U.S. that was offset by net operating loss carryforwards. Income taxes incurred related to the intercompany transactions are treated as a prepaid income tax in the Company’s consolidated balance sheet and amortized to income tax expense over the life of the intellectual property. The prepaid income tax is included in the “Prepaid expenses and other current assets” and “Other noncurrent assets” lines of the Consolidated Balance Sheet in the amount of $7.6 and $143.4 , respectively. The prepaid income taxes are amortized as a component of income tax expense over twenty years .

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The reconciliation of the U.S. Federal statutory tax rate to the Company’s effective income tax rate during fiscal 2015 , 2014 and 2013 is presented below:



	Year Ended June 30,
	2015			2014			2013
Income (loss) before income taxes	$	233.3		$	(44.1	)	$	318.7
Provision (benefit) for income taxes at statutory rate	$	81.7		$	(15.4	)	$	111.6
State and local taxes—net of federal benefit	(5.6		)	0.9			3.5
Foreign tax differentials	(74.4		)	(53.0		)	(44.2		)
Change in valuation allowances	(6.6		)	36.1			18.2
Change in unrecognized tax benefit	(35.2		)	(24.4		)	4.8
Asset impairment charges	—			67.4			—
Share-based compensation	—			1.8			16.0
Permanent differences—net	10.6			1.8			7.2
Other	3.4			4.9			(0.3		)
(Benefit) provision for income taxes	$	(26.1	)	$	20.1		$	116.8
Effective income tax rate	(11.2		)%	(45.6		)%	36.6		%

Significant components of Deferred income tax assets and liabilities as of June 30, 2015 and 2014 are presented below:



	June 30, 2015			June 30, 2014
Deferred income tax assets:
Inventories	$	14.0		$	20.2
Accruals and allowances	77.0			87.4
Sales returns	15.9			20.1
Share-based compensation	26.1			35.4
Employee benefits	38.4			50.9
Net operating loss carry forwards and tax credits	92.4			102.2
Other	27.2			45.3
Less: valuation allowances	(81.9		)	(98.6		)
Net deferred income tax assets	209.1			262.9
Deferred income tax liabilities:
Intangible assets	436.0			421.9
Licensing rights	6.3			6.4
Other	29.7			33.8
Deferred income tax liabilities	472.0			462.1
Net deferred income tax liabilities	$	(262.9	)	$	(199.2	)

The expirations of tax loss carry forwards, amounting to $264.3 as of June 30, 2015 , in each of the fiscal years ending June 30, are presented below:



Fiscal Year Ending June 30	United States		Western Europe		Rest of World		Total
2016	$	—	$	—	$	14.9	$	14.9
2017	—		—		18.2		18.2
2018	—		—		37.8		37.8
2019	—		—		51.6		51.6
2020 and thereafter	—		44.6		97.2		141.8
Total	$	—	$	44.6	$	219.7	$	264.3

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The total valuation allowances recorded are $81.9 and $98.6 as of June 30, 2015 and 2014 , respectively. In fiscal 2015 , the change in the valuation allowance was due primarily to a decrease in valuation allowance for net operating losses.

A reconciliation of the beginning and ending amount of UTBs is presented below:



	Year Ended June 30,
	2015			2014			2013
UTBs—July 1	$	400.5		$	331.4		$	326.5
Additions based on tax positions related to the current year	51.6			29.5			36.8
Additions for tax positions of prior years	6.4			91.9			5.0
Reductions for tax positions of prior years	(60.3		)	(9.9		)	—
Settlements	(29.7		)	(33.8		)	(27.9		)
Lapses in statutes of limitations	(14.2		)	(11.6		)	(13.8		)
Foreign currency translation	(11.7		)	3.0			4.8
UTBs—June 30	$	342.6		$	400.5		$	331.4

As of June 30, 2015 , the Company had $342.6 of UTBs of which $315.7 represents the amount that, if recognized, would impact the effective income tax rate in future periods. As of June 30, 2015 and 2014 , the liability associated with UTBs, including accrued interest and penalties, is $182.9 and $159.4 , respectively, which is recorded in Income and other taxes payable and Other non-current liabilities in the Consolidated Balance Sheets.

During fiscal 2015 , the Company released interest accruals of ($4.4) , while in fiscal 2014 and 2013 the Company accrued total interest of ($1.7) and $1.1 , respectively, and penalty benefit of ($1.0) , nil and $0.9 , respectively. The total gross accrued interest and penalties recorded in the Other noncurrent liabilities in the Consolidated Balance Sheets related to UTBs as of June 30, 2015 and 2014 is $15.2 and $25.5 , respectively.

The Company is present in over 35 tax jurisdictions, and any point in time is subject to several audits at various stages of completion. As a result, the Company evaluates tax positions and establishes liabilities for UTBs that may be challenged by local authorities and may not be fully sustained, despite a belief that the underlying tax positions are fully supportable. UTBs are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, developments in case law, and closing of statute of limitations. Such adjustments are reflected in the provision for income taxes as appropriate. In fiscal year 2015 and 2014, the Company recognized a tax benefit of $62.0 and $49.2 respectively associated with the settlement of tax audits in multiple jurisdictions and the expiration of foreign and state statutes of limitation. The Company has open tax years ranging from 2006 and forward.

On the basis of information available at June 30, 2015 , it is reasonably possible that a decrease of up to $93.8 in UTBs related to U.S. and foreign exposures may be necessary within the coming year. It is also possible the ongoing audits by tax authorities may result in increases or decreases to the balance of UTBs. Since it is common practice to extend audits beyond the Statute of Limitations, the Company is unable to predict the timing or conclusion of these audits and, accordingly, the Company is unable to estimate the amount of changes to the balance of UTBs that are reasonably possible at this time. However, the Company believes it has adequately provided for its UTBs for all open tax years in each tax jurisdiction.

It is the Company’s intention to permanently reinvest undistributed earnings and income from the Company’s foreign operations that have been generated through June 30, 2015 . Accordingly, no provision has been made for U.S. income taxes on the remaining undistributed earnings of foreign subsidiaries as of June 30, 2015 . Cumulative undistributed earnings of non-U.S. subsidiaries was $2,138.7 as of June 30, 2015 . It is not practicable for the Company to determine the amount of additional income and withholding taxes that may be payable in the event the remaining undistributed earnings are repatriated.

16. OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities as of June 30, 2015 and 2014 are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	June 30, 2015		June 30, 2014
Noncurrent income tax liabilities	$	182.9	$	154.3
Rent	36.3		37.5
Restructuring	10.5		5.3
Unfavorable lease contracts	9.9		11.2
Deferred income	3.6		8.1
Mandatorily redeemable financial instruments	5.1		5.5
Other	8.4		6.8
Total noncurrent liabilities	$	256.7	$	228.7

17. INTEREST EXPENSE, NET

Interest expense, net for the years ended June 30, 2015 , 2014 and 2013 is presented below:



	Year Ended June 30,
	2015			2014			2013
Interest expense	$	71.4		$	69.8		$	77.2
Foreign exchange losses, net of derivative contracts	4.1			2.8			—
Deferred financing fees write-off	0.9			—			2.6
Accretion of acquisition-related liability	—			—			0.6
Interest income	(3.4		)	(4.1		)	(3.9		)
Total interest expense, net	$	73.0		$	68.5		$	76.5

18. EMPLOYEE BENEFIT PLANS

Savings and Retirement Plans -The Company’s Savings and Retirement Plans include a U.S. defined contribution plan for employees primarily in the U.S. and international savings plans for employees in certain other countries. In the U.S., hourly and salary based employees are eligible to participate in the plan after 90 days of service and the Company matches 100% of employee contributions up to 6.0% of employee compensation. In addition, the Company makes contributions to the plan on behalf of employees determined by their age and compensation.

During fiscal 2015 , 2014 and 2013 , the defined contribution expense for the U.S. defined contribution plan was $12.2 , $12.7 and $15.0 , respectively, and the defined contribution expense for the international savings plans was $10.7 , $10.6 and $6.4 , respectively.

Pension Plans -The Company sponsors contributory and noncontributory defined benefit pension plans covering certain U.S. and international employees primarily in Austria, France, Germany, the Netherlands, Spain and Switzerland. Participants in the U.S. defined benefit pension plan no longer accrue benefits. The Company measures defined benefit plan assets and obligations as of the date of the Company’s fiscal year-end. The Company’s defined benefit pension plans are funded primarily through contributions from the Company after consideration of recommendations from the pension plans’ independent actuaries and are funded at levels sufficient to comply with local requirements.

During June 2015, the Company’s Board of Directors approved the termination of the U.S. Del Labs Pension Plan. The anticipated plan termination date is September 30, 2015. The Company currently expect that the termination of the plan will be completed during fiscal 2017, and intends to fund the plan to provide for all plan benefits. The Company will fully fund the plan prior to the date of assets are distributed with the plan termination. Settlement gain or loss, if any, resulting from the termination will be recognized at that time.

On October 27, 2014, the Society of Actuaries published RP-2014 Mortality Tables and Mortality Improvement Scale MP-2014, which both reflect improved longevity. The Company adopted the change to the mortality assumptions to re-measure our US defined benefit pension plan obligations as of June 30, 2015.

Other Post-Employment Benefit Plans (“OPEB”) -The Company provides certain post-employment health and life insurance benefits for certain employees and spouses principally in the U.S. and Canada if certain age and service requirements

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

are met. Estimated benefits to be paid by the Company are expensed over the service period of each employee based on calculations performed by an independent actuary. In addition, the Company has a supplemental retirement plan and a termination benefit plan for selected salaried employees.

On October 27, 2014, the Society of Actuaries published RP-2014 Mortality Tables and Mortality Improvement Scale MP-2014, which both reflect improved longevity. The Company adopted the change to the mortality assumptions to re-measure our US other post-employment benefit plan obligations as of June 30, 2015.

During fiscal 2015, the Company’s U.S. OPEB plan changed to a retiree health exchange with a subsidy to eligible retiree participants through a Health Reimbursement Account (“HRA”). As a result of the plan change, the Company recognized $36.9 of prior service credits which, has been recognized in Other Comprehensive Income for fiscal 2015.

The aggregate reconciliation of the projected benefit obligations, plan assets, funded status and amounts recognized in the Company’s Consolidated Financial Statements related to the Company’s pension plans and other post-employment benefit plans is presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Pension Plans												Other Post-Employment Benefits						Total
	U.S.						International						Other Post-Employment Benefits						Total
	2015			2014			2015			2014			2015			2014			2015			2014
Change in benefit obligation
Benefit obligation-July 1	$	80.8		$	72.8		$	197.4		$	166.6		$	86.0		$77.7			$	364.2		$317.1
Service cost	—			—			5.5			5.7			1.9			2.3			7.4			8.0
Interest cost	3.3			3.4			4.3			5.5			2.7			3.4			10.3			12.3
Plan participants’ contributions	—			—			2.0			1.7			0.4			—			2.4			1.7
Plan amendments	—			—			0.3			2.1			(36.9		)	—			(36.6		)	2.1
Benefits paid	(4.0		)	(4.3		)	(6.4		)	(9.0		)	(3.1		)	(2.0)			(13.5		)	(15.3)
Premiums paid	—			—			(0.6		)	(0.9		)	—			—			(0.6		)	(0.9)
Pension Curtailment	—			—			(1.5		)	(0.6		)	(0.1		)	—			(1.6		)	(0.6)
Pension Settlements	—			—			(6.1		)	(0.1		)	—			—			(6.1		)	(0.1)
Acquisition and transfer	—			—			6.2			1.3			—			—			6.2			1.3
Actuarial loss (gain)	(2.4		)	8.9			7.4			17.3			(2.5		)	5.4			2.5			31.6
Effect of exchange rates	—			—			(31.7		)	7.8			(0.3		)	—			(32.0		)	7.8
Other	—			—			0.4			—			0.1			(0.8)			0.5			(0.8)
Benefit obligation-June 30	$	77.7		$	80.8		$	177.2		$	197.4		$	48.2		$	86.0		$	303.1		$	364.2

Change in plan assets
Fair value of plan assets-July 1	$	45.9		$	36.9		$	37.5		$	30.6		$	—		$	—		$	83.4		$	67.5
Actual return on plan assets	2.5			4.3			2.3			1.8			—			—			4.8			6.1
Employer contributions	7.8			9.0			8.6			10.3			2.7			2.0			19.1			21.3
Plan participants’ contributions	—			—			2.0			1.7			0.4			—			2.4			1.7
Benefits paid	(4.0		)	(4.3		)	(6.4		)	(9.0		)	(3.1		)	(2.0		)	(13.5		)	(15.3)
Premiums paid	—			—			(0.6		)	(0.9		)	—			—			(0.6		)	(0.9)
Plan settlements	—			—			(6.1		)	—			—			—			(6.1		)	—
Acquisition and transfer	—			—			2.8			1.3			—			—			2.8			1.3
Effect of exchange rates	—			—			(3.5		)	1.7			—			—			(3.5		)	1.7
Other	—			—			—			—			—			—			—			—
Fair value of plan assets-June 30	52.2			45.9			36.6			37.5			—			—			88.8			83.4
Funded status-June 30	$	(25.5	)	$	(34.9	)	$	(140.6	)	$	(159.9	)	$	(48.2	)	$	(86.0	)	$	(214.3	)	$	(280.8	)

With respect to the Company’s pension plans and other post-employment benefit plans, amounts recognized in the Company’s Consolidated Balance Sheets as of June 30, 2015 and 2014 , are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Pension Plans												Other Post-Employment Benefits						Total
	U.S.						International						Other Post-Employment Benefits						Total
	2015			2014			2015			2014			2015			2014			2015			2014
Noncurrent assets	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Current liabilities	(0.7		)	(1.5		)	(4.6		)	(5.0		)	(2.5		)	(1.8		)	(7.8		)	(8.3		)
Noncurrent liabilities	(24.8		)	(33.4		)	(136.0		)	(154.9		)	(45.7		)	(84.2		)	(206.5		)	(272.5		)
Funded Status	(25.5		)	(34.9		)	(140.6		)	(159.9		)	(48.2		)	(86.0		)	(214.3		)	(280.8		)
AOC(L)/I	(13.6		)	(17.4		)	(48.2		)	(56.1		)	35.2			(0.8		)	(26.6		)	(74.3		)
Net amount recognized	$	(39.1	)	$	(52.3	)	$	(188.8	)	$	(216.0	)	$	(13.0	)	$	(86.8	)	$	(240.9	)	$	(355.1	)

The accumulated benefit obligation for the U.S. defined benefit pension plans was $76.7 and $80.8 as of June 30, 2015 and 2014 , respectively. The accumulated benefit obligation for international defined benefit pension plans was $169.4 and $189.3 as of June 30, 2015 and 2014 , respectively.

Pension plans with accumulated benefit obligations in excess of plan assets and projected benefit obligations in excess of plan assets are presented below:



	Pension plans with accumulated benefit obligations in excess of plan assets								Pension plans with projected benefit obligations in excess of plan assets

	U.S.				International				U.S.				International
	2015		2014		2015		2014		2015		2014		2015		2014
Projected benefit obligation	$	77.8	$	80.8	$	175.8	$	195.7	$	77.8	$	80.8	$	177.1	$	197.6
Accumulated benefit obligation	$	76.7	$	80.8	$	168.3	$	187.7	$	76.7	$	80.8	$	169.4	$	189.3
Fair value of plan assets	$	52.2	$	45.9	$	35.4	$	35.6	$	52.2	$	45.9	$	36.6	$	37.5

Net Periodic Benefit Cost

The components of net periodic benefit cost for pension plans and other post-employment benefit plans recognized in the Consolidated Statements of Operations are presented below:



	Year Ended June 30,
	Pension Plans																		Other Post- Employment Benefits
	U.S.									International									Other Post- Employment Benefits									Total
	2015			2014			2013			2015			2014			2013			2015			2014			2013			2015			2014			2013
Service cost	$	—		$	—		$	—		$	5.5		$	5.7		$	4.5		$	1.9		$	2.3		$	2.8		$	7.4		$	8.0		$	7.3
Interest cost	3.3			3.4			3.3			4.3			5.5			5.6			2.7			3.4			3.6			10.3			12.3			12.5
Expected return on plan assets	(3.0		)	(2.5		)	(2.3		)	(1.2		)	(1.2		)	(1.0		)	—			—			—			(4.2		)	(3.7		)	(3.3		)
Amortization of prior service (credit) cost	—			—			—			0.3			0.2			0.1			(3.1		)	(0.2		)	(0.2		)	(2.8		)	—			(0.1		)
Amortization of net loss (gain)	2.0			1.0			2.9			3.1			2.1			1.3			(0.1		)	(1.1		)	—			5.0			2.0			4.2
Settlements loss (gain) recognized	—			—			—			1.2			(0.1		)	(0.1		)	(0.1		)	—			—			1.1			(0.1		)	(0.1		)
Curtailment (gain) loss recognized	—			—			—			(0.6		)	(0.6		)	—			—			—			—			(0.6		)	(0.6		)	—
Net periodic benefit cost	$	2.3		$	1.9		$	3.9		$	12.6		$	11.6		$	10.4		$	1.3		$	4.4		$	6.2		$	16.2		$	17.9		$	20.5

Pre-tax amounts recognized in AOC(L)/I, which have not yet been recognized as a component of net periodic benefit cost are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Pension Plans												Other Post-Employment Benefits
	U.S.						International						Other Post-Employment Benefits					Total
	2015			2014			2015			2014			2015		2014			2015			2014
Net actuarial (loss) gain	$	(13.6	)	$	(17.4	)	$	(45.4	)	$	(52.9	)	$	1.1	$	(1.0	)	$	(57.9	)	$	(71.3	)
Prior service (cost) credit	—			—			(2.8		)	(3.2		)	34.1		0.2			31.3			(3.0		)
Total recognized in AOC(L)/I	$	(13.6	)	$	(17.4	)	$	(48.2	)	$	(56.1	)	$	35.2	$	(0.8	)	$	(26.6	)	$	(74.3	)

Changes in plan assets and benefit obligations recognized in OCI/(L) during the fiscal year are presented below:



	Pension Plans											Other Post-Employment Benefits
	U.S.					International						Other Post-Employment Benefits						Total
	2015		2014			2015			2014			2015			2014			2015			2014
Net actuarial (loss) gain	$	1.8	$	(7.1	)	$	(5.6	)	$	(16.7	)	$	2.3		$	(5.4	)	$	(1.5	)	$	(29.2	)
Amortization of prior service cost (credit)	—		—			0.3			0.2			(3.1		)	(0.2		)	(2.8		)	—
Recognized net actuarial loss (gain)	2.0		1.0			4.3			2.1			(0.1		)	(1.1		)	6.2			2.0
Prior service cost	—		—			(0.3		)	(2.1		)	36.9			—			36.6			(2.1		)
Effect of exchange rates	—		—			9.2			(2.0		)	—			0.2			9.2			(1.8		)
Total recognized in OCI/(L)	$	3.8	$	(6.1	)	$	7.9		$	(18.5	)	$	36.0		$	(6.5	)	$	47.7		$	(31.1	)

Amounts in AOCI/(L) expected to be amortized as components of net periodic benefit cost during fiscal 2016 are presented below:



	Pension Plans						Other Post-Employment Benefits		Total
	U.S.			International			Other Post-Employment Benefits		Total
Prior service (cost) credit	$	—		$	(0.2	)	$	5.9	$	5.7
Net loss	(1.2		)	(3.3		)	—		(4.5		)
	$	(1.2	)	$	(3.5	)	$	5.9	$	1.2

Pension and Other Post-Employment Benefit Assumptions

The weighted-average assumptions used to determine the Company’s projected benefit obligation above are presented below:



	Pension Plans				Other Post-Employment Benefits
	U.S.		International		Other Post-Employment Benefits
	2015	2014	2015	2014	2015	2014
Discount rates	4.1%-4.5%	3.1%-4.4%	1.0%-2.7%	1.8%-3.2%	4.1%-4.6	4.8%
Future compensation growth rates	N/A	N/A	1.5%-2.5%	2.0%-2.5%	N/A	N/A

The weighted-average assumptions used to determine the Company’s net periodic benefit cost in fiscal 2015 , 2014 and 2013 are presented below:



	Pension Plans						Other Post- Employment Benefits
	U.S.			International			Other Post- Employment Benefits
	2015	2014	2013	2015	2014	2013	2015	2014	2013
Discount rates	3.1%-4.5%	3.6%-5.0%	3.4%-4.6%	1.8%-3.2%	2.3%-3.8%	2.2%-4.5%	4.2%-4.8%	5.4%	4.9%
Future compensation growth rates	N/A	N/A	N/A	2.0%-2.5%	2.0%-2.5%	2.5%-3.0%	N/A	N/A	N/A
Expected long-term rates of return on plan assets	6.5%	6.5%	6.5%	2.8%-4.3%	3.3%-4.3%	3.3%-4.3%	N/A	N/A	N/A

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The health care cost trend rate assumptions have a significant effect on the amounts reported.



	2015	2014	2013
Health care cost trend rate assumed for next year	6.3%-6.7%	6.3%-6.9%	7.1%-8.0%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5%	5%	5%
Year that the rate reaches the ultimate trend rate	2022-2023	2021-2023	2018-2019

A one-percentage point change in assumed health care cost trend rates would have the following effects:



	One Percentage Point Increase			One Percentage Point Decrease
Effect on total service cost and interest cost		$	6.1		$	(5.6	)
Effect on post-employment benefit obligation		0.6			(0.5		)

Pension Plan Investment Policy

The Company’s investment policies and strategies for plan assets are to achieve the greatest return consistent with the fiduciary character of the plan and to maintain a level of liquidity that is sufficient to meet the need for timely payment of benefits. The goals of the investment managers include minimizing risk and achieving growth in principal value so that the purchasing power of such value is maintained with respect to the rate of inflation.

The pension plan’s return on assets is based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the assets in which the plan is invested, as well as current economic and market conditions.

The asset allocation decision includes consideration of future retirements, lump-sum elections, growth in the number of participants, company contributions and cash flow. These actual characteristics of the plan place certain demands upon the level, risk and required growth of trust assets. Actual asset allocation is regularly reviewed and periodically rebalanced to the strategic allocation when considered appropriate.

The target and weighted-average asset allocations for the Company’s U.S. pension plans as of June 30, 2015 and 2014 , by asset category are presented below:



			% of Plan Assets at Year Ended
			% of Plan Assets at Year Ended
	Target		2015		2014
Equity securities	45	%	39	%	44	%
Fixed income securities	55	%	46	%	53	%
Cash and other investments	—	%	15	%	3	%

The following is a description of the valuation methodologies used for plan assets measured at fair value:

Equity securities (domestic and international) -The fair values reflect the closing price reported on a major market where the individual securities are traded. These investments are classified within Level 1 of the valuation hierarchy.

U.S. government and government agencies fixed income securities -When quoted prices are available in an active market, the investments are classified as Level 1. When quoted market prices are not available in an active market, these investments are classified as Level 2.

Corporate securities -The fair values are based on a compilation of primarily observable market information or a broker quote in a non-active market. These investments are primarily classified within Level 2 of the valuation hierarchy.

Cash and cash equivalents -The carrying amount approximates fair value, primarily because of the short maturity of cash equivalent instruments. These investments are classified within Level 1 of the valuation hierarchy.

Insurance contracts -These instruments are issued by insurance companies. Insurance contracts are generally classified as Level 3 as there are neither quoted prices nor other observable inputs for pricing.

Fair Value of Plan Assets

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

The U.S. and international pension plan assets that the Company measures at fair value on a recurring basis, based on the fair value hierarchy as described in Note 2, as of June 30, 2015 and 2014 are presented below:



	Level 1				Level 2				Level 3				Total
	2015		2014		2015		2014		2015		2014		2015		2014
Equity securities:
Domestic equity securities	$	15.8	$	15.2	$	—	$	—	$	—	$	—	$	15.8	$	15.2
International equity securities	4.4		4.7		—		—		—		—		4.4		4.7
Fixed income securities:
U.S. Government and government agencies	4.9		5.7		12.3		10.8		—		—		17.2		16.5
Corporate securities	—		—		6.8		8.3		—		—		6.8		8.3
Other:
Cash and cash equivalents	8.0		1.2		—		—		—		—		8.0		1.2
Insurance contracts	—		—		—		—		36.6		37.5		36.6		37.5
Total pension plan assets at fair value-June 30	$	33.1	$	26.8	$	19.1	$	19.1	$	36.6	$	37.5	$	88.8	$	83.4

The Company sponsors a qualified defined benefit pension plan for all eligible Swiss employees. Retirement benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee regulations. Consistent with typical Swiss practice, the pension plan is funded through a guaranteed insurance contract with an insurance company (“IC”). The IC is responsible for the investment strategy of the insurance premiums that the Company submits and does not hold individual assets per participating employer. Assets are invested in accordance with the IC’s own strategies and risk assessments. Under the terms of the contract, the interest rate as well as the capital value is guaranteed for each participant, with the IC assuming any risk to the value of the underlying assets. The IC is a member of a security fund, whose purpose is to cover any shortfall in the event they are not able to fulfill its contractual agreements. The plan assets of the Swiss plan are included in the Level 3 valuation.

The benefits of the pension plans in the Netherlands are fully insured with an IC which meets all the benefit payments directly to the beneficiaries as they fall due. The contracts included in the Level 3 valuation reflect the expected benefit payments, discounted using the same rate used to determine the projected benefit obligation.

In Spain, the plans’ assets represent the computed value of the insurance contracts owned by the Company. These insurance contracts represent a portion of the IC’s general investments linked to the Company. The value of these contracts is determined by the IC. However, a minimum of 4.0% rate of return is stipulated. Upon retirement, the Company calculates the annuity due to a given participant and to the extent that the amounts linked to that specific employee are not sufficient, the Company funds the difference. In the event that a participant terminates employment prior to retirement, the value for that individual reverts back to the Company. The plan assets of the Spanish plan are included in the Level 3 valuation.

The reconciliations of Level 3 plan assets measured at fair value in fiscal 2015 and 2014 are presented below:



	June 30, 2015			June 30, 2014
Insurance contract:
Fair value-July 1	$	37.5		$	30.6
Return on plan assets	2.3			1.8
Purchases, sales and settlements, net	0.3			3.4
Effect of exchange rates	(3.5		)	1.7
Fair value-June 30	$	36.6		$	37.5

Contributions

The Company expects to contribute approximately $0.7 , $9.6 , and $1.6 to its U.S. and international pension plans and other post-employment benefit plans, respectively, during fiscal 2016.

Estimated Future Benefit Payments

Expected benefit payments, which reflect expected future service, as appropriate, are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Pension Plans				Other Post-Employment Benefits		Total
Fiscal Year Ending June 30	U.S		International		Other Post-Employment Benefits		Total
2016	$	3.8	$	7.6	$	1.8	$	13.2
2017	4.5		7.3		1.7		13.5
2018	4.5		7.5		2.0		14
2019	4.6		7.8		2.3		14.7
2020	4.7		8.6		2.5		15.8
2020 - 2023	24.1		41.5		15.3		80.9

19. FAIR VALUE MEASUREMENTS

The financial assets and liabilities that the Company measures at fair value on a recurring basis based on the fair value hierarchy, as of June 30, 2015 and 2014 are presented below:



	Level 1				Level 2					Level 3
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014			June 30, 2015			June 30, 2014
Financial assets and liabilities
Recurring fair value measurements
Assets:
Foreign exchange contracts	$	—	$	—	$	12.4	$	2.1		$	—		$	—
Liabilities:
Foreign exchange contracts	$	—	$	—	$	6.3	$	11.5		$	—		$	—
Contingent consideration - business combinations	—		—		—		—			0.9			1.1
Total Liabilities	$	—	$	—	$	6.3	$	11.5		$	0.9		$	1.1
Total recurring fair value measurements	$	—	$	—	$	6.1	$	(9.4	)	$	(0.9	)	$	(1.1	)

The fair values of the Company’s financial instruments estimated as of June 30, 2015 and 2014 are presented below:



	June 30, 2015				June 30, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Coty Inc. Credit Agreements	$	2,611.5	$	2,614.2	$	2,774.5	$	2,763.2
Senior Notes - Series A	—		—		100.0		109.7
Senior Notes - Series B	—		—		225.0		256.3
Senior Notes - Series C	—		—		175.0		199.9
Dividends payable	1.4		1.1		0.9		0.7

The Company has concluded that the carrying amounts of cash and cash equivalents, trade receivables, accounts payable, certain accrued expenses, and short-term debt approximate their fair values due to their short-term nature.

The following methods and assumptions were used to estimate the fair value of the Company’s other financial instruments for which it is practicable to estimate that value:

Foreign exchange contracts —The Company uses currency spot and forward rates to value the foreign exchange contracts, which were obtained from an independent pricing service. Based on the assumptions used to value foreign exchange contracts at fair value, these assets and/or liabilities are categorized as Level 2 in the fair value hierarchy.

Contingent consideration - business combinations — The Company uses an industry standard valuation model within the option pricing framework to value the Contingent Consideration. The inputs used to measure the fair value included weighted net sales projections through the settlement date of the contingent consideration, revenue volatility using comparable

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

companies' historical performance and a present value calculation to discount the expected settlement. Based on the assumptions used to value the contingent consideration, these liabilities are categorized as Level 3 in the fair value hierarchy.

Coty Inc. Credit Agreements, Term Loans, and Senior Notes —The Company uses the income approach to value the Credit Agreements, Term Loan, and the Senior Notes. The Company uses a present value calculation to discount interest payments and the final maturity payment on the Credit Agreements, Term Loan, and the Senior Notes using a discounted cash flow model based on observable inputs. The Company discounts the debt based on what the current market rates would offer the Company as of the reporting date. Based on the assumptions used to value the Credit Agreements, Term Loan, and the Senior Notes at fair value, this debt is categorized as Level 2 in the fair value hierarchy.

Dividends payable — The Company uses the income approach to value the long-term portion of Dividends Payable by utilizing a present value calculation to discount the settlements of the long-term portion of Dividends Payable which is calculated using a discounted cash flow model based on observable inputs. The Company discounts the liability based on an internally developed discount rate as of the reporting date. Based on the assumptions used to value the long-term portion of Dividends Payable at fair value, this debt is categorized as Level 3 in the fair value hierarchy.

20. DERIVATIVE INSTRUMENTS

The Company is exposed to foreign currency exchange fluctuations through its global operations, with manufacturing and distribution facilities in various countries around the world. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments. The Company expects that any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying firm commitments or forecasted transactions. During fiscal 2014, the Company launched a program to qualify derivatives for hedge accounting treatment using foreign currency forward contracts. The Company continued entering into derivatives for which hedge accounting treatment has been applied during fiscal 2015 which the Company anticipates realizing in the Consolidated Statements of Operations in fiscal 2016 and 2017. The Company also continued to use certain derivatives as economic hedges of foreign currency exposure on firm commitments and forecasted transactions. Although these derivatives were not designated for hedge accounting, the overall objective of mitigating foreign currency exposure is the same for all derivative instruments. The Company does not enter into derivative financial instruments for trading or speculative purposes, nor is the Company a party to leveraged derivatives.

For derivatives accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of specific underlying forecasted transactions, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses both at inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. If it is determined that a derivative or a portion of a derivative is not highly effective as a hedge, the Company will discontinue hedge accounting for the affected derivative or related portion in the related period. Additionally, all of the master agreements governing the Company’s derivative contracts contain standard provisions that could trigger early termination of the contracts in certain circumstances which would require the Company to discontinue hedge accounting, including if the Company were to merge with another entity and the creditworthiness of the surviving entity were to be “materially weaker” than that of the Company prior to the merger. As of June 30, 2015 , foreign currency forward contracts in net liability positions that contained credit-risk-related features were $6.3 .

The Company also attempts to minimize credit exposure to counterparties by entering into derivative contracts with counterparties that are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the fair value of contracts in net asset positions, which totaled $12.4 and $2.1 at June 30, 2015 and 2014 , respectively. Accordingly, management of the Company believes risk of material loss under these hedging contracts is remote.

Quantitative Information

Derivatives are recognized on the balance sheet at their fair values. The following table presents the fair value of derivative instruments outstanding at June 30, 2015 and 2014 :

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Asset					Liability
	Balance Sheet Classification	Fair Value				Balance Sheet Classification	Fair Value
		June 30, 2015		June 30, 2014			June 30, 2015		June 30, 2014
Derivatives designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	6.8	$	—	Accrued expenses and other current liabilities	$	4.8	$	10.5
Total derivatives designated as hedges		$	6.8	$	—		$	4.8	$	10.5
Derivatives not designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	5.6	$	2.1	Accrued expenses and other current liabilities	$	1.5	$	1.0
Total derivatives not designated as hedges		$	5.6	$	2.1		$	1.5	$	1.0
Total derivatives		$	12.4	$	2.1		$	6.3	$	11.5

The table below presents the gross amount of foreign exchange contract hedges recorded as assets and liabilities in Prepaid expenses and other current assets and Accrued expenses and other current liabilities in the Consolidated Balance Sheet, respectively, as of June 30, 2015 :



										Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	16.1		$	(3.7	)	$	12.4		$	—	$	—	$	12.4
Liabilities	$	(6.5	)	$	0.2		$	(6.3	)	$	—	$	—	$	(6.3	)



										Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	2.2		$	(0.1	)	$	2.1		$	—	$	—	$	2.1
Liabilities	$	(12.9	)	$	1.4		$	(11.5	)	$	—	$	—	$	(11.5	)

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments during the fiscal years ended June 30, 2015 , 2014 and 2013 is presented below:



Consolidated Statements of Operations Classification of Gain (Loss) on Forward Exchange Contracts Recognized in Operations	Gain (Loss) Recognized in Operations Year Ended June 30,
	2015			2014			2013
Interest expense, net ^(a)	$	(37.2	)	$	0.4		$	0.8
Net revenues	$	(0.1	)	$	—		$	—
Cost of sales	$	(0.3	)	$	0.1		$	0.9
Selling, general and administrative	$	(0.2	)	$	(0.1	)	$	—

^(a)

The impact on interest expense, net at June 30, 2015 related to derivative contracts entered into to offset fluctuations in the underlying non-functional currency cash balances and intercompany loans at June 30, 2015 is due to increased foreign exchange exposure and higher volatility in currencies during the year, which is more than offset by the revaluation of underlying non-functional currency cash balances.

The Company enters into foreign currency forward contracts for anticipated transactions for periods consistent with the Company’s identified exposures to minimize the effect of foreign exchange rate movements on revenues and costs and on the cash flows that the Company receives from foreign subsidiaries and third parties where there is a high probability that anticipated exposures will materialize. The foreign currency forward contracts entered into for these anticipated transactions

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

have been designated as foreign currency cash-flow hedges and have varying maturities through the end of June 2016 . Hedge effectiveness of foreign currency forward contracts is based on the forward-to-forward hypothetical derivative methodology and includes all changes in value.

The ineffective portion of foreign currency forward contracts is recorded in current-period earnings. For derivative contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses accumulated in Other comprehensive income (loss) (“AOCI”) are reclassified to earnings when the underlying forecasted transaction occurs. If it is no longer probable that the forecasted transaction will occur, then any gains or losses in AOCI are reclassified to current-period earnings. During the year ended June 30, 2015, the Company made a decision to implement a new business model for certain subsidiaries in Europe. As a result, the existing hedges were no longer deemed effective foreign currency cash-flow hedges. Those hedges were de-designated and the Company reclassified a net loss of $3.9 from AOCI to the Consolidated Statements of Operations.

As of June 30, 2015 , all of the Company’s remaining foreign currency forward contracts designated as hedges were highly effective in all material respects. The accumulated loss on these derivative instruments in AOCI, net of tax, was $0.1 and $8.9 as of June 30, 2015 and June 30, 2014 , respectively. The estimated net gain related to these effective hedges that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $0.2 .

The amount of gains and losses reclassified from AOCI to the Consolidated Statements of Operations related to the Company’s derivative financial instruments which are designated as hedging instruments during the fiscal years ended June 30, 2015, 2014 and 2013 is presented below:



Consolidated Statements of Operations Classification of Gain (Loss) Reclassified from AOCI/(L)	Gain (Loss) Recognized in Operations Year Ended June 30,
	2015		2014		2013
Net revenues	$	8.1	$	—	$	—
Cost of sales	$	0.3	$	—	$	—

As of June 30, 2015 , the Company had foreign currency forward contracts designated as effective hedges in the notional amount of $277.0 , that mature at various dates through June 2016 . The foreign currencies of the counterparties in the hedged foreign currency forward contracts (notional value stated in U.S. dollars) are principally the British pound ( $97.7 ), euro ( $112.1 ), Australian dollar ( $18.7 ), Canadian dollar ( $37.0 ), and the Russian ruble ( $10.3 ).

As of June 30, 2014 , the Company had foreign currency forward contracts designated as effective hedges in the notional amount of $361.3 .The foreign currencies of the counterparties in the hedged foreign currency forward contracts (notional value stated in U.S. dollars) are principally the British pound ($108.5) , euro ($85.8) , Australian dollar ($42.4) , Canadian dollar ($49.5) , Russian ruble ($38.3) , Polish zloty ($30.2) , U.S. dollar ($17.4) , and Japanese yen ($2.5) .

As of June 30, 2015 and June 30, 2014 , the Company had foreign currency forward contracts not designated as hedges with a notional value of $1,297.6 and $535.4 , respectively, which mature at various dates through June 2016 .

21. NONCONTROLLING INTERESTS AND REDEEMABLE NONCONTROLLING INTERESTS

Effective December 28, 2014, the Company entered into an agreement through a majority-owned subsidiary and a third party to create a new subsidiary in Saudi Arabia. The Company contributed 20.25 million SAR ( $5.4 ) for a 75% ownership interest. The new subsidiary engages in the sale, promotion and distribution of fragrances, color cosmetics, and skin & body care products.

The Company has the right to purchase the noncontrolling interests (“NCI”) in certain subsidiaries from the NCI holders (each such right, a “Call right”) at certain points in time. On August 23, 2013 , the Company exercised its Call right for 7% of a certain Hong Kong subsidiary from the NCI holder, and it consummated the purchase on January 10, 2014 for $4.4 . The $4.4 is recorded as a reduction to Additional paid-in capital (“APIC”) and NCI of $4.2 and $0.2 , respectively. The effect of the change in the ownership percentage of the NCI on Net income attributable to Coty Inc. is presented below:



	Year Ended June 30,
	2015		2014			2013
Net (loss) income attributable to Coty Inc.	$	232.5	$	(97.4	)	$	168.0
Decrease in APIC for purchase of Hong Kong NCI	—		(4.2		)	—
Net (loss) income attributable to Coty Inc. and transfers from NCI	$	232.5	$	(101.6	)	$	168.0

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Redeemable Noncontrolling Interests

The redeemable noncontrolling interests consist of a 33.0% interest in a consolidated subsidiary in the United Arab Emirates and a 45.0% interest in a consolidated subsidiary in Hong Kong.

The Company has the right to purchase the redeemable noncontrolling interests (“RNCI”) in certain subsidiaries from the RNCI holders (each such right, a “Call right”) at certain points in time.

In addition to the Call right feature, the noncontrolling interest holders of the Company’s consolidated foreign subsidiaries in the United Arab Emirates (“Middle East”) and Hong Kong have the right to sell the noncontrolling interests to the Company at certain points in time (each such right, a “Put right”). The amount at which the Put right and Call right can be exercised is based on a formula prescribed by the stockholder agreements as summarized in the table below, multiplied by the noncontrolling interest holder’s percentage of stock-holding in the Company. Given the provision of the Put right, the entire noncontrolling interests are redeemable outside of the Company’s control and are recorded in the Consolidated Balance Sheets at the estimated redemption value. The Company adjusts the redeemable noncontrolling interests to the redemption values at the end of each reporting period with changes recognized as adjustments to APIC.

On September 20, 2013, the Company gave notice to purchase 7% of a certain Middle East (M.E.) subsidiary. The Company and the RNCI holder amended the M.E. subsidiary’s Shareholders’ Agreement resulting in the Company recording an additional 7% interest in the M.E. subsidiary as of July 1, 2014 and consummated the purchase during the three months ended September 30, 2014 for a purchase price of $15.8 . The $15.8 is recorded as a reduction to Redeemable Noncontrolling Interest in the Company’s Consolidated Statements of Equity and Redeemable Noncontrolling Interests as of June 30, 2015. The purchase price of $15.8 was paid in full as of June 30, 2015. The Company also has the ability to exercise the Call right for the remaining noncontrolling interest of 33% on July 1, 2028, with such transaction to close on July 1, 2029.



	Middle East	Hong Kong
Percentage of redeemable noncontrolling interest	33%	45%
Earliest exercise date(s)	33.0% in July 2028	June 2016
Formula of redemption value ^(a)	3-year average	3-year average
	of EBIT ^(b) * 6	of EBIT ^(b) * 8 plus
		retained earnings less
		liabilities ^(c)


^(a)	The redemption value formula related to Hong Kong is subject to a 110% of three year’s averaged net sales cap and net asset value minimum.


^(b)	EBIT is defined in the respective stockholder agreements as earnings before interest and income taxes.


^(c)	Liabilities are defined in the stockholder agreement as all financial indebtedness except bank overdraft required for normalized trading working capital.

22. EQUITY

Initial Public Offering

In June 2013 , the Company completed an IPO in which the selling stockholders sold 57.1 million shares of Class A Common Stock. The Company did not receive any proceeds from the sale of shares. Prior to the IPO, the Company’s outstanding shares consisted of 382.8 million shares of Common Stock and no Preferred Stock, each with a value of $0.01 . On the date of the IPO, all shares of Common Stock converted to 72.2 million shares of Class A Common Stock and 310.6 million shares of Class B Common Stock.

Common Stock

As of June 30, 2015 , the Company’s common stock consisted of Class A Common Stock and Class B Common Stock, each with a par value of $0.01 . Class A Common Stock and Class B Common Stock are identical in all respects except for voting rights, certain conversion rights, and transfer restrictions in respect to the shares of Class B Common Stock. The holders of Class A Common Stock are entitled to one vote per share and the holders of Class B Common Stock are entitled to ten votes per share. Holders of Class A Common Stock and Class B Common Stock are entitled to pro rata distribution of dividends if and when declared by the Board of Directors. As of June 30, 2015 , total authorized shares of Class A Common Stock and Class B Common Stock are 800.0 million and 262.0 million , respectively, and total outstanding shares of Class A Common Stock and Class B Common Stock are 98.8 million and 262.0 million , respectively.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

During the year ended June 30, 2015 the Company issued 5.8 million shares of its Class A Common Stock and received $48.5 in cash in connection with exercise of employee stock options, settlement of RSUs and special incentive awards, and purchase of shares by employees under the Platinum Program (“Platinum”), which is an employee stock ownership program under the Omnibus Equity and Long-Term Incentive Plan (“Omnibus LTIP”). Additionally, the Company issued 1.4 million shares of its Class A Common Stock and recorded Additional Paid in Capital (“APIC”) of $12.5 in relation to the exercise of stock options by Mr. Michele Scannavini (“Mr. Scannavini”), its former Chief Executive Officer.

Between April 8, 2015 and June 12, 2015, JABC, the Company’s controlling stockholder sold 1.7 million shares of its Class B shares to certain Coty executives and two individuals intended to become Coty executives. Upon the consummation of these sales of the Class B shares, such shares converted into an equal number of Class A Common Stock and the Company reclassified 1.7 million shares from Class B to Class A Common Stock on the Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests as of June 30, 2015. The Company did not receive any shares or proceeds from the sale of shares by JABC.

On June 5, 2014, the Company entered into a Stock Purchase Agreement (the “PE Stock Purchase Agreement”) with Worldwide Beauty Offshore L.P. and Worldwide Beauty Onshore L.P. (“Rhone”), Berkshire Fund VII, L.P., Berkshire Fund VII-A, L.P., Berkshire Investors III LLC and Berkshire Investor IV LLC ("Berkshire"), M. Steven Langman and Bradley Bloom. Rhone, Berkshire, M. Steven Langman and Bradley Bloom were all considered related parties. In connection with the agreement, the Company agreed to repurchase a total of 27.9 million and less than 0.1 million shares of Class B Common Stock and Class A Common Stock, respectively, on June 12, 2014, as further discussed in the Treasury Stock section below.

On December 13, 2013 , Berkshire distributed 4.0 million shares of its Class B Common Stock to its general and limited partners and members. On March 14 and June 6, 2014, Berkshire distributed an additional 6.0 million shares and 1.0 million shares of its Class B Common Stock, respectively. The Company did not receive any shares or proceeds from the distribution of shares by Berkshire.

On July 12, 2013, the underwriters of the Company’s IPO exercised their option under the underwriting agreement to purchase from the selling stockholders 8.0 million additional shares of Class A Common Stock at the initial offering price (the “Overallotment Option”). The Company did not receive any proceeds from the sale of shares by the selling stockholders.

In connection with the Overallotment Option, the distributions of Class B Common Stock and repurchase of Class B Common Stock disclosed above, the Company reclassified 46.9 million shares from Class B Common Stock to Class A Common Stock on the Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests as of June 30, 2014.

Preferred Stock

As of June 30, 2015, the Company’s preferred stock consisted of Series A Preferred Stock with a par value of $0.01 . The Series A Preferred Stock is not entitled to receive any dividends and has no voting rights except as required by law. As of June 30, 2015, total authorized shares of preferred stock are 20.0 million and total outstanding shares of Series A Preferred Stock are 1.9 million .

In April 2015, the Company sold 7.4 million shares of Series A Preferred Stock for $0.01 par value to four executives, of which 5.5 million were subsequently forfeited and repurchased by the Company at the $0.01 par value. The outstanding 1.9 million Series A Preferred Stock generally vest on April 15, 2020. Under the terms provided in the various subscription agreements, the holders of the vested Series A Preferred Stock are entitled to exchange the Series A Preferred Stock at the election of the Company into either: (i) cash equal to the market value of a share of Class A Common Stock on the date of conversion less $27.97 or (ii) the number of whole shares whose value is equal to the aggregate market value of a share of Class A Common Stock on the date of conversion less $27.97 . If the holder does not exchange the vested Series A Preferred Stock by a certain expiration date, the Company must automatically exchange the Series A Preferred Stock into cash for the pro-rata portion of the grants attributable to services rendered by the holder within the United States. Therefore, these grants are accounted for using the liability plan accounting at issuance. As a holder provides service outside the U.S., a pro-rata portion of the grants are converted to equity awards to the extent the Company is not required to settle the award in cash, which are measured and fixed at the quarter end date that such services are provided, based on the estimated fair value of the award and recognized on a straight-line basis, net of estimated forfeitures, over the employee’s requisite service period. As of June 30, 2015, all of these Series A Preferred Stock have been classified as a liability in Other noncurrent liabilities.

Accumulated Other Comprehensive Income (Loss)

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	(Losses) Gains on Cash Flow Hedges			Pension and Other Post-Employment Benefit Plans			Foreign Currency Translation Adjustments			Total
Beginning Balance at July 1, 2013	$	—		$	(33.4	)	$	(85.2	)	$	(118.6	)
Other Comprehensive income before reclassifications	(8.9		)	(22.7		)	63.7			32.1
Amounts reclassified from AOCL ^(a)	—			1.4			—			1.4
Net current-period other comprehensive income	(8.9		)	(21.3		)	63.7			33.5
Ending balance at June 30, 2014	$	(8.9	)	$	(54.7	)	$	(21.5	)	$	(85.1	)
Other Comprehensive income before reclassifications	$	12.8		$	27.7		$	(227.8	)	$	(187.3	)
Less: Net Amounts reclassified from AOCL ^(a)	(4.0		)	2.4			—			(1.6		)
Net current-period other comprehensive income	$	8.8		$	30.1		$	(227.8	)	$	(188.9	)
Ending balance at June 30, 2015	$	(0.1	)	$	(24.6	)	$	(249.3	)	$	(274.0	)

^(a) Amortization of actuarial losses of $3.4 and $2.0 , net of taxes of $1.0 and $(0.6) , were reclassified out of AOCL and included in the computation of net period pension costs for the fiscal year ending June 30, 2015 and 2014, respectively (see Note 18).

Treasury Stock

In connection with the Company’s Class A Common Stock repurchase program announced on February 14, 2014 and June 3, 2014, the Company repurchased 13.4 shares of its Class A Common Stock during the fiscal years ended June 30, 2015. The shares were purchased in multiple transactions at prices ranging from $18.64 to $21.99 during the fiscal year end June 30, 2015. The fair value of all shares repurchased was $263.1 during the fiscal year end June 30, 2015 and was reflected as an increase to Treasury stock in the Company’s Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

On April 1, 2015, the Company completed its previously announced purchase of 100% of the net assets of the Bourjois cosmetics brand (“Bourjois”) from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated as of March 12, 2015, between the Company and CHANEL (the “Stock Purchase Agreement”). The Company issued to its foreign subsidiaries 15.5 million shares of its Class A Common Stock for $376.8 in cash and subsequently exchanged these shares with CHANEL as consideration for Bourjois. The shares had an approximate value of $376.8 based on the closing value of the Company’s Class A Common Stock on the New York Stock Exchange. As a result of the purchase, the Company reissued the total of $269.9 Treasury Stock with a charge to APIC of $106.9 .

On September 29, 2014, the Company entered into an agreement with Mr. Scannavini, the Company’s former Chief Executive Officer in connection with his resignation. The agreement required the Company to purchase on or before January 27, 2015 all Class A Common Stock Mr. Scannavini held directly or indirectly, including shares of Class A Common Stock obtained upon the exercise of certain stock options, for a share price of $17.21 , which is the average closing value of the Class A Common Stock on the New York Stock Exchange over five business days immediately preceding September 29, 2014. As a result of the agreement, the Company purchased 2.4 million shares of its Class A Common Stock for $42.0 , which is reflected as an increase to Treasury stock in the Company’s Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests during the year ended June 30, 2015. The Company made a net payment to Mr. Scannavini of $29.5 , which is the purchase amount of $42.0 net of the aggregate exercise price of his vested stock options of $12.5 .

On June 12, 2014, in connection with the PE Stock Purchase Agreement, a related party transaction, the Company repurchased a total of 27.9 million and less than 0.1 million shares of Class B Common Stock and Class A Common Stock, respectively, for $16.78 per share, which was determined by calculating the volume weighted average price of the Company's Class A Common Stock from May 30, 2014 through June 5, 2014, inclusive. The fair value of Class B shares and Class A shares repurchased was $468.0 and $1.0 , respectively, and was reflected as an increase to Treasury stock in the Company’s Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

In connection with its repurchase program, the Company repurchased 6.6 million shares of its Class A Common Stock during fiscal 2014. The shares were purchased in multiple transactions at prices ranging from $14.64 to $15.69 . The fair value of all shares repurchased was $100.0 and was reflected as an increase to Treasury stock in the Company’s Consolidated Balance Sheets and Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

Dividends

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

On September 16, 2014, the Company announced a cash dividend of $0.20 per share, or $71.9 on its Class A and Class B Common Stock. Of the $71.9 , $71.0 was paid on October 15, 2014 to holders of record of Class A and Class B Common Stock on October 1, 2014 and was recorded as a decrease to APIC in the Consolidated Balance Sheet as of June 30, 2015. The remaining $0.9 is payable upon settlement of the RSUs outstanding as of October 1, 2014, and is recorded as Other noncurrent liabilities in the Consolidated Balance Sheet.

Additionally, the Company reduced the dividend accrual recorded in a prior period by $0.3 to adjust for accrued dividends on RSUs no longer expected to vest, which was recorded as an increase to APIC in the Consolidated Balance Sheet as of June 30, 2015. Total accrued dividends on unvested RSUs of $1.4 are included in Other noncurrent liabilities in the Consolidated Balance Sheet as of June 30, 2015.

On September 17, 2013 , the Company declared a cash dividend of $0.20 per share, or $77.6 on its Class A Common Stock and Class B Common Stock. Of the $77.6 , which was recorded as a decrease to APIC in the Consolidated Balance Sheet, $76.9 was paid on October 31, 2013 to holders of record of Class A Common Stock and Class B Common Stock on October 11, 2013 . The remaining $0.7 is payable upon settlement of RSUs and vesting of restricted shares of Class A Common Stock, each outstanding as of October 11, 2013 , and is recorded as Other noncurrent liabilities in the Consolidated Balance Sheet.

Additionally, the Company reduced the dividend accrual recorded in a prior period by $0.2 to adjust for accrued dividends on RSUs no longer expected to vest, which was recorded as an increase to APIC in the Consolidated Balance Sheet. Total accrued dividends on unvested RSUs of $0.9 are included in Other noncurrent liabilities in the Consolidated Balance Sheet as of June 30, 2014.

23. SHARE-BASED COMPENSATION PLANS

The Company has various share-based compensation programs (the “Plans”) under which awards, including non-qualified stock options, Series A Preferred Stock, RSUs and other share-based awards, may be granted or shares of Class A Common Stock may be purchased. As of June 30, 2015 , approximately 12.5 million shares of the Company's Class A Common Stock were available to be granted pursuant to these Plans.

The Company accounts for its share-based compensation plans for common stock as equity plans. The share-based compensation for equity plans is estimated and fixed at the grant date, based on the estimated fair value of the award. Series A Preferred Stock is accounted for using the liability plan accounting to the extent the award is expected to be settled in cash. Accordingly, share-based compensation expense for the liability plan awards are measured at the end of each reporting period based on the fair value of the award on each reporting date and recognized as an expense to the extent earned.

Total share-based compensation expense for fiscal 2015 , 2014 and 2013 of $35.9 , $46.8 and $144.4 , respectively, is included in Selling, general and administrative expenses in the Consolidated Statements of Operations. As of June 30, 2015 , the total unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, restricted, and other share awards is $19.6 , $16.0 and $32.8 , respectively. The unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, and restricted and other share awards is expected to be recognized over a weighted-average period of 2.91 , 4.87 , and 3.22 years, respectively.

Nonqualified Stock Options

In April 2015, the Company granted 1.7 million nonqualified stock option awards to a select group of key executives. These options are accounted for using equity plan accounting whereby the share-based compensation expense is estimated and fixed at the grant date based on the estimated value of the options using the Black-Scholes valuation model.

Prior to June 12, 2013 , the Company’s nonqualified and tandem stock option plans allowed all option holders to exercise their vested options for cash or for shares of Common Stock. These options were granted to eligible employees as specified in the terms of the plans. For these awards, the fair value of the award which determined the measurement of the equity on the balance sheet was measured at the grant date. Fluctuations in the fair value of the liability awards were recorded as increases or decreases in share-based compensation expense until the award was settled.

During fiscal 2015, the share-based compensation expense recognized on nonqualified stock options is based upon the fair value on April 15, 2015, and June 12, 2013 were estimated using the Black-Scholes valuation model with the following assumptions:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	2015		2014	2013
Expected life	7.50 years		N/A	4.03 years
Risk-free interest rate	1.79	%	N/A	0.84	%
Expected volatility	31.73	%	N/A	32.53	%
Expected dividend yield	0.80	%	N/A	0.86	%

Expected life —The expected life represents the period of time (years) that options granted are expected to be outstanding, which the Company calculates using a formula based on the vesting term and the contractual life of the respective option.

Risk-free interest rate —The Company bases the risk-free interest rate on the implied yield available on a U.S. Treasury note with a term equal to the expected term of the underlying options was 1.79% as of April 15, 2015, and ranged from 0.11% to 1.30% as of June 12, 2013.

Expected volatility —The Company calculates expected volatility based on median volatility for peer companies using expected life daily stock price history equal to the expected life.

Expected dividend yield —The Company used an expected dividend yield of 0.80% as of April 15, 2015, and 0.86% as of June 12, 2013, respectively, which is based upon the Company’s expectation to pay dividends over the contractual term of the options.

Prior to June 12, 2013 , all options related to share-based compensation plans were granted at the estimated fair value of Common Stock, which was determined based upon, in each instance, an evaluation by management with assistance from a major investment banking firm. The valuation of shares was based on (i) an aggregate value Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) benchmark of future earnings and (ii) a price earnings growth rate benchmark, with a comparison to peer group companies and market multiples. Additionally, the Company applied a theoretical liquidity discount of 10% to the valuation associated with the illiquidity of the Common Stock due to the absence of a public market for the stock and certain restrictions from the transfer of stock in a private entity.

Nonqualified stock options generally become exercisable 5 years from the date of the grant and have a 5 -year exercise period from the date the grant becomes fully vested for a total contractual life of 10 years .

The Company’s outstanding nonqualified stock options as of June 30, 2015 and activity during the fiscal year then ended are presented below:



	Shares (in millions)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
Outstanding at July 1, 2014	23.2		$	9.32
Granted	1.7		24.13
Exercised	(6.8	)	8.59
Forfeited	(4.1	)	9.99
Outstanding at June 30, 2015	14.0		$	11.32
Vested and expected to vest at June 30, 2015	12.5		$	10.79	$	264.3	5.15
Exercisable at June 30, 2015	3.7		$	8.41	$	87.7	2.97

The grant prices of the outstanding options as of June 30, 2015 ranged from $5.10 to $24.13 . The grant prices for exercisable options ranged from $5.10 to $10.50 .

A summary of the aggregated weighted-average grant date fair value of stock options granted, total intrinsic value of stock options exercised and payment to settle nonqualified stock options for fiscal 2015 , 2014 and 2013 is presented below:



	2015		2014		2013
Weighted-average grant date fair value of stock options	$	8.75	$	—	$	—
Intrinsic value of options exercised	77.2		28.3		160.6
Payment to settle nonqualified stock options of former CEOs	12.0		—		101.4
Payment to settle nonqualified stock options					53.0

The Company’s non-vested nonqualified stock options as of June 30, 2015 and activity during the fiscal year then ended are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Shares (in millions)		Weighted Average Grant Date Fair Value
Non-vested at July 1, 2014	16.2		$	3.81
Granted	1.7		24.13
Vested	(3.5	)	3.56
Forfeited	(4.1	)	3.89
Non-vested at June 30, 2015	10.3		$	4.70

The share-based compensation expense recognized on the nonqualified stock options is $9.5 , $28.6 and $98.8 during fiscal 2015 , 2014 and 2013 , respectively.

Prior to June 12, 2013 , the Pre-IPO share-based compensation plans governing the exercised options contained a clause permitting the participants to sell their unrestricted shares of Common Stock back to the Company without restrictions. During the period of time that the Company retained the risks and rewards of share ownership, the Company recorded the value of Common Stock in excess of par value to Accrued expenses and other current liabilities and the change in fair value of Common Stock issued to option holders of $0.4 to share-based compensation expense in fiscal 2013. There was no fair value adjustment recorded for fiscal 2015 or 2014.

Series A Preferred Stock

The Company sold 7.4 million shares of Series A Preferred Stock for $0.01 par value to four executives, of which 5.5 million were subsequently forfeited and repurchased by the Company at the $0.01 par value. The exercise price of the outstanding Series A Preferred Stock as of June 30, 2015 was $27.97 . The holders of the 1.9 million Series A Preferred Stock are entitled to initiate an exchange into, at the election of the Company, either: (i) cash equal to the market value of a share of Class A Common Stock on the date of conversion less $27.97 or (ii) the number of whole shares whose value is equal to the market value of a share of Class A Common Stock on the date of conversion less $27.97 . The Series A Preferred Stock are accounted for as a liability as of June 30, 2015 and the Company recognized an expense of $0.4 in fiscal 2015, accordingly.

The fair value of the Company’s outstanding Series A Preferred Stock liability on June 30, 2015 were estimated using the Black-Scholes valuation model with the following assumptions:



	2015
Expected life	5.79 years
Risk-free interest rate	1.96	%
Expected volatility	26.14	%
Expected dividend yield	0.63	%

Expected life -The expected life represents the period of time (years) that Series A Preferred Stock granted are expected to be outstanding, which the Company calculates using a formula based on the vesting term and the contractual life of the respective Series A Preferred Stock.

Risk-free interest rate -The Company bases the risk-free interest rate on the implied yield available on a U.S. Treasury note with a term equal to the expected term of the underlying Series A Preferred Stock, which is 1.96% as of June 30, 2015.

Expected volatility -The Company calculates expected volatility based on median volatility for peer companies using 5.79 years of daily stock price history.

Expected dividend yield -The Company used an expected dividend yield of 0.63% as of June 30, 2015, which is based upon the Company’s expectation to pay dividends over the contractual term of the shares of Series A Preferred Stock.

Shares of Series A Preferred Stock generally become exercisable 5 years from the date of the grant and have a 2 -year exercise period from the date the grant becomes fully vested for a total contractual life of 7 years.

The Company’s non-vested shares of Series A Preferred Stock as of June 30, 2015 and activity during the fiscal year then ended are presented below:

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)



	Shares (in millions)		Weighted Average Grant Date Fair Value
Non-vested at July 1, 2014	—		$	—
Granted	7.4		5.24
Vested	—		—
Forfeited	(5.5	)	5.24
Non-vested at June 30, 2015	1.9		$	5.24

Restricted Share Units

During fiscal 2015 , 1.7 million RSUs were granted under the Omnibus LTIP and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors. During fiscal 2014, 2.1 million RSUs were granted under the Omnibus LTIP and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors.

The Company’s outstanding RSUs as of June 30, 2015 and activity during the fiscal year then ended are presented below:



	Shares (in millions)		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
Outstanding at July 1, 2014	4.4
Granted	1.8
Settled	(0.3	)
Cancelled	(1.6	)
Outstanding at June 30, 2015	4.3
Vested and expected to vest at June 30, 2015	3.4		$	107.4	3.14

The share-based compensation expense recorded in connection with the RSUs was $9.7 , $10.8 and $9.1 during fiscal 2015 , 2014 and 2013 , respectively.

Prior to June 12, 2013 , the Pre-IPO share-based compensation plans governing the released awards contained a clause permitting the participants to sell their unrestricted shares of Common Stock back to the Company without restrictions. During the period of time that the Company retained the risks and rewards of ownership, the Company recorded the value of Common Stock in excess of par value to Accrued expenses and other current liabilities and the change in fair value of Common Stock issued to holders of RSUs of $0.7 to share-based compensation expense for fiscal 2013. There was no fair value adjustment recorded for fiscal 2015 or 2014.

The Company’s outstanding and non-vested RSUs as of June 30, 2015 and activity during the fiscal year then ended are presented below:



	Shares (in millions)		Weighted Average Grant Date Fair Value
Outstanding and nonvested at July 1, 2014	4.0		$	15.77
Granted	1.8		16.95
Vested	(0.3	)	14.32
Cancelled	(1.6	)	15.82
Outstanding and nonvested at June 30, 2015	3.9		$	16.23

The total intrinsic value of RSUs vested and settled during fiscal 2015 , 2014 , and 2013 is $6.2 , $2.8 and $4.2 , respectively.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

Executive Ownership Programs

The Company encourages stock ownership through various programs. These programs govern shares purchased by employees (“Purchased Shares”). During fiscal 2012 , the Company adopted the Omnibus LTIP, which governs Platinum, and amended and restated the previous ownership program. As a result, all outstanding shares purchased by employees were considered vested as of the adoption date or the amendment date, as applicable, and no longer incur expense.

Employees purchased 0.1 million and 0.1 million shares in fiscal 2015 and 2014 , respectively, and received matching RSUs in accordance with the terms of Platinum under the Omnibus LTIP. There were 1.4 million and 1.3 million Purchased Shares outstanding as of June 30, 2015 and 2014 , respectively.

There was $(0.5) share-based compensation (income) expense recorded in connection with Purchased Shares during fiscal 2015 . During the first quarter of fiscal 2015, Mr. Scannavini forfeited less than 0.1 million restricted shares. Share-based compensation expense recorded for fiscal 2014 and fiscal 2013 was nil and $10.7 , respectively.

Prior to June 12, 2013 , the Pre-IPO share-based compensation plans governing the restricted and released shares contained a clause permitting the participants to sell their Purchased Shares of Common Stock back to the Company without restrictions once the restriction period on the Purchased Shares expired. During the period of time that the Company retained the risks and rewards of ownership, the Company recorded the value of Common Stock in excess of par value to Accrued expenses and other current liabilities and the change in fair value of Common Stock issued to holders of Purchased Shares of $5.8 to share-based compensation expense for fiscal 2013. There was no fair value adjustment recorded for fiscal 2015 or 2014 .

Special Incentive Award

In February 2012 and September 2010, the Company granted a special incentive award to a select group of key executives that, upon vesting, provides 3.9 million shares of Common Stock, of which 1.5 million shares of Common Stock were forfeited by one holder during fiscal 2013. Prior to June 13, 2013, the date the Class A Common Stock began trading on the NYSE, vesting of these awards was dependent upon the occurrence of (i) an initial public offering by September 14, 2015 or (ii) if an initial public offering had not occurred by September 14, 2015, upon achievement of a target fair value of the Company’s share price and the completion of the service period upon the vesting date of September 14, 2015.

During December 2012, the target fair value of the Company’s share price was achieved and as a result, share-based compensation expense was recorded based on the fair value of the Company’s Common Shares on each reporting period date from December 2012 through June 13, 2013.

On June 13, 2013, the date Class A Common Stock began trading on the New York Stock Exchange, the special incentive awards were re-measured at the IPO price and 50% of the outstanding awards vested immediately. The remaining awards vested on June 13, 2014, the one-year anniversary date of the IPO. The 1.2 million shares that vested during fiscal 2013 and 2014 had a weighted average grant date fair value of $6.82 . There were no special incentive awards outstanding as of June 30, 2015 or 2014.

Share-based compensation expense recorded in connection with special incentive awards is $0.0 , $7.4 and $18.9 for fiscal 2015 , 2014 and 2013 , respectively. The total intrinsic value of special incentive awards vested and settled during fiscal 2015 , 2014 , and 2013 is $0.0 , $20.4 , and $20.9 , respectively. As of June 30, 2015, there were no special incentive awards outstanding as all special incentive awards vested as of June 13, 2014. There was no vesting or forfeiture activity during fiscal 2015.

Special Share Purchase Transaction

As noted at Special Share Purchase Transaction described in Note 22, “Equity”, JABC sold 1.7 million shares of its Class B shares to certain Coty executives and individuals intended to become Coty executives. One of these individuals purchased the 1.4 million shares on March 13, 2015 at a purchase price representing a discount of $1.9 below the market price on the purchase date, which was determined to be share-based compensation expense to the Company. Subsequently, the individual that had purchased the 1.4 million shares on March 13, 2015 indicated a desire to sell the Class A Common Stock back to JABC. JABC entered into an agreement and repurchased these shares on July 8, 2015 at the market price on that date. At June 30, 2015, the Company determined that the individual was not expected to hold the shares for a period of at least six months and therefore, the shares should be deemed compensatory and accounted for under liability plan accounting. The Company recorded a total of $15.8 share-based compensation expense to Selling, general and administrative expense which includes: (a) $1.9 for the discount recorded to APIC and (b) $13.9 for the difference between the market price of the shares as of June 30, 2015 and the original sale date of March 13, 2015 recorded to Accrued expenses and other current liabilities.

Phantom Units

On December 1, 2014, the Board granted Lambertus J.H. Becht (“Mr. Becht”), the Company’s Chairman of the Board and interim Chief Executive Officer, an award of 49,432 phantom units, in consideration of Mr. Becht’s increased responsibilities as interim Chief Executive Officer of the Company. At the time of grant, the phantom units had a value of $1.0 based on the

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

closing price of the Company’s Class A Common Stock on December 1, 2014, and each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock. Mr. Becht elected to receive payment of the phantom units in the form of shares of Class A Common Stock. As a result the phantom units will be settled in shares of Class A Common Stock on the fifth anniversary of the grant date or, in the event of a change of control or Mr. Becht’s death or disability, immediately.

The Company recognized $1.0 of share-based compensation expense during fiscal year 2015 as there are no service or performance conditions with respect to the phantom units.

24. NET INCOME (LOSS) ATTRIBUTABLE TO COTY INC. PER COMMON SHARE

Net income (loss) attributable to Coty Inc. per common share (“basic EPS”) is computed by dividing net income (loss) attributable to Coty Inc. by the weighted-average number of common shares outstanding during the period. Net income (loss) attributable to Coty Inc. per common share assuming dilution (“diluted EPS”) is computed by using the basic EPS weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of nonqualified stock options and RSUs as of June 30, 2015 and 2014. Potentially dilutive securities also included restricted shares and special incentive awards as of June 30, 2013. The dilutive effect of these outstanding instruments is reflected in diluted EPS by application of the treasury stock method. Due to the net loss incurred in fiscal 2014, no stock options, restricted shares, restricted stock units or special incentive awards were included in the computation of diluted loss per share.

Net income (loss) attributable to Coty Inc. is adjusted through the application of the two-class method of income per share to reflect a portion of the periodic adjustment of the redemption value in excess of fair value of the redeemable noncontrolling interests. There is no excess of redemption value over fair value of the redeemable noncontrolling interests in fiscal 2015, 2014 and 2013. In addition, there are no participating securities requiring the application of the two-class method of income per share.

Reconciliation between the numerators and denominators of the basic and diluted EPS computations is presented below:



	Year Ended June 30,
	2015		2014			2013

Net income (loss) attributable to Coty Inc.	$	232.5	$	(97.4	)	$	168.0
Weighted-average common shares outstanding—Basic	353.3		381.7			381.7
Effect of dilutive stock options and Series A Preferred Stock ^(a)	7.6		—			12.3
Effect of restricted stock and RSUs ^(b)	2.0		—			2.4
Weighted-average common shares outstanding—Diluted	$	362.9	$	381.7		$	396.4
Net income (loss) attributable to Coty Inc. per common share:
Basic	$	0.66	$	(0.26	)	$	0.44
Diluted	0.64		(0.26		)	0.42

^(a)

As of June 30, 2015 and 2013, outstanding stock options and Series A Preferred Stock to purchase 0.7 million and 1.2 million shares of Common Stock, respectively, are excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. Due to the net loss incurred in fiscal 2014, stock options are excluded from the computation of diluted EPS as their inclusion would be anti-dilutive.


^(b)	As of June 30, 2015 and 2013, there are 0.4 million and zero anti-dilutive RSUs excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. Due to the net loss incurred in fiscal 2014, RSUs are excluded from the computation of diluted EPS as their inclusion would be anti-dilutive.

25. COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to the business. Other than as described below, management believes that the outcome of current litigation will not have a material adverse impact on the Company's results of operations, financial condition, or cash flows. However, management’s

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

assessment of the Company’s current litigation, regulatory actions and other legal proceedings could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings.

In fiscal 2014, two putative class action complaints were filed in the United States District Court for the Southern District of New York against the Company, its directors and certain of its executive officers, and the underwriters of the IPO, alleging violations of the federal securities laws in connection with the Company's initial public offering (“IPO”). Those lawsuits were consolidated under the caption In re Coty Inc. Securities Litigation, and following the court’s appointment of lead plaintiffs and lead counsel, a consolidated and amended complaint (the “Securities Complaint”) was filed on July 7, 2014. The Securities Complaint asserts claims against the Company, its directors, and certain of its executive officers, under Sections 11, 12 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), and seeks, on behalf of persons who purchased the Company’s Class A Common Stock in the IPO, damages of an unspecified amount and equitable or injunctive relief.

On September 9, 2014, Plaintiffs voluntarily dismissed their claims against the underwriter defendants without prejudice. The Securities Complaint was further amended on October 18, 2014. The Company has filed a motion to dismiss the Securities Complaint, which has been fully briefed since December 2014. The motion to dismiss is currently pending. The Company believes the Securities Complaint is without merit and intends to vigorously defend it.

On December 21, 2012, the Company voluntarily disclosed to the U.S. Commerce Department’s Bureau of Industry and Security’s Office of Export Enforcement (“OEE”) results of the Company’s internal due diligence review conducted with the advice of outside counsel regarding certain export transactions from January 2008 through March 2012. In particular, the Company disclosed information relating to overall compliance with U.S. Export Administration Regulations (“EAR”). In its submission, the Company has provided OEE with an explanation of the activities that led to the sales of its products in Syria. In addition, the Company disclosed that prior to January 2010 some of its subsidiary’s sales to Syria were made to a party that was designated as a target of U.S. economic sanctions by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). The Company did not believe these sales constituted a violation of U.S. trade sanctions administered by OFAC, however, the Company also notified the Office of Foreign Assets Control of its voluntary disclosure to the OEE. On May 12, 2015, OFAC decided to resolve the matter of these sales by issuing a cautionary letter and declining to impose a financial penalty. The cautionary letter does not preclude OFAC from taking further action if the Company violates OFAC administered sanctions in the future.

On June 28, 2013 , the Company submitted the final voluntary disclosure to the OEE which disclosed the results of the Company's internal due diligence review conducted with the advice of outside counsel regarding certain export transactions from January 2008 through March 2012. In particular, the Company disclosed information relating to overall compliance with U.S. export control laws by its majority-owned subsidiary in the UAE, and the nature and quantity of its re-exports to Syria that the Company believed may constitute violations of the EAR. The disclosure addressed the above described findings and the remedial actions the Company has taken to date. On January 6, 2014, the Company received a warning letter from the OEE stating that the bureau has closed its investigation of the Company's final voluntary disclosure and determined not to pursue administrative or criminal prosecution even though the transactions violated EAR. The OEE imposed no financial penalties.

On January 14, 2013 , the Company voluntarily disclosed to the U.S. Department of Commerce’s Bureau of Industry and Security’s Office of Antiboycott Compliance (“OAC”) additional results of the Company’s internal due diligence review. In particular, the Company disclosed information relating to overall compliance with U.S. antiboycott laws by a majority-owned subsidiary in the UAE, including with respect to the former inclusion of a legend on invoices, confirming that the corresponding goods did not contain materials of Israeli origin. A number of the invoices involved U.S. origin goods. The Company believes inclusions of this legend may constitute violations of U.S. antiboycott laws. On June 28, 2013 , the Company voluntarily disclosed to the OAC the final results of the Company’s internal due diligence review. The disclosure addressed the above described findings and the remedial actions the Company has taken to date. The Company cannot predict when the OAC will complete its review.

Penalties for EAR violations can be significant and civil penalties can be imposed on a strict liability basis, without any showing of knowledge or willfulness. OAC has wide discretion to settle claims for violations. The Company believes that a penalty or penalties could be imposed from its voluntary disclosures, and that such penalty or penalties would result in a material loss is reasonably possible. Irrespective of any penalty, the Company could suffer other adverse effects on its business as a result of any violations or the potential violations, including legal costs and harm to its reputation, and the Company also will incur costs associated with its efforts to improve its compliance procedures. The Company has not established a reserve for potential penalties and does not know whether OAC will assess a penalty or what the amount of any penalty would be, if a penalty or penalties were assessed.

COTY INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

26. SUBSEQUENT EVENTS

On July 8, 2015 Coty announced the signing of a definitive agreement to merge the P&G Beauty Business into Coty through a tax-free Reverse Morris Trust transaction. The transaction is based on a proposal by Coty valuing the P&G Beauty Business at approximately $12,500.0 at the time the proposal was made. Following the transaction, P&G shareholders are expected to own 52% of all outstanding shares on a fully diluted basis (inclusive of all outstanding equity grants), while Coty’s existing shareholders would own 48% percent of the combined company. It is expected to close in the second half of calendar year 2016, subject to regulatory clearances, works council consultations, and other customary conditions.

On July 8, 2015, JABC repurchased 1.4 million shares of Class A Common Stock, for an aggregate amount of approximately $45.7 from an affiliate of an individual originally intended to become an executive of the Company. The Company recognized compensation expense of $13.9 in fiscal 2015 relating to this transaction as disclosed in Note 23. The repurchase will be reported in the first quarter of fiscal 2016 as the settlement of the liability with a deemed capital contribution from JABC, which will be recorded in APIC.

On July 21, 2015, the Company’s Board of Directors granted Mr. Becht an award of 300,000 phantom units in consideration of the extension of Mr. Becht’s responsibilities as interim Chief Executive Officer of the Company into fiscal 2016. The award to Mr. Becht was made outside of the Company’s Equity and Long-Term Incentive Plan. At the time of grant, the phantom units had a value of $8.1 based on the closing price of the Company’s Class A Common Stock on July 21, 2015.

On August 13, 2015, the Company announced that its Board of Directors has authorized the Company to repurchase up to $700.0 million of its Class A common stock, which amount is inclusive of any amounts existing under the Company’s previously announced share repurchase program (the “Repurchase Program”). Repurchases will be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its common stock, and general market conditions. No time has been set for the completion of the Repurchase Program, and the program may be suspended or discontinued at any time. The Repurchase Program authorizes the company to purchase its common stock from time to time through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws and other restrictions.

COTY INC. & SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Years Ended June 30, 2015 , 2014 , and 2013

($ in millions, except per share data)

Valuation and Qualifying Accounts



Description	Three Years Ended June 30,
Description	Balance at Beginning of Period		Charged to Costs and Expenses			Deductions				Balance at End of Period
Allowance for doubtful accounts:
2015	$	16.7	$	4.5		$	(1.6	)	^(a)	$	19.6
2014	14.5		3.2			(1.0		)	^(a)	16.7
2013	19.6		3.2			(8.3		)	^(a)	14.5
Allowance for customer returns:
2015	$	87.3	$	153.9		$	(181.3	)		$	59.9
2014	76.0		173.8			(162.5		)		87.3
2013	74.9		158.6			(157.5		)		76.0
Deferred tax valuation allowances:
2015	$	98.6	$	7.9	^(b)	$	(24.6	)		$	81.9
2014	61.5		42.2		^(b)	(5.1		)		98.6
2013	47.1		20.6		^(b)	(6.2		)		61.5


(a)	Includes amounts written-off, net of recoveries and cash discounts.


(b)	Includes foreign currency translation adjustments unless otherwise noted.

S-1

Exhibit 2.2

TRANSACTION AGREEMENT

between

THE PROCTER & GAMBLE COMPANY,

GALLERIA CO.,

COTY INC.

and

GREEN ACQUISITION SUB INC.

dated as of

July 8, 2015

TABLE OF CONTENTS

I. GALLERIA TRANSFER AND RESTRUCTURING; RECAPITALIZATION OF SPLITCO 3

1.01 Transfer and Restructuring 3

1.02 Transfer of Assets 3

1.03 Assumption of Liabilities 3

1.04 Transfer of Excluded Assets; Excluded Liabilities 4

1.05 Galleria Assets 4

1.06 Galleria Liabilities 8

1.07 Termination of Intercompany Agreements; Settlement of Intercompany Accounts 10

1.08 Transfers In Violation of Law or Required Consents 10

1.09 Retained Elements of Mercury Business 12

1.10 Evidence of Transfer of Galleria Assets and Galleria Liabilities 12

1.11 Transfer of Excluded Assets and Assumption of Excluded Liabilities 12

1.12 Galleria Transfer – Deliveries 13

1.13 Recapitalization of SplitCo 14

1.14 Waiver of Bulk-Sales Laws 15

II. THE DISTRIBUTION AND MERGER 15

2.01 Form and Manner of Distribution 15

2.02 The Distribution 16

2.03 Plan of Reorganization 17

2.04 The Merger 17

2.05 Amendment of Acquiror’s Certificate 18

2.06 Closing of the Merger 18

2.07 Conversion of Capital Stock in the Merger 18

2.08 Exchange of Certificates 19

2.09 Exchange Procedures 19

2.10 No Further Ownership Rights in SplitCo Common Stock 20

2.11 No Fractional Shares 20

2.12 Distributions With Respect To Unexchanged Shares 20

2.13 Withholding Rights 21

2.14 No Liability 21

2.15 Closing Date Adjustment – Cut-Off Date Working Capital 21

III. REPRESENTATIONS AND WARRANTIES OF PARENT 22

3.01 Due Organization, Good Standing and Corporate Power 23

3.02 Authorization of Agreement 23

3.03 Consents and Approvals; No Violations 23

3.04 Capital Structure; SplitCo 24

3.05 Intellectual Property 25

3.06 Litigation 26

3.07 Compliance With Laws 26

3.08 Contracts 26

3.09 Employees and Employee Benefits 28

3.10 Financial Statements; Absence of Changes; Undisclosed Liabilities 31

3.11 Taxes 33

3.12 Broker’s or Finder’s Fee 33

3.13 Title to Properties; Security Interests 33

3.14 Sufficiency; Condition of Assets 33

3.15 Information To Be Supplied 34

3.16 Real Property 35

3.17 Environmental Matters 36

3.18 Mercury Business Perfume Oils 36

3.19 Ancillary Fragrances 37

3.20 No Other Representations or Warranties; Disclaimer; Acknowledgement by Acquiror 37

IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR 38

4.01 Due Organization, Good Standing and Corporate Power 38

4.02 Authorization of Agreement 39

4.03 Consents and Approvals; No Violations 39

4.04 Broker’s or Finder’s Fee 39

4.05 Capitalization 40

4.06 Intellectual Property 41

4.07 Litigation 42

4.08 Compliance With Laws 42

4.09 Contracts 43

4.10 Employee Benefits 45

4.11 Acquiror SEC Filings; Financial Statements; Absence of Changes; Undisclosed Liabilities 46

4.12 Taxes 47

4.13 Title to Properties; Security Interests 48

4.14 Information To Be Supplied 48

4.15 Voting Requirements; Board Approval 48

4.16 Fairness Opinion 48

4.17 Real Property 49

4.18 Environmental Matters 49

4.19 No Other Representations or Warranties; Acknowledgment by Parent 50

V. COVENANTS 50

5.01 Conduct of Galleria Business Pending the Closing 50

5.02 Further Assurances; Efforts To Obtain Consents; Antitrust Clearance 55

5.03 Public Announcements 58

5.04 Notification of Certain Matters 59

5.05 Financial Statements 59

5.06 Conduct of Acquiror Pending The Closing 59

5.07 Access 62

5.08 Acquiror Stockholder Consent; Preparation of SEC Filings 64

5.09 No Solicitation 65

5.10 NYSE Listing 68

5.11 Required Amendments 68

5.12 Capital Transactions 68

5.13 Agreement for Exchange of Information 72

5.14 Privileged Matters 73

5.15 Restriction on Hiring 74

5.16 Intellectual Property Assignment/Recordation 75

5.17 Use of Parent Names and Marks 76

5.18 Removal of Tangible Assets 77

5.19 Works Council Cooperation 78

5.20 Insurance Matters 79

5.21 Restructuring of Galleria Business; Transition Plan 80

5.22 Confidentiality 83

5.23 Certain Material Contracts 84

5.24 Mercury Business Perfume Oils 86

5.25 Ancillary Fragrances 86

5.26 Continuing Employee Restrictions 87

5.27 Facilities Split Plan 88

5.28 Wind-down of Max Factor Gold Business 88

5.29 Diamond Technology 88

5.30 Non-Compete Restrictions 88

VI. EMPLOYEE MATTERS 90

6.01 Identification of Employees 90

6.02 Continuity of Employment 91

6.03 Establishing Galleria Group Plans 92

6.04 Terms of Employment 93

6.05 Bonuses and Incentives 98

6.06 Credit for Service with Parent 98

6.07 Workers’ Compensation 99

6.08 WARN Act 99

6.09 Miscellaneous 99

VII. CONDITIONS 100

7.01 Joint Conditions 100

7.02 Conditions to the Obligation of Acquiror 101

7.03 Conditions to the Obligation of Parent 102

7.04 Additional Conditions to Each Party’s Obligation To Effect the Merger 104

7.05 Frustration of Conditions 104

VIII. TERMINATION AND ABANDONMENT 104

8.01 Basis for Termination 104

8.02 Notice of Termination; Return of Documents; Continuing Confidentiality Obligation 105

8.03 Effect of Termination 106

IX. MUTUAL RELEASES; INDEMNIFICATION 106

9.01 Release of Pre-Business Transfer Time Claims 106

9.02 Indemnification by Acquiror and the Galleria Group 107

9.03 Indemnification by Parent 108

9.04 Calculation and Other Provisions Relating to Indemnity Payments 108

9.05 Procedures for Defense, Settlement and Indemnification of Claims 110

9.06 Additional Matters 112

9.07 Exclusive Remedy 113

X. MISCELLANEOUS 114

10.01 Non-Survival of Representations and Warranties 114

10.02 Expenses 114

10.03 Entire Agreement 117

10.04 Governing Law; Jurisdiction; Waiver of Jury Trial 117

10.05 Notices 118

10.06 Amendments and Waivers 119

10.07 No Third-Party Beneficiaries 120

10.08 Assignability 120

10.09 Construction 120

10.10 Severability 121

10.11 Counterparts 121

10.12 Specific Performance 121

10.13 Disclosure Letters 122

10.14 Waiver 122

10.15 Dispute Resolution 122

10.16 Obligations of Affiliates 123

10.17 No Recourse Against Debt Financing Sources 123

XI. DEFINITIONS 123

EXHIBITS



Exhibit A	Acquiror Certificate
Exhibit B-1	Parent Transaction Announcement
Exhibit B-2	Acquiror Transaction Announcement
Exhibit C	Stockholder Consent
Exhibit D	Transition Services
Exhibit E	Minimum Tender Condition Formula
Exhibit F	Target Working Capital Statement
Exhibit G	Cut-Off Date Adjustment Statement Format
Exhibit H	Tax Matters Agreement
Exhibit I	Transition Services Agreement
Exhibit J	Form of Acquiror Letter of Representation
Exhibit K	Form of Parent Letter of Representation
Exhibit L	Galleria Commitment Letter
Exhibit M	Acquiror Commitment Letter
Exhibit N-1	Parent Shared Technology License Agreement
Exhibit N-2	SplitCo Shared Technology License Agreement
Exhibit O-1	Parent Trademark License Agreement
Exhibit O-2	SplitCo Trademark License Agreement
Exhibit P	Form of Coexistence Agreement
Exhibit Q	Sample Calculation of Fully Diluted Basis

SCHEDULES

PARENT DISCLOSURES



Schedule 1.05(a)(i)	Galleria Business Equipment
Schedule 1.05(a)(iii)	Galleria Facilities
Schedule 1.05(a)(iv)	Galleria Entities
Schedule 1.05(a)(vii)	Galleria IP Assets
Schedule 1.05(a)(x)	Galleria Software
Schedule 1.05(a)(xiii)	Galleria Business Acquired Plan Assets
Schedule 1.05(a)(xix)	Galleria Bank Accounts
Schedule 1.05(b)(i)	Excluded Assets
Schedule 1.05(b)(ii)	Excluded IP Assets
Schedule 1.06(a)(xi)	Assumed Liabilities
Schedule 1.06(b)(i)	Excluded Liabilities
Schedule 1.09	Retained Elements of the Mercury Business
Section 1.10	Parent Transfer Documents
Section 3.03	Consents and Approvals
Section 3.05	Intellectual Property
Section 3.06	Litigation
Section 3.07	Compliance With Laws
Section 3.08(a)	Galleria Material Contracts
Section 3.08(b)	Shared Business Contracts
Section 3.08(c)	Enforceability / Absence of Breach
Section 3.08(d)	Contracts to be Provided
Section 3.09	Employee Matters
Section 3.10	Financial Statements
Section 3.11	Tax Matters
Section 3.14	Sufficiency; Condition of Assets
Section 3.16	Real Property
Section 3.17	Environmental Matters
Section 3.18(a)	Exclusive Third-Party Perfume Oils
Section 3.18(b)	Exclusive Parent Perfume Oils
Section 3.19(a)(i)	Exclusive Third-Party Ancillary Fragrances
Section 3.19(a)(ii)	Non-Exclusive Third-Party Ancillary Fragrances
Section 3.19(b)(i)	Exclusive Parent Ancillary Fragrances
Section 3.19(b)(ii)	Non-Exclusive Parent Ancillary Fragrances
Section 5.01	Conduct of Galleria Business Pending the Closing
Section 5.13(c)	Marketing Activities
Section 5.21(f)	Excluded Technologies
Section 5.30(a)(iii)	Non-Compete Restrictions
Section 5.30(b)(iii)	Parent Out-of-Scope Products
Section 6.01	Identification of Employees
Section 6.04(b)(i)	Compensation and Benefits
Section 6.04(c)	Severance
Section 6.04(g)	Expatriate Packages
Section 6.04(h)	Localized Employees
Section 7.01(c)	Notifications
Section 10.02	Transition Process
Section 11.01(a)	Knowledge of Parent
Section 11.01(b)	Accounting Principles
Section 11.01(d)	Excluded Employees

ACQUIROR DISCLOSURES



Section 4.03	Consents and Approvals; No Violations
Section 4.06	Intellectual Property
Section 4.07	Litigation
Section 4.08	Compliance With Laws
Section 4.09	Contracts
Section 4.10	Employee Benefits
Section 4.17	Real Property
Section 4.19	Environmental Matters
Section 5.06	Conduct of Acquiror Pending The Closing
Section 8.01	Acquiror Stockholder Consent
Section 11.01(a)	Knowledge
Section 11.01(c)	Acquiror MAE

TRANSACTION AGREEMENT

This Transaction Agreement (this “ Agreement ”), dated July 8, 2015, is among The Procter & Gamble Company, an Ohio corporation (“ Parent ”), Galleria Co., a Delaware corporation (“ SplitCo ”), Coty Inc., a Delaware corporation (“ Acquiror ”) and Green Acquisition Sub Inc., a Delaware corporation and wholly-owned subsidiary of Acquiror (“ Merger Sub ”).

RECITALS

1. Parent is engaged, directly and indirectly through certain of its Subsidiaries, in the Galleria Business.

2. Parent has determined that it would be appropriate and desirable to separate the Galleria Business from Parent and to divest the Galleria Business in the manner contemplated hereby.

3. Parent has caused SplitCo to be formed in order to facilitate such separation and divestiture.

4. Parent currently owns all of the issued and outstanding shares of common stock, par value $0.01 per share, of SplitCo (the “ SplitCo Common Stock ”).

5. Parent has determined that, subject to the terms and conditions herein, it would be appropriate and desirable for Parent and certain of its Subsidiaries to, directly or indirectly, Convey to SplitCo or the Galleria Entities, as applicable, certain Assets of the Galleria Business in exchange for (i) the assumption by SplitCo or the other members of the Galleria Group, as applicable, of certain Liabilities of the Galleria Business and (ii) Parent’s receipt of shares of SplitCo Common Stock and the Recapitalization Amount, all as provided herein.

6. The Parties contemplate that the Galleria Business will be transferred to SplitCo as provided herein, and in connection therewith the Recapitalization will take place, including SplitCo’s entry into the Galleria Credit Facility and SplitCo’s payment of the Recapitalization Amount.

7. The Parties contemplate that, immediately following the Galleria Transfer and Recapitalization, Parent will either (i) distribute all of the shares of SplitCo Common Stock to Parent shareholders without consideration on a pro rata basis (a “ One-Step Spin-Off ”) or (ii) consummate an offer to exchange (an “ Exchange Offer ”) shares of SplitCo Common Stock for currently outstanding shares of Parent’s common stock (“ Parent Common Stock ”) and, in the event that Parent’s shareholders subscribe for less than all of the SplitCo Common Stock in the Exchange Offer, subject to the terms and conditions of this Agreement, Parent will distribute, pro rata to its shareholders, any unsubscribed SplitCo Common Stock on the Distribution Date immediately following the consummation of the Exchange Offer so that Parent may be treated for U.S. federal income Tax purposes as having distributed all of the SplitCo Common Stock to its shareholders (the “ Clean-Up Spin-Off ”).

8. The disposition by Parent of 100% of the SplitCo Common Stock, whether by way of the One-Step Spin-Off or the Exchange Offer (followed by any Clean-Up Spin-Off) is referred to herein as the “ Distribution ”.

9. Immediately after the Distribution, Merger Sub, a wholly-owned Subsidiary of Acquiror, will merge with and into SplitCo and SplitCo Common Stock will be converted into shares of Class A Common Stock (“ Acquiror New Common Stock ”) on the terms and subject to the conditions set forth in this Agreement.

10. The Boards of Directors of Parent, SplitCo, Acquiror and Merger Sub have each approved and declared advisable the Merger of Merger Sub with and into SplitCo.

11. No later than 24 hours following execution of this Agreement, it is anticipated that the holders of shares of common stock of Acquiror representing at least a majority of the voting power of Acquiror will execute and deliver to Acquiror a written consent, in accordance with and pursuant to Section 228 of the DGCL, approving (i) the issuance of shares of Acquiror New Common Stock pursuant to the terms of this Agreement, (ii) increasing the number of authorized shares of capital stock of Acquiror and (iii) amending the Acquiror’s certificate of incorporation. Contemporaneously with the execution hereof, JAB Cosmetics B.V., as the sole record and beneficial owner of all of the outstanding shares of Class B Common Stock, is entering into a letter agreement with Parent regarding the conversion of all such shares into shares of Class A Common Stock as of two Business Days prior to the Closing, subject to the terms and conditions set forth in such letter agreement (the “ JAB Letter Agreement ”).

12. It is intended that (i) the Galleria Transfer, together with the Distribution, qualify as a reorganization under Section 368(a) of the Code, (ii) the Distribution, as such, qualify as a distribution of SplitCo Common Stock to Parent’s shareholders pursuant to Section 355 of the Code, (iii) the Merger qualify as a tax-free reorganization pursuant to Section 368(a) of the Code, (iv) any Parent Cash Distribution qualify as money distributed to Parent creditors in connection with the reorganization for purposes of Section 361(b)(3) of the Code, and (v) the execution of this Agreement constitute a plan of reorganization under Treasury Regulation Section 1.368-2(g).

13. Pursuant to the plan of reorganization and within one year after the Distribution Date, Parent will effect any Parent Cash Distribution to Parent’s creditors in retirement of outstanding Parent Indebtedness in the manner described in this Agreement.

14. Simultaneously with the execution of this Agreement, Parent and Acquiror are entering into the Split Plan Agreement.

Accordingly, the Parties agree as follows:

I. GALLERIA TRANSFER AND RESTRUCTURING;
RECAPITALIZATION OF SPLITCO

1.01 Transfer and Restructuring . (a) Overview . Prior to consummating the Distribution and Merger as contemplated in Article II , Parent and SplitCo will effect a reorganization of the Galleria Business. This reorganization will include the Galleria Transfer and a restructuring of the Galleria Business as contemplated by Section 5.21 (the Galleria Transfer, together with the activities set forth in Sections 5.21 , 6.02 and 6.03 , collectively, the “ Restructuring ”).

(b) SplitCo . SplitCo was formed as a Delaware corporation and will hold and conduct, directly and indirectly through its Subsidiaries, the Galleria Business. Parent will not cause or permit SplitCo to engage in any activity not contemplated by this Agreement, and prior to the Closing SplitCo will not operate any business other than the Galleria Business. In connection with the Restructuring, SplitCo and/or one or more of its Subsidiaries will become the owner of the Galleria Assets and will assume the Galleria Liabilities.

(c) Business Transfer Time . Subject to the satisfaction and waiver of the conditions set forth in Article VII , the effective time and date of each Conveyance and assumption of any Asset or Liability in accordance with this Article I in connection with the Galleria Transfer will be 12:01 a.m., Eastern Time, on the anticipated Closing Date (such time, the “ Business Transfer Time ,” and such date the “ Business Transfer Date ”).

1.02 Transfer of Assets . Except as provided in Section 1.08 , effective as of the Business Transfer Time, Parent will assign, transfer, convey and deliver (“ Convey ”) (or will cause any applicable Subsidiary of Parent to Convey) to SplitCo and/or its Subsidiaries, and SplitCo will accept from Parent and will cause its applicable Subsidiaries to accept, all of Parent’s and its applicable Subsidiaries’ respective right, title and interest in and to all Galleria Assets (other than any Galleria Assets that are already held as of the Business Transfer Time by SplitCo or one of its Subsidiaries, which Galleria Asset will continue to be held by SplitCo or such Subsidiary), free and clear of all Securities Interests (other than Permitted Encumbrances).

1.03 Assumption of Liabilities . Effective as of the Business Transfer Time, Parent will Convey (or will cause any applicable Subsidiary of Parent to Convey) to SplitCo, and SplitCo will assume, perform and fulfill when due and, to the extent applicable, comply with, or will cause any applicable Subsidiary to assume, perform and fulfill when due and, to the extent applicable, comply with, all of the Galleria Liabilities, in accordance with their respective terms (other than any Galleria Liability that as of the Business Transfer Time is already a Liability of SplitCo or one of its Subsidiaries, which Galleria Liability will continue to be a Liability of SplitCo or such Subsidiary). As between members of the Parent Group, on the one hand, and members of the Galleria Group, on the other hand, the members of the Galleria Group will be solely responsible for all Galleria Liabilities as of the Business Transfer Time, on a joint and several basis.

1.04 Transfer of Excluded Assets; Excluded Liabilities . Except as provided in Section 1.08 , prior to the Business Transfer Time, (a) Parent will cause any applicable Galleria Entity to Convey to Parent or a Subsidiary of Parent any Excluded Assets that it owns, leases or has any right to use, and Parent will accept from such member of the Galleria Group, and will cause an applicable Subsidiary of Parent (other than a Galleria Entity) to accept, all such respective right, title and interest in and to any and all of such Excluded Assets and (b) Parent will cause any applicable Galleria Entity to Convey any Excluded Liability for which it is otherwise responsible to Parent or a Subsidiary of Parent (other than a Galleria Entity), and Parent will assume, perform and fulfill when due, and to the extent applicable, comply with, or will cause the applicable Subsidiary of Parent to assume, perform and fulfill when due and, to the extent applicable, comply with, all of such Excluded Liabilities in accordance with their respective terms.

1.05 Galleria Assets . (a) For purposes of this Agreement and subject to the exclusions set forth in Section 1.05(b) and Section 1.09 , “ Galleria Assets ” means all Assets owned or held by any member of the Parent Group that are included in any of clauses (i)-(xix) below or that are otherwise primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) and that are not otherwise addressed in such clauses, in each case whether now existing or hereafter acquired prior to the Business Transfer Time (other than any such Assets that are Conveyed or otherwise disposed of after the date hereof and prior to the Business Transfer Time not in violation of Section 5.01 ):

(i) (A) all computers and other electronic data processing equipment, fixtures, machinery, molds, tools (including special and general tools), pucks, push plates, star wheels, prototypes, models, equipment, manufacturing equipment, process, packaging and related utilities, furniture, office equipment and other tangible personal property primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business), (B) computers, smartphones and similar communications equipment provided by the Parent Group in connection with a Continuing Employee’s performance of services, (C) all motor vehicle and other transportation equipment primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) or provided for the use of a Continuing Employee, including those motor vehicles and other transportation equipment listed on Schedule 1.05(a)(i) (as such list may be updated from time to time in Parent’s sole discretion), and (D) the items listed on Schedule 1.05(a)(i) .

(ii) all product inventories, raw and packaging materials, Store Room Inventory, Goods in Transit, parts, work-in-process, finished goods and products, in each case to the extent it is primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) (the “ Galleria Inventory ”);

(iii) all Real Property Interests in the land and facilities primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business), including the items listed on Schedule 1.05(a)(iii) , together with the improvements, structures and fixtures located thereon (the “ Galleria Facilities ”);

(iv) all issued and outstanding capital stock or other equity interests of the Persons listed on Schedule 1.05(a)(iv) , including any entities that may be designated as Galleria Entities pursuant to Section 5.21 (such capital stock or other equity interests, the “ Galleria Entity Interests ” and, such Persons, the “ Galleria Entities ”);

(v) subject to Section 5.23 , all interests, rights, claims and benefits of Parent and any of its Subsidiaries pursuant to, and associated with, all Galleria Contracts;

(vi) all of the Governmental Approvals that are primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business);

(vii) all Intellectual Property primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) and the Intellectual Property otherwise listed on Schedule 1.05(a)(vii) , including all goodwill related to any of the foregoing and all rights to sue or recover and retain damages and costs and attorneys’ fees for infringement, misappropriation or other violation of any of the foregoing, whether occurring prior to, on or after the Business Transfer Time (all of the foregoing, the “ Galleria IP Assets ”);

(viii) (A) all business and employment records primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business), including the corporate minute books and related stock records of the Galleria Entities, (B) all of the separate financial statements, books of account and Tax records of SplitCo and the Galleria Entities or other financial and Tax records primarily relating to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera Business), the Galleria Assets and the Galleria Liabilities that do not form part of the general ledger of Parent or any of its Affiliates (other than SplitCo and the Galleria Entities), (C) to the extent within Parent’s possession, all prosecution files, certificates, notices and registrations pertaining to the Intellectual Property listed on Schedule 1.05(a)(vii) , and (D) all other books, records, ledgers, files, documents and correspondence, whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form, and that in any such case are primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera Business) (collectively, the “ Galleria Books and Records ”); provided , however , that (1) none of clauses (A)-(D) will include Intellectual Property in any such records, writings or other materials (which is the subject of clause (vii), above), (2) Parent will be entitled to retain a copy of the Galleria Books and Records, which will be subject to the provisions of Section 5.14 , (3) neither clause (A) nor (D) will be deemed to include any books, records or other items or portions thereof (x) that are subject to restrictions on transfer pursuant to applicable Laws regarding personally identifiable information or Parent’s privacy policies regarding personally identifiable information or with respect to which transfer would require any Governmental Approval under applicable Law, or (y) that are personnel records that relate to any employees who are not Continuing Employees, and (4) in no event will Galleria Books and Records include any Consolidated Tax Return;

(ix) the benefits of all prepaid expenses and other current assets, including prepaid leases and prepaid rentals, in each case to the extent primarily related to or held for primary use in the Galleria Business;

(x) all software (in source code, object code and all source materials) primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) or otherwise listed on Schedule 1.05(a)(x) (all of the foregoing, the “ Galleria Software ”);

(xi) all goodwill of the Galleria Business;

(xii) all rights to past, present and future causes of action, lawsuits, judgments, claims, counterclaims and demands arising out of the conduct of or otherwise primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera Business);

(xiii) all Assets in respect of the Galleria Business Acquired Plans, as determined in accordance with Schedule 1.05(a)(xiii) (the “ Galleria Business Acquired Plan Assets ”) and any Assets in respect of any and all Galleria Group Plans;

(xiv) the right to enforce the Parent Group’s rights in (A) the confidentiality provisions of any confidentiality, non-disclosure or other similar Contracts that are not otherwise Galleria Contracts to the extent such provisions relate to confidential information of the Galleria Business and (B) any Intellectual Property assignment, license or non-assertion provisions of any Intellectual Property assignment Contract that is not otherwise a Galleria Contract to the extent such provisions relate to the Galleria IP Assets;

(xv) all rights of SplitCo and the Galleria Entities under this Agreement or any Ancillary Agreement and the certificates, instruments and Transfer Documents delivered in connection herewith;

(xvi) (A) any cash and cash equivalents held by SplitCo and the Galleria Entities (including in bank and other deposit accounts of the Galleria Entities) and (B) any security deposits and customer deposits primarily used or held for primary use in the Galleria Business;

(xvii) all accounts receivable that are either (A) primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily related to the Salon Professional Business;

(xviii) any other Assets reflected in the Cut-Off Date Adjustment Statement; and

(xix) all of the bank accounts of SplitCo and the Galleria Entities listed on Schedule 1.05(a)(xix) .

(b) Notwithstanding Section 1.05(a) or any other provision hereof, the Galleria Assets will not in any event include any of the following Assets (the “ Excluded Assets ”):

(i) the Assets listed or described on Schedule 1.05(b)(i) ;

(ii) the Excluded IP Assets;

(iii) all Assets in respect of any and all Compensation and Benefit Plans, all Assets corresponding to any Liabilities allocated to Parent or any of its Affiliates or for which Parent is expressly liable pursuant to Article VI and all Assets in respect of all other compensation and benefit plans sponsored by the Parent Group, in each case other than (A) the Galleria Business Acquired Plan Assets and (B) any Assets in respect of any and all Galleria Group Plans;

(iv) all financial and Tax records relating to the Galleria Business that form part of the general ledger of Parent or any of its Subsidiaries (other than the members of the Galleria Group), any work papers of Parent’s auditors and any other Tax records (including accounting records) of Parent or any of its Subsidiaries (other than the members of the Galleria Group); provided that Parent will provide to Acquiror upon written request from Acquiror, copies of any portions of such financial and Tax records (other than Consolidated Tax Returns and supporting Tax workpapers related thereto) that relate solely to the Galleria Entities, the Galleria Assets, the Galleria Liabilities or the Galleria Business;

(v) subject to Section 5.20 , all rights to insurance policies or practices of Parent and its Subsidiaries (including any captive insurance policies, fronted insurance policies, surety bonds or corporate insurance policies or practices, or any form of self-insurance whatsoever), any refunds paid or payable in connection with the cancellation or discontinuance of any such policies or practices and any claims made under such policies;

(vi) other than rights to enforce the provisions of any confidentiality, non-disclosure or other similar Contracts to the extent related to the Galleria Business or as provided in Section 1.05(a) and the corresponding sections of the Parent Disclosure Letter, all records prepared by or on behalf of Parent or its Subsidiaries relating to the negotiation of the transactions contemplated by this Agreement and all records prepared by or on behalf of Parent or its Subsidiaries in connection with the potential divestiture of all or a part of the Galleria Business or any other business or Asset of Parent or its Subsidiaries, including (A) proposals received from third parties and analyses relating to such transactions and (B) without limiting Section 5.14 , confidential communications with legal counsel representing Parent or its Affiliates and the right to assert the attorney-client privilege with respect thereto;

(vii) all rights of Parent or its Affiliates (other than members of the Galleria Group) under this Agreement or any Ancillary Agreement and the certificates, instruments and Transfer Documents delivered in connection therewith;

(viii) the LINC Facility; and

(ix) any and all Assets that are expressly contemplated by this Agreement as Assets to be retained by Parent or any other member of the Parent Group.

1.06 Galleria Liabilities . (a) For the purposes of this Agreement, “ Galleria Liabilities ” will mean each of the following, regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Business Transfer Time, or where or against whom such Liabilities are asserted or determined or whether asserted or determined prior to the date hereof:

(x) all Liabilities that are reflected in the Cut-Off Date Adjustment Statement and that remain outstanding as of the Closing;

(xi) any and all Liabilities of Parent and its Affiliates (including the members of the Galleria Group) to the extent arising out of, relating to or otherwise in respect of, the ownership or use of the Galleria Assets or the operation or the conduct of the Galleria Business, whether before, at or after the Business Transfer Time;

(xii) all Liabilities that are provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by SplitCo or any other member of the Galleria Group and all Liabilities of SplitCo or any other member of the Galleria Group under this Agreement or any Ancillary Agreement, including (A) Liabilities in connection with the collection of amounts due under loans outstanding to Continuing Employees as of the Business Transfer Time (other than loans under a Tax-qualified Compensation and Benefit Plan), and (B) all Liabilities allocated to or expressly assumed by any member of the Galleria Group pursuant to Article VI ;

(xiii) subject to Section 5.23 , all Liabilities under the Galleria Contracts with respect to performance of the Galleria Contracts;

(xiv) all Liabilities to the extent relating to, resulting from or arising out of advertising time or space (including television, print, radio and point of sale) used or to be used in the Galleria Business;

(xv) all Liabilities to the extent relating to, resulting from or arising out of trade and consumer promotions, in-store promotions, coupon campaigns, loyalty programs and gift card campaigns of the Galleria Business;

(xvi) all Liabilities to the extent relating to, resulting from or arising out of product returns, recalls of products of the Galleria Business or fulfilling warranty claims and similar repair and replacement commitments in respect of products of the Galleria Business;

(xvii) all Liabilities to the extent relating to, resulting from or arising out of (A) any Environmental Conditions that result from or arise out of the operation or conduct of the Galleria Business, (B) any Release of Hazardous Materials that occurs at any of the Galleria Facilities, to the extent such Release results from or arises out of the operation or conduct of the Galleria Business, or (C) any violation of or remediation or other requirements under any Environmental Law resulting from the operation or conduct of the Galleria Business;

(xviii) all Liabilities under the Galleria Credit Facility;

(xix) all Liabilities to the extent relating to German Inventorship Laws with respect to the Galleria IP Assets; and

(xx) all Liabilities listed on Schedule 1.06(a)(xi) .

(b) Notwithstanding anything to the contrary in this Agreement, the Galleria Liabilities will not include the following Liabilities (such Liabilities, the “ Excluded Liabilities ”):

(i) all Liabilities listed or described on Schedule 1.06(b)(i) ;

(ii) all Liabilities to the extent relating to, resulting from or arising out of any Excluded Asset, except to the extent expressly identified as Galleria Liabilities in Section 1.06(a) ;

(iii) all Liabilities to the extent relating to, resulting from or arising out of any accounts payable that are not held by SplitCo or any Galleria Entity or accounts payable that are not related to the Galleria Business; and

(iv) all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by Parent or any other member of the Parent Group, and all Liabilities of any member of the Parent Group under this Agreement or any of the Ancillary Agreements.

1.07 Termination of Intercompany Agreements; Settlement of Intercompany Accounts . (a) SplitCo, on behalf of itself and each other member of the Galleria Group, on the one hand, and Parent, on behalf of itself and each other member of the Parent Group, on the other hand, hereby terminate any and all Contracts between or among SplitCo or any member of the Galleria Group, on the one hand, and Parent or any member of the Parent Group, on the other hand, effective without further action as of the Business Transfer Time. No such Contract (including any provision thereof which purports to survive termination) will be of any further force or effect after the Business Transfer Time and all parties will be released from all Liabilities thereunder. Each Party will, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) Parent will cause all of the intercompany receivables, payables, loans and other accounts, rights and Liabilities between SplitCo and any other member of the Galleria Group, on the one hand, and Parent or any other member of the Parent Group, on the other hand, in existence as of immediately prior to the Business Transfer Time (collectively, the “ Intercompany Accounts ”) to be settled such that, as of the Business Transfer Time, there are no Intercompany Accounts outstanding.

1.08 Transfers In Violation of Law or Required Consents . (a) Except as otherwise provided in Section 1.09 , if and to the extent that the consummation of the Galleria Transfer or Conveyance of Excluded Assets would be a violation of applicable Laws or require any Consent in connection with the transactions contemplated hereby that has not been obtained as of the Business Transfer Time, then, notwithstanding any other provision hereof, such Conveyance of the applicable Galleria Asset or Excluded Asset will automatically be deferred and will not occur until all legal impediments are removed or such Consents have been obtained. Notwithstanding the foregoing, any such Asset will still be considered a Galleria Asset or Excluded Asset, as applicable, and the Person retaining such Asset will thereafter hold such Asset in trust for the benefit, insofar as reasonably possible, of the Person entitled thereto (and at such Person’s sole expense) until the consummation of the Conveyance thereof. The Parties will use their respective Commercially Reasonable Efforts to (i) continue to seek to remove any legal impediments or secure any contractual Consents required from third parties necessary to Convey such Asset and (ii) develop and implement arrangements to place the Person entitled to receive such Asset, insofar as reasonably possible and to the extent not prohibited by applicable Law or the relevant Contract, in the same position as if such Asset had been Conveyed as contemplated hereby such that all the benefits and burdens relating to such Asset, including possession, use, risk of loss, potential for gain, any Tax Liabilities in respect thereof and dominion, control and command over such Asset, are to inure from and after the Business Transfer Time to such Person. If and when the applicable legal or contractual impediments are removed or the applicable Consents are obtained, the Conveyance of the applicable Asset will be effected in accordance with the terms of this Agreement or such applicable Ancillary Agreement. The obligations set forth in this Section 1.08 will terminate on the two-year anniversary of the Closing. Nothing in this Section 1.08(a) will be deemed to (A) constitute or require a waiver by any of the Parties of any of the closing conditions set forth in Article VII , including the receipt of the Governmental Approvals or (B) apply to any Shared Business Contract, it being understood that Shared Business Contracts are governed by Section 1.08(b) .

(b) Shared Business Contracts . (c) Parent will use Commercially Reasonable Efforts to deliver a true, correct and complete list of its Shared Business Contracts existing as of the date of this Agreement no later than 90 days after the date hereof (except in connection with any Contract the existence or terms of which are confidential) that are not set forth on Section 3.08(b) of the Parent Disclosure Letter. With respect to purchases of raw materials and packaging materials that are not covered or governed by a Contract other than a purchase order or other similar arrangement, Parent may satisfy this obligation by identifying the relevant raw material or packaging material and providing a reasonably detailed description of the arrangement utilized to purchase such material.

(i) Parent shall use Commercially Reasonable Efforts to cause each Shared Business Contract to be assigned in relevant part to a Galleria Entity on or prior to the Business Transfer Time or to appropriately amend such Shared Business Contract to the extent permitted by applicable Law or the relevant Shared Business Contract so that Acquiror or its Affiliates will, at and following the Closing, be entitled to the rights and benefits inuring to the Galleria Business under such Shared Business Contracts, and any such amended Shared Business Contract will be treated by the Parties as a separate Contract for all purposes. In addition, Parent will provide Acquiror with contact information for such third parties and introduce representatives of the Acquiror Group to Parent’s contacts at such third parties.

(d) Notwithstanding anything in this Section 1.08 to the contrary, no member of the Parent Group nor any of its Affiliates will be required to undertake any action or arrangement contemplated by this Section 1.08 (i) if Parent determines, in its sole discretion, that such arrangement or action would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, or (ii) if such arrangement is not in compliance with applicable Law (or the relevant Shared Business Contract).

1.09 Retained Elements of Mercury Business . The Parent and Acquiror will implement the provisions set forth on Schedule 1.09 .

1.10 Evidence of Transfer of Galleria Assets and Galleria Liabilities . In furtherance of the Conveyance of Galleria Assets and assumption of Galleria Liabilities provided in Sections 1.02 and 1.03 , on the Business Transfer Date, (a) Parent will execute and deliver, and will cause its Subsidiaries to execute and deliver, such bills of sale, stock powers, certificates of title, deeds, assignments of Contracts and other instruments of Conveyance, including the real property transfer documents described in Section 1.10 of the Parent Disclosure Letter (in each case to the extent applicable and in a form that is consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Assets are located), as necessary to evidence the Conveyance of all of Parent’s and its Subsidiaries’ right, title and interest in and to the Galleria Assets to SplitCo and the other members of the Galleria Group (it being understood that no such bill of sale, stock power, certificate of title, deed, assignment or other instrument of Conveyance will require Parent or any of its Affiliates to make any additional representations, warranties or covenants, expressed or implied, not contained in this Agreement except to the extent required to comply with applicable local Law, in which case the Parties will enter into such supplemental agreements or arrangements as are effective to preserve the allocation of economic benefits and burdens contemplated by this Agreement) and (b) SplitCo will execute and deliver such assumptions of Galleria Liabilities and other instruments of assumption (in each case in a form that is consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Liabilities are located) as and to the extent reasonably necessary to evidence the valid and effective assumption of the Galleria Liabilities by SplitCo or the applicable members of the Galleria Group. All of the foregoing documents contemplated by this Section 1.10 will be referred to collectively herein as the “ Parent Transfer Documents .”

1.11 Transfer of Excluded Assets and Assumption of Excluded Liabilities . In furtherance of the Conveyance of Excluded Assets and assumption of Excluded Liabilities provided in Section 1.04 , on the Business Transfer Date, (a) SplitCo will execute and deliver, and will cause its Subsidiaries to execute and deliver, such bills of sale, stock powers, certificates of title, deeds, assignments of Contracts and other instruments of Conveyance (in each case to the extent applicable and in a form that is consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Assets are located), as necessary, to evidence the Conveyance of all of SplitCo’s and its Subsidiaries’ right, title and interest in and to the Excluded Assets to Parent and the other members of the Parent Group (it being understood that no such bill of sale, stock power, certificate of title, deed, assignment or other instrument of Conveyance will require SplitCo or any of its Affiliates to make any additional representations, warranties or covenants, expressed or implied, not contained in this Agreement except to the extent required to comply with applicable local Law, in which case the Parties will enter into such supplemental agreements or arrangements as are effective to preserve the allocation of economic benefits and burdens contemplated by this Agreement) and (b) Parent will execute and deliver such assumptions of Excluded Liabilities and other instruments of assumption (in each case in a form that is consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Liabilities are located) as and to the extent reasonably necessary to evidence the valid and effective assumption of the Excluded Liabilities by Parent or the applicable member of the Parent Group. All of the foregoing documents contemplated by this Section 1.11 will be referred to collectively herein as the “ Galleria Transfer Documents ” and, together with the Parent Transfer Documents, the “ Transfer Documents .”

1.12 Galleria Transfer – Deliveries . (a) Documents To Be Delivered by Parent . On the Business Transfer Date, Parent will deliver, or will cause its appropriate Subsidiaries to deliver, to SplitCo all of the following instruments:

(i) the Ancillary Agreements to which Parent or any other member of the Parent Group is a Party, duly executed by the members of the Parent Group party thereto;

(ii) the Transfer Documents as described in Section 1.10 and Section 1.11 ;

(iii) resignations (or evidence of removal) of each of the individuals who serve as an officer or director of members of the Galleria Group in their capacity as such and the resignations of any other Persons that will be employees of any member of the Galleria Group after the Business Transfer Time and that are directors or officers of any member of the Galleria Group, to the extent requested by Acquiror, in each case effective as of the Effective Time; and

(iv) the certificate contemplated by Section 7.02(d) .

(b) Documents To Be Delivered by SplitCo and Acquiror . On the Business Transfer Date, SplitCo and Acquiror, as applicable, will deliver, or will cause their Subsidiaries to deliver, as appropriate, to Parent all of the following instruments:

(i) in each case where any member of the Galleria Group is a party to any Ancillary Agreement, a counterpart of such Ancillary Agreement duly executed by the member of the Galleria Group party thereto;

(ii) the Transfer Documents as described in Section 1.10 and Section 1.11 ;

(iii) resignations (or evidence of removal) of each of the individuals who serve as an officer or director of members of the Parent Group in their capacity as such and the resignations of any other Persons that will be employees of any member of the Galleria Group after the Business Transfer Time and that are directors or officers of any member of the Parent Group, to the extent requested by Parent, in each case effective as of the Effective Time; and

(iv) the certificate contemplated by Section 7.03(h) .

1.13 Recapitalization of SplitCo . Subject to the terms and conditions set forth herein (including the creation of the Galleria Credit Facility as contemplated by Section 5.12 ), Parent and SplitCo will cause the following to occur:

(a) General . At the Business Transfer Time, in partial consideration for the Conveyance of Assets contemplated by Section 1.02 , SplitCo will:

(v) issue and deliver to Parent a number of shares of SplitCo Common Stock equal to (1) the Galleria Stock Amount, less (2) the number of shares of SplitCo Common Stock outstanding immediately prior to the issuance of SplitCo Common Stock pursuant to this Section 1.13 (the “ Galleria Stock Issuance ”);

(vi) subject to Section 1.13(c) , distribute to Parent any remaining portion of the Recapitalization Amount not previously distributed to Parent pursuant to Section 1.13(c) in cash in immediately available funds to an account specified for this purpose by Parent; and

(vii) assume the Galleria Liabilities in accordance with the requirements of this Agreement.

(b) Credit Facility . At the Business Transfer Time, or within seven days prior to the Business Transfer Time, SplitCo, together with the other members of the Galleria Group, will enter into a credit facility with a third-party creditor, with total available credit in the principal amount of $4,500,000,000 (subject to adjustment as contemplated by Section 5.12 ) in accordance with the Galleria Credit Documents (such credit facility, the “ Galleria Credit Facility ”, and the entry into the Galleria Credit Facility, together with the Galleria Stock Issuance and the Recapitalization Amount, the “ Recapitalization ”).

(c) Cash Distribution . At the Business Transfer Time, or within seven days prior to the Business Transfer Time, SplitCo will (i) borrow funds under the Galleria Credit Facility in an amount equal to the Recapitalization Amount, (ii) in its discretion, subject to Section 5.21(g) , use all or a portion of such borrowed proceeds to fund the purchase, directly or indirectly, of Galleria Assets from one or more Subsidiaries of Parent, and (iii) promptly distribute to Parent any amount remaining after funding any such Galleria Asset purchases pursuant to clause (ii) immediately above. Parent will maintain any such funds distributed from SplitCo in a segregated account, and will take into account for Tax purposes all items of income, gain, deduction or loss associated with the funds while maintained in this segregated account. Pursuant to the plan of reorganization and as soon as practicable following the Distribution Date, Parent will distribute any funds received from SplitCo pursuant to this Section 1.13(c) , and all remaining amounts in the above-described segregated account, to Parent’s creditors in retirement of outstanding Parent indebtedness (any such distribution, the “ Parent Cash Distribution ”). Prior to effecting any Parent Cash Distribution, Parent will adopt a corporate resolution specifying that such distribution will be made from the funds maintained in the segregated account referenced in this Section 1.13(c) .

1.14 Waiver of Bulk-Sales Laws . Each of Parent and SplitCo hereby waives compliance by each member of their respective Group with the requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the Conveyance of any or all of the Assets to any member of the Parent Group or Galleria Group, as applicable.

II. THE DISTRIBUTION AND MERGER

2.01 Form and Manner of Distribution . (a) Parent may elect, in its sole discretion, to effect the Distribution in the form of either (i) so long as Parent reasonably believes the condition set forth in Section 7.03(d) would be capable of being satisfied, a One-Step Spin-Off or (ii) an Exchange Offer (including any Clean-Up Spin-Off, as set forth below).

(b) If Parent elects to effect the Distribution in the form of a One-Step Spin-Off, the Board of Directors of Parent, in accordance with applicable Law, will establish (or designate Persons to establish) a Record Date and the Distribution Date. All shares of SplitCo Common Stock held by Parent on the Distribution Date will be distributed to the Record Holders in the manner determined by Parent and in accordance with Section 2.02(e) .

(c) If Parent elects to effect the Distribution as an Exchange Offer, Parent will determine in its sole discretion the terms and conditions of such Exchange Offer, including the number of shares of SplitCo Common Stock that will be offered for each validly tendered share of Parent Common Stock, the period during which such Exchange Offer will remain open, the procedures for the tender and exchange of shares and all other terms and conditions of such Exchange Offer, which will comply with securities Law requirements applicable to such Exchange Offer; provided , that in any event, Parent shall extend the expiration date of such Exchange Offer for one or more consecutive increments of not more than 20 Business Days each (the length of such period to be determined by Parent in consultation with Acquiror), if, as of any otherwise scheduled expiration of the Exchange Offer, any condition to the Exchange Offer or the closing of the Merger, other than those conditions that are to be satisfied on the date the expiration of the Exchange Offer or the closing of the Merger, has not been satisfied or waived (to the extent permitted under applicable Laws), it being understood that no such extension shall extend the expiration date of such Exchange Offer to a time later than, the earlier of (1) the date that is 60 Business Days after the satisfaction of all conditions to such Exchange Offer and the closing of the Merger, other than the Minimum Condition and those conditions that are to be satisfied on the date of expiration of the Exchange Offer or the closing of the Merger, (2) the termination of this Agreement in accordance with its terms and (3) the End Date. In the event that Parent’s shareholders subscribe for less than all of the SplitCo Common Stock in the Exchange Offer, subject to the terms and conditions of this Agreement (including the satisfaction of the Minimum Condition), Parent will consummate the Clean-Up Spin-Off on the Distribution Date immediately following the consummation of the Exchange Offer.

2.02 The Distribution . (a) To the extent the Distribution is effected as a One-Step Spin-Off, subject to the terms thereof, in accordance with Section 2.02(e) , each Record Holder will be entitled to receive for each share of Parent Common Stock held by such Record Holder a number of shares of SplitCo Common Stock equal to the total number of shares of SplitCo Common Stock held by Parent on the Distribution Date, multiplied by a fraction, the numerator of which is the number of shares of Parent Common Stock held by such Record Holder and the denominator of which is the total amount of Parent Common Stock outstanding on the Distribution Date.

(b) Subject to the terms thereof, to the extent the Distribution is effected as an Exchange Offer, each Parent shareholder may elect in the Exchange Offer to exchange a number of shares of Parent Common Stock held by such Parent shareholder for shares of SplitCo Common Stock subject to the terms and conditions set forth in the SplitCo Form 10/S-4.

(c) Parent and SplitCo, as the case may be, will instruct the transfer agent or the Exchange Agent in the Distribution, as applicable, to deduct and withhold from the consideration otherwise required to be distributed pursuant to this Agreement such amounts as are required to be deducted and withheld from such consideration under the Code or any provision of state, local or foreign Tax Law. Any withheld amounts will be treated for all purposes of this Agreement as having been distributed to the Persons otherwise entitled thereto.

(d) The terms and conditions of any Clean-Up Spin-Off will be as determined by Parent in its sole discretion, provided that, subject to the terms and conditions of this Agreement, (i) any SplitCo Common Stock that is not subscribed for in the Exchange Offer must be distributed to the Parent’s shareholders in the Clean-Up Spin-Off, and (ii) such Clean-Up Spin-Off must take place on the Distribution Date immediately following the consummation of the Exchange Offer so that Parent may be treated for U.S. federal income Tax purposes as having distributed all of the SplitCo Common Stock to Parent’s shareholders.

(e) Upon the consummation of the One-Step Spin-Off or the Exchange Offer, Parent will deliver to the Exchange Agent a global certificate representing the SplitCo Common Stock distributed in the One-Step Spin-Off or exchanged in the Exchange Offer, as the case may be, for the account of the Parent shareholders that are entitled thereto. Upon a Clean-Up Spin-Off, if any, Parent will deliver to the Exchange Agent an additional global certificate representing the SplitCo Common Stock distributed in the Clean-Up Spin-Off for the account of the Parent shareholders that are entitled thereto. The Exchange Agent will hold such certificate or certificates, as the case may be, for the account of the Parent shareholders pending the Merger.

2.03 Plan of Reorganization . This Agreement will constitute a “plan of reorganization” for the transactions contemplated by this Agreement under Treasury Regulation Section 1.368-2(g). Pursuant to the plan of reorganization, (a) Parent will complete the Distribution through either (i) a One-Step Spin-Off or (ii) the Exchange Offer and, subject to the terms and conditions of this Agreement, any Clean-Up Spin-Off (as described above) and (b) immediately following the Distribution, Merger Sub will merge with and into SplitCo with SplitCo surviving.

2.04 The Merger . (c) On the terms and subject to the conditions of this Agreement, Merger Sub will be merged (the “ Merger ”) with and into SplitCo in accordance with the provisions of the DGCL. Immediately following the Merger, SplitCo will continue as the surviving corporation (the “ Surviving Corporation ”) and will be a direct, wholly owned Subsidiary of Acquiror, and the separate corporate existence of Merger Sub will cease.

(d) The Merger will be consummated by the filing of a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later time as is specified in the Certificate of Merger and as is agreed to by Parent and Acquiror, the “ Effective Time ”).

(e) The Merger will have the effects set forth in this Agreement and, to the extent not otherwise addressed herein, the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of SplitCo and Merger Sub will vest in SplitCo as the Surviving Corporation and all debts, liabilities and duties of SplitCo (including all of the obligations under the Galleria Credit Facility) and Merger Sub will become the debts, liabilities and duties of SplitCo as the Surviving Corporation.

(f) The text of the certificate of incorporation of the Surviving Corporation in effect at the Effective Time will, by virtue of the Merger, be amended and restated so as to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time (except that the name of the corporation set forth in the certificate of incorporation of the Surviving Corporation will continue to be “ Galleria Co. ”), until thereafter changed or amended as provided therein or by applicable Law. The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.

(g) The initial directors of the Surviving Corporation at the Effective Time will be the directors of Merger Sub. The initial officers of the Surviving Corporation at the Effective Time will be the officers of SplitCo at the Effective Time (after taking into account the resignations contemplated by Section 1.12(a)(iii) ). Each of such initial officers and directors of the Surviving Corporation will hold office from the Effective Time until their respective successors are duly elected or appointed and qualified in the manner provided by the certificate of incorporation and bylaws of the Surviving Corporation or as otherwise provided by Law.

2.05 Amendment of Acquiror’s Certificate . Acquiror will present to its stockholders for approval by written consent in lieu of a meeting, as part of the Acquiror Stockholder Approval, a proposal to amend, effective as of immediately prior to the Effective Time, Acquiror’s Amended and Restated Certificate of Incorporation (“ Acquiror Certificate ”), in the form attached hereto as Exhibit A , to provide for the issuance of Acquiror New Common Stock and the increase in the number of total authorized shares of capital stock of Acquiror, and, to the extent the Acquiror Stockholder Approval is so obtained, such certificate of incorporation will be the certificate of incorporation of Acquiror from and after the Effective Time until thereafter changed or amended as provided therein or by applicable Law.

2.06 Closing of the Merger . On the terms and subject to the conditions set forth in this Agreement, the consummation of the Merger (the “ Closing ”) will take place at Jones Day, 222 East 41st Street, New York, New York, at 10:00 a.m., local time, on the last Business Day of the calendar month in which the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature or pursuant to the terms of this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, the waiver of those conditions), it being understood that the Parties will work together in good faith to seek to cause such conditions to be satisfied, and for the Closing to occur, prior to July 31, 2016. The date on which the Closing occurs is referred to as the “ Closing Date .” For accounting purposes, the Closing will be deemed to have occurred as of 11:59:59 pm local time on the Closing Date.

2.07 Conversion of Capital Stock in the Merger . At the Effective Time, by virtue of the Merger and without any action on the part of SplitCo, Acquiror or the holders of the following securities:

(e) Each share of Merger Sub Common Stock will be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation.

(f) Subject to Section 2.11 in respect of fractional shares, each issued share of SplitCo Common Stock will be converted into the right to receive one fully paid and nonassessable share of Acquiror New Common Stock (such one for one exchange ratio, the “ Exchange Ratio ”). The shares of Acquiror New Common Stock to be issued upon the conversion of shares of SplitCo Common Stock pursuant to this Section 2.07 and cash in lieu of fractional shares as contemplated by Section 2.11 are referred to collectively as “ Merger Consideration .” As of the Effective Time, all such shares of SplitCo Common Stock will no longer be outstanding and will automatically be canceled and retired and will cease to exist, and any holder of a certificate representing any such shares of SplitCo Common Stock will cease to have any rights with respect thereto, except the right to receive Merger Consideration upon surrender of such certificate, without interest. The issuance of Acquiror New Common Stock in connection with the Merger is referred to as the “ Acquiror Stock Issuance .”

2.08 Exchange of Certificates . (a) Pursuant to Section 2.02(e) , the Exchange Agent will hold, for the account of the relevant Parent shareholders, the global certificate(s) representing all of the outstanding shares of SplitCo Common Stock distributed in the Distribution. Such shares of SplitCo Common Stock will be converted into shares of Acquiror New Common Stock in accordance with the terms of this Article II .

(b) Prior to the Closing, Parent will appoint a bank or trust company reasonably acceptable to Acquiror as exchange agent (the “ Exchange Agent ”). Prior to or at the Effective Time, or as reasonably requested by Parent, Acquiror will deposit with the Exchange Agent, for the benefit of the holders of shares of SplitCo Common Stock, for exchange in accordance with this Article II through the Exchange Agent, evidence in book entry form representing the shares of Acquiror New Common Stock issuable pursuant to this Article II in exchange for outstanding shares of SplitCo Common Stock (such shares of Acquiror New Common Stock, together with any dividends or distributions with respect thereto, being hereafter referred to as the “ Exchange Fund ”). For the purposes of such deposit, Acquiror will assume that there will not be any fractional shares of Acquiror New Common Stock. Acquiror will make available to the Exchange Agent, for addition to the Exchange Fund, from time to time as needed or as reasonably requested by Parent, cash sufficient to pay cash in lieu of fractional shares in accordance with Section 2.11 . The Exchange Agent will, pursuant to irrevocable instructions, deliver the Acquiror New Common Stock to be issued pursuant to this Article II out of the Exchange Fund. The Exchange Fund will not be used for any other purpose.

2.09 Exchange Procedures . As soon as reasonably practicable after the Effective Time of the Merger, and to the extent not previously distributed in connection with the Distribution, the Exchange Agent will mail to any holder of record of outstanding shares of SplitCo Common Stock whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.07 (a) a letter of transmittal and (b) instructions for use in effecting the exchange of any shares of SplitCo Common Stock for Merger Consideration. Upon delivery to the Exchange Agent of the letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such SplitCo Common Stock will be entitled to receive in exchange therefor the Merger Consideration (together with cash in lieu of fractional shares) that such holder has the right to receive pursuant to the provisions of this Article II , and the respective SplitCo Common Stock will forthwith be canceled. Until exchanged as contemplated by this Section 2.09 , any SplitCo Common Stock will be deemed at any time after the Effective Time to represent only the right to receive upon such exchange Merger Consideration as contemplated by this Section 2.09 . No interest will be paid or accrue on any cash payable upon exchange of any SplitCo Common Stock.

2.10 No Further Ownership Rights in SplitCo Common Stock . The Merger Consideration issued (and paid) in accordance with the terms of this Article II upon conversion of any shares of SplitCo Common Stock will be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to such shares of SplitCo Common Stock, and after the Effective Time there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of SplitCo Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any certificates formerly representing shares of SplitCo Common Stock are presented to the Surviving Corporation or the Exchange Agent for any reason, they will be cancelled and exchanged as provided in this Article II .

2.11 No Fractional Shares . (c) No certificates or scrip representing fractional shares of Acquiror New Common Stock will be issued upon the conversion of SplitCo Common Stock pursuant to Section 2.07 , and such fractional share interests will not entitle the owner thereof to vote or to any rights of a holder of Acquiror Common Stock. For purposes of this Section 2.11 , all fractional shares to which a single record holder would be entitled will be aggregated, and calculations will be rounded to three decimal places.

(d) Fractional shares of Acquiror New Common Stock that would otherwise be allocable to any former holders of SplitCo Common Stock in the Merger will be aggregated, and no holder of SplitCo Common Stock will receive cash equal to or greater than the value of one full share of Acquiror New Common Stock. The Exchange Agent will cause the whole shares obtained thereby to be sold, in the open market or otherwise as reasonably directed by Parent, and in no case later than 20 Business Days after the Effective Time. The Exchange Agent will make available the net proceeds thereof, after deducting any required withholding Taxes and brokerage charges, commissions and transfer Taxes, on a pro rata basis, without interest, as soon as practicable to the holders of SplitCo Common Stock entitled to receive such cash. Payment of cash in lieu of fractional shares of Acquiror Common Stock will be made solely for the purpose of avoiding the expense and inconvenience to Acquiror of issuing fractional shares of Acquiror New Common Stock and will not represent separately bargained-for consideration.

2.12 Distributions With Respect To Unexchanged Shares . No dividends or other distributions with respect to Acquiror New Common Stock with a record date after the Effective Time will be paid to the holder of any SplitCo Common Stock with respect to the shares of Acquiror New Common Stock issuable upon exchange thereof, and no cash payment in lieu of fractional shares will be paid to any such holder pursuant to Section 2.11 , until, in each case, the exchange of such SplitCo Common Stock in accordance with this Article II . Subject to applicable Law, following the exchange of any such SplitCo Common Stock, there will be paid to the holder of the certificate representing whole shares of Acquiror New Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of any cash payable in lieu of a fractional share of Acquiror New Common Stock to which such holder is entitled pursuant to Section 2.11 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Acquiror New Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such exchange payable with respect to such whole shares of Acquiror New Common Stock.

2.13 Withholding Rights . Acquiror, the Surviving Corporation, the Exchange Agent and the transfer agent, as the case may be, will deduct and withhold from the consideration otherwise required to be distributed pursuant to this Agreement such amounts as may be required to be deducted and withheld under the Code or any provision of state, local or foreign Tax Law. Any withheld amounts will be treated for all purposes of this Agreement as having been distributed to the Persons otherwise entitled hereto.

2.14 No Liability . None of the Parties, the Exchange Agent and the transfer agent will be liable to any Person in respect of any shares of SplitCo Common Stock or Acquiror New Common Stock (or in either case for any dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any abandoned property, escheat or similar Law.

2.15 Closing Date Adjustment – Cut-Off Date Working Capital . (a) Not later than the 10 ^th Business Day following the Cut-Off Date, Parent will provide to Acquiror its good faith estimate of the Cut-Off Date Working Capital (if such amount exceeds the Working Capital Target, the absolute value of the difference is the “ Working Capital Excess ,” and if such amount is less than the Working Capital Target, the absolute value of the difference is the “ Working Capital Deficit ”). Such statement (as such statement is finally determined pursuant to this Section 2.15 , the “ Cut-Off Date Adjustment Statement ”) will be prepared (A) in a manner and format consistent with the Cut-Off Date Adjustment Statement Format and (B) using the most current and most reliable financial information reasonably available to Parent in the Ordinary Course of Parent’s operations.

(b) Acquiror will review the Cut-Off Date Adjustment Statement and, if Acquiror disagrees with any item set forth in such statement, it will provide written notice to Parent (an “ Acquiror Objection ”) within five Business Days following receipt of the Cut-Off Date Adjustment Statement, and Parent and Acquiror will attempt to resolve in good faith any such disagreements as soon as practicable.

(c) If Parent and Acquiror are unable to resolve any of their disputes with respect to the Cut-Off Date Adjustment Statement within two Business Days following Parent’s receipt of the Acquiror Objection pursuant to Section 2.15(b) , either Party may refer the remaining disputed items to Ernst & Young LLP or another independent accounting firm mutually selected by Parent and Acquiror (the “ Accounting Firm ”) to make a written determination as to each then-remaining disputed item, which written determination will be final and binding on the Parties as to each such disputed item. The Accounting Firm will act as an arbitrator and not an expert and will address only those items that are in dispute. With respect to any item of the Cut-Off Date Adjustment Statement for which a determination is to be made by the Accounting Firm, the Accounting Firm may only assign a value that is equal to the value for such item claimed by either Party. The Parties will use their Commercially Reasonable Efforts to have the Accounting Firm make its determination within five Business Days of being engaged (and in any event prior to Closing). The fees and expenses of the Accounting Firm shall be allocated between Parent, on the one hand, and Acquiror, on the other hand, based upon the percentage which the portion of the disputed items not awarded to each party bears to the amount actually contested by such party. The fees and disbursements of the Representatives of each Party incurred in connection with their preparation of the Cut-Off Date Adjustment Statement and preparation or review of any Acquiror Objection, as applicable, will be borne by such Party.

(d) The Cut-Off Date Adjustment Statement will become final and binding on the Parties upon the earliest of (i) if no Acquiror Objection has been given, the expiration of the period within which Acquiror must make its objection pursuant to Section 2.15(b) , (ii) the agreement in writing by Parent and Acquiror that the Cut-Off Date Adjustment Statement, together with any modifications thereto agreed by Parent and Acquiror, is final and binding, and (iii) the date on which the Accounting Firm issues its written determination with respect to any dispute relating to such Cut-Off Date Adjustment Statement pursuant to Section 2.15(c) .

(e) If, as finally determined pursuant to Section 2.15(d) , (i) there is a Working Capital Excess that is greater than 5.0% of the Working Capital Target (the “ Working Capital Band Amount ”), then the Recapitalization Amount will be increased by an amount equal to the Working Capital Excess, (ii) there is a Working Capital Deficit that is greater than the Working Capital Band Amount, then the Recapitalization Amount will be decreased by an amount equal to the Working Capital Deficit and (iii) there is a Working Capital Excess or a Working Capital Deficit that is equal to or less than the Working Capital Band Amount, then the Recapitalization Amount shall not be increased or decreased by this Section 2.15 .

(f) In furtherance of this Section 2.15 , upon the request of Acquiror, Parent will promptly provide to Acquiror and its accountants access during normal business hours to the books and records and any other information, and to any employees of Parent or any other member of the Parent Group, that Acquiror determines is reasonably necessary for Acquiror to review the Cut-Off Date Adjustment Statement.

III. REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby represents and warrants to Acquiror that, except as (i) set forth in the applicable section or subsection of the Parent Disclosure Letter (interpreted as contemplated by Section 10.13 ) or (ii) to the extent disclosed in, and reasonably apparent from, any report, schedule, form or other document filed with, or furnished to, the Commission by Parent or SplitCo and publicly available prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section relating to forward-looking statements and any other similar disclosures included therein to the extent that they are primarily cautionary in nature) and as provided in Section 3.20 Acquiror acknowledges:

3.01 Due Organization, Good Standing and Corporate Power . Each of Parent, SplitCo and the Galleria Entities is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation. Parent and its Subsidiaries have the requisite corporate power and authority to own, lease and operate their properties that will be contributed to SplitCo or the Galleria Entities and to carry on the Galleria Business as now being conducted and to enter into and perform its obligations under this Agreement or the Ancillary Agreements to which it is, or will be, a party and to consummate the transactions contemplated hereby and thereby. Parent and each of its Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by the Galleria Business that will be contributed to SplitCo or the Galleria Entities or the nature of the Galleria Business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing has not been and would not reasonably be expected to be, individually or in the aggregate, material to the Galleria Business.

3.02 Authorization of Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements by each of Parent and SplitCo, as applicable, and the consummation by each of them of the transactions contemplated hereby and thereby, have been duly authorized and approved by their respective boards of directors (and this Agreement has been adopted by Parent as the sole stockholder of SplitCo) and no other corporate or shareholder action on the part of Parent or SplitCo is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is, or will be at the Business Transfer Time, a party, or the consummation of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements, when executed, will be duly executed and delivered by each of Parent and SplitCo, as applicable, and each is (or when executed will be) a valid and binding obligation of each of Parent and SplitCo enforceable against each of Parent and SplitCo, as applicable, in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Law affecting the enforcement of creditors’ rights generally and by general equitable principles (such exception, the “ Enforceability Exception ”).

3.03 Consents and Approvals; No Violations . Assuming (a) the filings required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “ HSR Act ”), are made and the waiting periods thereunder (if applicable) have been terminated or expired and any Governmental Approvals required under any other Antitrust Law have been obtained or satisfied, (b) the Governmental Approvals required to Convey any Real Property or Governmental Permits to Acquiror have been made or obtained, (c) the applicable requirements of the Securities Act and the Exchange Act are met, (d) the requirements under any applicable state securities or blue sky Laws are met, (e) the requirements of the NYSE in respect of the listing of the shares of Acquiror New Common Stock to be issued hereunder are met and (f) the filing of the Certificate of Merger and other appropriate merger documents, if any, as required by the DGCL, and the filing of the Acquiror Certificate with the Secretary of State of the State of Delaware pursuant to Section 2.05 , are made, the execution and delivery of this Agreement and the Ancillary Agreements by Parent and SplitCo, the consummation by Parent and SplitCo of the transactions contemplated hereby and thereby do not and will not (i) violate or conflict with any provision of their respective certificates or articles of incorporation, bylaws or code of regulations (or the comparable governing documents), (ii) violate or conflict with any Law or Order of any Governmental Authority applicable to Parent or any of its Subsidiaries or by which any of their respective properties or assets that will be contributed to SplitCo or that are owned by the Galleria Entities as of the Business Transfer Time may be bound, (iii) require any Governmental Approval, or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under or give rise to any right of termination, cancellation or acceleration, or give rise to any obligation, right of termination, cancellation, acceleration or increase of any obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Galleria Material Contract, excluding in the case of clauses (ii) through (iv) above, (x) conflicts, violations, approvals, breaches, defaults, rights of terminations, cancellations, accelerations, increases or losses which would not reasonably be expected, individually or in the aggregate, to be material to the Galleria Business and (y) any Security Interests created in connection with the Galleria Credit Facility.

3.04 Capital Structure; SplitCo . (c) On the date of this Agreement, the authorized capital stock of SplitCo consisted solely of 1,000 shares of SplitCo Common Stock, of which 100 shares of SplitCo Common Stock were outstanding. On the date of this Agreement and immediately prior to the Distribution, all of the outstanding shares of SplitCo Common Stock are and will be owned directly by Parent free and clear of any Security Interest other than Permitted Encumbrances. Immediately following the Distribution, (i) there will be outstanding a number of shares of SplitCo Common Stock equal to the Galleria Stock Amount, (ii) no shares of SplitCo Common Stock will be held in SplitCo’s treasury and (iii) no bonds, debentures, notes or other indebtedness of SplitCo or any of its Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of SplitCo Common Stock or the holders of capital stock of any of SplitCo’s Subsidiaries may vote will be outstanding. All outstanding shares of SplitCo Common Stock are, and all such shares that may be issued prior to the Effective Time as contemplated by this Agreement will be when issued, duly authorized, validly issued, fully paid and nonassessable. As of the date of this Agreement, there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to SplitCo Common Stock or any capital stock equivalent or other nominal interest in SplitCo or any of its Subsidiaries which relate to SplitCo (collectively, “ Galleria Equity Interests ”) pursuant to which SplitCo or any of its Subsidiaries is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any Galleria Equity Interests. There are no outstanding obligations of SplitCo to repurchase, redeem or otherwise acquire any outstanding securities of Galleria Equity Interests.

(d) Immediately prior to commencing the Restructuring, SplitCo will have no Assets, other than the capital contribution with which such entity was incorporated, and no Liabilities, other than de minimis Liabilities arising under or in connection with its incorporation and Liabilities arising under or in connection with this Agreement or any other Ancillary Agreement to which SplitCo is or will be a party as contemplated hereby.

3.05 Intellectual Property . (c) Parent or a Subsidiary of Parent (including a Galleria Entity) is the sole owner of the Galleria IP Assets, free and clear of any Security Interests other than Permitted Encumbrances.

(d) Section 1.05(a)(vii) of the Parent Disclosure Letter sets forth a list of material Galleria IP Assets that constitute Registered Intellectual Property, including for each such item listed, as applicable, its (i) territory, (ii) application serial number and date, (iii) issue number and date, and (iv) title or mark. All registration, maintenance and renewal fees, issue fees and annuities due to any Governmental Authority in respect of such Galleria IP Assets as of the date hereof have been paid. None of such Galleria IP Assets is licensed to any third party or is subject to any material restrictions on its disclosure, ownership, license or transfer, except pursuant to a Galleria Material Contract listed in Section 3.08(a)(v) of the Parent Disclosure Letter.

(e) Except as would not, individually or in the aggregate, be material to the Galleria Business, to the Knowledge of Parent, the Galleria Business as currently conducted by Parent and its Subsidiaries does not, and, assuming the Consents set forth on Section 3.03 of the Parent Disclosure Letter are obtained, the Galleria Business immediately following the Closing will not, infringe, misappropriate or otherwise violate any enforceable Intellectual Property right of any third party. Except as would not, individually or in the aggregate, be material to the Galleria Business, during the past two years, no third party has made any written claim or demand or instituted any Action against Parent or any of its Subsidiaries, or to the Knowledge of Parent threatened the same in writing, and neither Parent nor any of its Subsidiaries has received any written notice of such a claim, demand or Action, that (i) challenges the rights of Parent and its Subsidiaries in respect of any of the Intellectual Property used in the Galleria Business or (ii) asserts that the operation of the Galleria Business is or was infringing, misappropriating or otherwise violating the Intellectual Property rights of any third party. None of the Intellectual Property used in the Galleria Business is subject to any outstanding Order applicable to the Galleria Business that materially limits the use of such Intellectual Property in the Galleria Business as currently conducted by Parent and its Subsidiaries. To the Knowledge of Parent, no Person is engaging in any activity that materially infringes, misappropriates or otherwise violates any of the Galleria IP Assets.

(f) Notwithstanding whether any other representations or warranties in this Article III could be read to apply to matters involving Intellectual Property, the representations and warranties set forth in Section 3.02 , Section 3.03 , Section 3.05 , 3.08(a) (and Sections 3.08(b) , 3.08(c) and 3.08(d) as applicable thereto), Section 3.10 , Section 3.11 , Section 3.12 , Section 3.14(a) (and 3.14(c) as applicable thereto), Section 3.15 , Section 3.18 and Section 3.19 constitute the sole and exclusive representations and warranties under this Article III with respect to Intellectual Property.

3.06 Litigation . There are no Actions in respect of which Parent has been duly served with a complaint or otherwise given written notice (or to the Knowledge of Parent, oral notice) that are pending against Parent or any of its Subsidiaries, or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries (or any of their respective properties, rights or franchises), at Law or in equity, or before or by any Governmental Authority, that have been or would reasonably be expected to be, individually or in the aggregate, material to the Galleria Business. Neither Parent nor any of its Subsidiaries is subject to any Order applicable to any Galleria Entity or the Galleria Business, other than any Order generally applicable to the businesses in which the Galleria Business operates, that would reasonably be expected to affect, in any material respect, individually or in the aggregate, the Galleria Business.

3.07 Compliance With Laws . (c) Except as has not been and would not reasonably be expected to be material to the Galleria Business, the Galleria Business is being conducted in compliance with applicable Laws. None of the Governmental Approvals required for the continued conduct of the Galleria Business as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated hereby or by the Ancillary Agreements, except as has not been and would not reasonably be expected to be material to the Galleria Business.

(d) Notwithstanding the foregoing, the representations and warranties set forth in this Section 3.07 do not apply to Intellectual Property, employees and employee benefits, Taxes or environmental matters, which are addressed in Sections 3.05 , 3.09 , 3.11 (except as set forth therein) and 3.17 , respectively.

3.08 Contracts . (a) Section 3.08(a) of the Parent Disclosure Letter contains a list of each Galleria Contract that is in effect as of the date of this Agreement and that falls in one or more of the following categories (collectively, whether or not scheduled, the “ Galleria Material Contracts ”):

(ii) a Contract containing covenants binding upon Parent or its Subsidiaries that restrict during any period of time the ability of Parent or any of its Subsidiaries to compete or engage in any business or geographic area and that would bind SplitCo or any of its Affiliates (including the Galleria Entities) following the Business Transfer Time;

(iii) a Contract containing any “most favored nations,” exclusivity or similar right or undertaking in favor of any party other than Parent and its Subsidiaries with respect to any material goods or services purchased or sold by Parent or its Subsidiaries and that would bind SplitCo or any of its Affiliates (including the Galleria Entities) following the Business Transfer Time;

(iv) a lease, sublease or similar Contract with any Person under which Parent or any of its Subsidiaries is a lessor or sublessor of, or makes available for use to any Person, any Galleria Facilities;

(v) a lease, sublease or similar Contract with any Person under which (A) Parent or any of its Subsidiaries is lessee of, or holds or uses, any material machinery, equipment, vehicle or other tangible personal property owned by any Person or (B) Parent or any of its Subsidiaries is a lessor or sublessor of, or makes available for use by any Person, any material tangible personal property owned or leased by Parent or its Subsidiaries, in any such case which has an aggregate future liability or receivable, as the case may be, in excess of $10,000,000 in any calendar year and is not terminable by Parent or such Subsidiary by notice of not more than 60 days for a cost, individually or together with any similar Contract, of less than $10,000,000;

(vi) a license or sublicense or other Contract under which Parent or any of its Subsidiaries is licensee or licensor, or sub-licensee or sub-licensor of, or otherwise grants or is granted a right to use any material Intellectual Property used or held for use in the Galleria Business other than licenses to any shrink wrap, click wrap or other software that is generally commercially available and not customized;

(vii) a Contract for the sale of any Galleria Entity or material Galleria Asset or collection of Galleria Assets that are material to the Galleria Business in the aggregate, other than Contracts entered into in the Ordinary Course of the Galleria Business that provide for the sale of Galleria Inventory (including any finished goods or work-in-process) or obsolete equipment;

(viii) a Contract relating primarily to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, relating exclusively to the Non-Color Caldera Business) involving the payment of more than $10,000,000 for the purchase of materials, supplies, goods, services, equipment or other assets and that is (A) with any vendor from whom Parent or any of its Subsidiaries purchased more than $10,000,000, in the aggregate in respect of the Galleria Business, in the fiscal year ended June 30, 2014, or would reasonably be expected to provide for the purchase of more than $10,000,000 in the aggregate in respect of the Galleria Business, in the fiscal year ended June 30, 2015 or any future 12-month period ended June 30 and (B) not terminable at will by Parent or any of its Subsidiaries (or by the Galleria Group following the Business Transfer Time) on less than 60 days’ notice without penalty;

(ix) a Contract with a customer of the Galleria Business that involves, or would reasonably be expected to involve, (A) the payment of more than $10,000,000 by such customer to the Galleria Business in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 (other than purchase orders submitted in the Ordinary Course of the Galleria Business) or (B) the payment of more than $10,000,000 to such customer by the Galleria Business in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 pursuant to a “joint business plan” or other similar incentive arrangement;

(x) a Contract relating to any Indebtedness to a third party that individually is in excess of $5,000,000;

(xi) a Contract under which (A) any Person has directly or indirectly guaranteed or assumed Indebtedness, liabilities or obligations of a Galleria Entity or of the Galleria Business or (B) a Galleria Entity or the Galleria Business has directly or indirectly guaranteed or assumed Indebtedness, Liabilities or obligations of another Person, in each case in excess of $5,000,000 individually or $10,000,000 in the aggregate;

(xii) a material settlement or compromise of any suit, claim, proceeding or dispute relating to the Galleria Business or any Galleria Entity that would materially and adversely impact the Galleria Business at or following the Business Transfer Time;

(xiii) a Contract establishing or providing for any material partnership, strategic alliance, joint venture or material collaboration; and

(xiv) any other Contract not made in the Ordinary Course of the Galleria Business that is material to the Galleria Business.

(b) Section 3.08(b) of the Parent Disclosure Letter contains a list of each Shared Business Contract that is in effect as of the date of this Agreement.

(c) Each Galleria Material Contract is valid, binding and in full force and effect and is enforceable by and against Parent or one of its Subsidiaries in accordance with its terms, except as has not been and would not reasonably be expected to be material to the Galleria Business. Each of Parent and its Subsidiaries has performed all obligations required to be performed by it to date under the Galleria Material Contracts to which it is a party and is not in breach of or default thereunder and, to the Knowledge of Parent, no other party to any Galleria Material Contract is in breach of or default thereunder, in each case in any respect that would reasonably be expected to be, individually or in the aggregate, material to the Galleria Business.

(d) Subject to Section 5.23 , Parent has made available to Acquiror a true and correct copy of each Galleria Material Contract (or, if such Contract is not in written form, a true and correct summary of the material terms thereof).

3.09 Employees and Employee Benefits . (a) Section 6.01 of the Parent Disclosure Letter sets forth, as of the relevant date of presentation, a true and complete list of each In-Scope Employee’s unique identification number that has been randomly assigned, function, base salary or hourly wage rate, most recent annual equity compensation award, cash bonus target, employer, home country, host country, employment site, age, credited service date, employment status and whether such employee is a Choice Employee, an Expatriate Employee or a Localized Employee.

(b) Since June 30, 2012, (i) there has not been any labor strike, work stoppage or lockout with respect to the Galleria Business, (ii) no member of the Parent Group has received written notice of any pending or threatened unfair labor practice charges against the Galleria Business that are pending before the National Labor Relations Board or any other state, local or foreign Governmental Authority, and (iii) no member of the Parent Group has received written notice of any pending or threatened suits, actions or other proceedings in connection with the Galleria Business brought by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing before any Governmental Authority responsible for the enforcement of employment practices Laws, except, in the case of each of clauses (i), (ii) and (iii) above, for any such matters that have not been and would not reasonably be expected to be, individually or in the aggregate, material to the Galleria Business.

(c) (i) The Galleria Group is neither party to, nor bound by, any labor agreement, collective bargaining agreement, or any other material labor-related agreements or arrangements with any labor union, labor organization, works council, or employee representative group; (ii) there are no labor agreements, collective bargaining agreements or any other material labor-related agreements or arrangements that pertain to any In-Scope Employees; and (iii) no In-Scope Employees are represented by any labor organization with respect to their employment with the Parent Group.

(d) To Parent’s Knowledge, with respect to the In-Scope Employees, (i) no labor union, labor organization, works council, or other employee representative group has made a pending demand for recognition or certification, and (ii) there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. The Parent Group has no Knowledge of any labor union organizing activities with respect to any In-Scope Employees.

(e) As of the date of this Agreement, Parent has no actual Knowledge (without the obligation to conduct due inquiry) of any In-Scope Employee or Choice Employee being in material violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other obligation to a former employer of any such employee relating (i) to the right of any such employee to be employed by the Parent Group or (ii) to the knowledge or use of trade secrets or proprietary information.

(f) As of the date of this Agreement, Parent has no actual Knowledge (without the obligation to conduct due inquiry) that any In-Scope Employee or Choice Employee with a seniority level of “Band 4” or higher (as such employment bands are commonly referred to within Parent’s organization as of the date of this Agreement) intends to terminate his or her employment.

(g) No Compensation and Benefit Plan, other than the Galleria Business Acquired Plans or the Galleria Group Plans, is sponsored or maintained by any member of the Galleria Group, except as would not give rise to a Galleria Liability.

(h) (i) No Liability under Title IV of ERISA has been incurred by Parent or any of its ERISA Affiliates which has not been satisfied in full, other than Pension Benefit Guaranty Corporation (“ PBGC ”) premiums that are not past due, and (ii) no event has occurred and no circumstance exists that could result in Parent or its ERISA Affiliates incurring a Liability under Title IV of ERISA that would result in any material Liability to Acquiror or, after the Closing, to the Galleria Group.

(i) With respect to each Galleria Business Acquired Plan, (i) all statutory contributions due from Parent or any of its Subsidiaries have been made and all amounts and Liabilities have been properly accrued and (ii) there are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge of Parent, threatened with respect to such Galleria Business Acquired Plan, except, in the case of each of clauses (i)-(ii) above, as would not result in a material Liability to Acquiror.

(j) Parent has made available to Acquiror copies or summaries of the material terms of all of the material Compensation and Benefit Plans (including any material amendments thereto).

(k) Each Compensation and Benefit Plan has been maintained, operated and administered in all respects in accordance with its terms and in compliance in all respects with all applicable Laws except, in each case, as would not result in material Liability to Acquiror.

(l) The attachments to Section 6.04(c) of the Parent Disclosure Letter set forth the severance plans, policies and practices of Parent or its Subsidiaries applicable to the Galleria Business as in effect on the date of this Agreement. The severance plans, policies and practices of Parent or its Subsidiaries applicable to the Galleria Business have not been amended or implemented during the 12 months immediately preceding the date of this Agreement for purposes of the transactions contemplated by this Agreement.

(m) Neither the execution nor delivery of this Agreement nor the consummation of the contemplated transactions under this Agreement will, whether alone or in combination with any other event, (i) result in the accelerated vesting or payment of, or any increase in, any compensation to any In-Scope Employee or (ii) result in the entitlement of any In-Scope Employee or, to the Knowledge of Parent, independent contractor or consultant of the Galleria Business, in either case, to any material severance or termination pay or benefits other than as set forth in the attachments to Section 6.04(c) of the Parent Disclosure Letter.

3.10 Financial Statements; Absence of Changes; Undisclosed Liabilities . (e) Attached as Section 3.10(a) of the Parent Disclosure Letter are copies of (i) the combined audited financial statements of the Mercury Business, including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Mercury Business for the fiscal years ended June 30, 2014 and June 30, 2013, together with all related footnotes and schedules thereto (collectively, the “ Audited Mercury Financial Statements ”) and (ii) the unaudited selected balance sheet line items of the Mercury Business as of March 31, 2015 and the unaudited management profit and loss statement of the Mercury Business for the nine-month period then ended (collectively, the “ Unaudited Mercury Financial Statements ” and together with the Audited Mercury Financial Statements, the “ Mercury Financial Statements ”). Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, the Mercury Financial Statements (i) will reflect the Mercury Business without giving effect to Section 1.09 and (ii) will include the following brands that are not Mercury Brands: Laura Biagiotti, Rochas, Naomi Campbell and Puma.

(f) Attached as Section 3.10(b) of the Parent Disclosure Letter are copies of (i) the combined audited financial statements of the Kosmos Business, including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Kosmos Business for the fiscal years ended June 30, 2014 and June 30, 2013, together with all related footnotes and schedules thereto (collectively, the “ Audited Kosmos Financial Statements ”) and (ii) the unaudited selected balance sheet line items of the Kosmos Business as of March 31, 2015 and the unaudited management profit and loss statement of the Kosmos Business for the nine-month period then ended (collectively, the “ Unaudited Kosmos Financial Statements ”).

(g) Attached as Section 3.10(c) of the Parent Disclosure Letter are copies of (i) the combined audited financial statements of the Salon Professional Business, including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Salon Professional Business for the fiscal years ended June 30, 2014 and June 30, 2013, together with all related footnotes and schedules thereto (collectively, the “ Audited Salon Professional Financial Statements ”) and (ii) the unaudited selected balance sheet line items of the Salon Professional Business as of March 31, 2015 and the unaudited management profit and loss statement of the Salon Professional Business for the nine-month period then ended (collectively, the “ Unaudited Salon Professional Financial Statements ”).

(h) Attached as Section 3.10(d) of the Parent Disclosure Letter are copies of (i) the combined unaudited financial statements of the Retail Color Business, including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Retail Color Business for the fiscal years ended June 30, 2014 and June 30, 2013, together with all related footnotes and schedules thereto (together with the Audited Mercury Financial Statements, the Audited Kosmos Financial Statements and the Audited Salon Professional Financial Statements, the “ Full Year Financial Statements ”) and (ii) the unaudited selected balance sheet line items of the Retail Color Business as of March 31, 2015 and the unaudited management profit and loss statement of the Retail Color Business for the nine-month period then ended (together with the Unaudited Mercury Financial Statements, the Unaudited Kosmos Financial Statements, the Unaudited Salon Professional Financial Statements, the “ Partial Year Financial Statements ” and, collectively with the Full Year Financial Statements, the “ Financial Statements ”).

(i) The Financial Statements were derived from the books and records of Parent and its Subsidiaries and were prepared in accordance with GAAP, consistently applied, as at the dates and for the periods presented (except, in the case of the Partial Year Financial Statements, for the absence of footnote disclosures and normal and recurring adjustments), and the Full Year Financial Statements and, with respect to the items presented therein, the Partial Year Financial Statements present fairly in all material respects the financial position and results of operations of the Galleria Business (excluding the Retail Styling Business) as at the dates and for the periods presented on the basis by which the Financial Statements were prepared (subject, in the case of the Partial Year Financial Statements, to normal and recurring adjustments).

(j) Attached as Section 3.10(f) of the Parent Disclosure Letter are copies of (i) the unaudited management profit and loss statement for the Retail Styling Business for the fiscal years ended June 30, 2014 and June 30, 2013 and (ii) the unaudited management profit and loss statement for the Retail Styling Business for the nine-month period ended March 31, 2015 (the financial information referred to in clauses (i) and (ii) collectively, the “ Retail Styling Unaudited Financial Information ”). The Retail Styling Unaudited Financial Information was derived from the books and records of Parent and its Subsidiaries and was prepared in good faith with the same level of skill and care as that utilized in the standard procedures of the Retail Styling Business and of Parent and its Subsidiaries and, with respect to the items presented therein, the Retail Styling Unaudited Financial Information presents fairly in all material respects the line items presented therein, subject to the limitations and qualifications set forth therein.

(k) Since March 31, 2015, there has not occurred any event, occurrence or condition which has had or would reasonably be expected to have, individually or in the aggregate, a Galleria Business MAE.

(l) Except for such matters as would not be reasonably expected to have a Galleria Business MAE, since March 31, 2015, the Galleria Business has been conducted in the Ordinary Course of the Galleria Business.

(m) There are no Liabilities of the Galleria Business or any member of the Galleria Group other than any such Liabilities (i) that would not be required to be reflected in financial statements (or the notes thereto) of the Galleria Business that were prepared in accordance with GAAP, (ii) that are specifically reserved against on the Financial Statements or reflected in the notes thereto, (iii) that have been incurred since March 31, 2015 in the Ordinary Course of the Galleria Business, (iv) that are Excluded Liabilities or (v) that are Liabilities that relate to the Retail Styling Business.

(n) Since March 31, 2015, Parent and each of its Subsidiaries has not taken or failed to take any action that, had such action been taken or failed to have been taken after the date hereof, would have required Acquiror’s consent under Section 5.01(b)(ii)(B) of this Agreement.

3.11 Taxes . Except as would not reasonably be expected to have a Galleria Business MAE, (a) no Security Interests for Taxes exist (other than Permitted Encumbrances), and no outstanding claims for Taxes have been asserted in writing, with respect to the Galleria Business, the Galleria Assets or the Galleria Liabilities, (b) Parent and its Subsidiaries have paid all Taxes required to be paid by them with respect to the Galleria Business, the Galleria Assets and the Galleria Liabilities, (c) neither SplitCo nor any of its Subsidiaries has distributed stock of another Person or had its stock distributed by another Person in a transaction (other than the Distribution or a transaction effected in connection therewith) that was intended to be governed in whole or in part by Section 355 of the Code in the two years prior to the date of this Agreement, and (d) neither Parent nor SplitCo has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that has prevented, or would reasonably be expected to prevent, the Intended Tax-Free Treatment. Except for the representations and warranties in Section 3.09 and Section 3.10 , the representations and warranties contained in this Section 3.11 constitute the sole and exclusive representations and warranties of Parent relating to Taxes.

3.12 Broker’s or Finder’s Fee . Neither Parent nor any of its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder or other similar agent with respect to the transactions contemplated by this Agreement for which SplitCo or Acquiror or any of its Affiliates (including the Galleria Entities) could become liable or obligated.

3.13 Title to Properties; Security Interests . Except as would not, individually or in the aggregate, be material to the Galleria Business, Parent and its Subsidiaries have good and valid title to, or, if applicable, valid leasehold interests in, or valid license or right to use, all Galleria Assets (other than the Owned Real Property, the title of which is the subject of Section 3.16(c) ), in each case as such property is currently being used, subject to no Security Interests other than Permitted Encumbrances.

3.14 Sufficiency; Condition of Assets . (g) Except as set forth in Section 3.14 of the Parent Disclosure Letter, the Galleria Assets, including any Assets acquired after the date hereof and prior to the Closing for primary use by the Galleria Business (or, in the case of the Non-Color Caldera Business, for exclusive use in the Non-Color Caldera Business) in connection with the Restructuring and the implementation of the Transition Plan, together with the Assets for which access thereto is otherwise provided in this Agreement or in the Ancillary Agreements, including in Section 1.08 , Section 5.23 , Section 5.24 and Section 5.25 of this Agreement, are sufficient to conduct each of the Adjusted Galleria Business (taken as a whole), the Mercury Business (excluding the Retained Businesses), the Kosmos Business, the Salon Professional Business, the Retail Color Business and the Retail Styling Business, in each case immediately after the Business Transfer Time, in substantially the same manner as which each such business is being conducted on the date hereof, including the sourcing, manufacturing, distributing and developing of the products of each such business in all material respects as such products are currently being sourced, manufactured, distributed and developed by each such business, as applicable, in substantially the same quantities and to such specifications currently manufactured by each such business, as applicable, in all material respects , by Parent and its Subsidiaries in all material respects (it being understood, however, that as a result of the Restructuring or the implementation of the Transition Plan, (A) the Galleria Assets may differ in some respects from the Assets utilized to conduct the Galleria Business prior to the Closing and (B) the method in which the Galleria Assets are utilized to conduct the Galleria Business immediately following the Closing may be different than prior to the Closing). Notwithstanding the foregoing, for purposes of determining the accuracy of this representation, the impacts of any restructuring decisions made pursuant to the Transition Plan or otherwise made with the consent of the Acquiror, including any Acquiror consent to the alteration or elimination of certain activities of the Galleria Business and the extent to which any Assets are not made available to SplitCo after the Restructuring as a result of decisions or actions to which Acquiror consented prior to Closing, will not be considered.

(h) The tangible Galleria Assets are in good condition in all material respects, reasonable wear and tear excepted, except as would not materially adversely affect the continued production of the products of the Galleria Business in the quality and quantity as such products are being manufactured and sold by the Galleria Business as of the date of this Agreement in all material respects. The plants, buildings and structures included in the Galleria Assets are structurally sound in all material respects, have access to public roads or valid easements for such ingress and egress and have access to water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other similar systems, in each case as necessary to permit the use of such plants, buildings and structures in the conduct of the Galleria Business in all material respects as currently conducted.

(i) Notwithstanding anything to the contrary, the representations and warranties set forth in this Section 3.14 will not be deemed to be a representation or warranty that any of such activities can or will be conducted without infringement, other violation or use of the Intellectual Property of any Third Party, and the Parties hereby acknowledge that, to the extent any such representation or warranty is made, it is exclusively in Section 3.05(c) .

3.15 Information To Be Supplied . The information supplied or to be supplied by Parent for inclusion in the Acquiror Filings to be filed with the Commission will not, on the date of its filing or, in the case of the Acquiror Form S-4 or the SplitCo Form 10/S-4, at the time it becomes effective under the Securities Act or Exchange Act, as applicable, or on the date the Information Statement is mailed to the Acquiror Stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

3.16 Real Property . (a) Section 3.16(a) of the Parent Disclosure Letter sets forth a list of (i) all material real property and interests in material real property owned in fee by Parent or any of its Subsidiaries that is primarily used in connection with the Galleria Business (or, in the case of the Non-Color Caldera Business, exclusively used in connection with the Non-Color Caldera Business) (the “ Owned Real Property ”) as of the date hereof, (ii) any material real property leases, subleases, licenses or occupancy agreements to which the Parent or any of its Subsidiaries is a party, whether as a lessor or a lessee that is primarily used in the Galleria Business (or, in the case of the Non-Color Caldera Business, exclusively used in connection with the Non-Color Caldera Business) (the “ Real Property Leases ,” and such real property, the “ Leased Real Property ”) as of the date hereof, and (iii) any other real property that is owned in fee or leased, subleased, licensed or otherwise used by Parent or any of its Subsidiaries and utilized by Parent or any of its Subsidiaries to manufacture, distribute or sell the products of the Galleria Business that is material to, but is not primarily used in, the Galleria Business (or, in the case of the Non-Color Caldera Business, exclusively used in connection with the Non-Color Caldera Business) (“ Other Operational Real Property ”) as of the date hereof.

(b) True, complete (in all material respects) and correct copies of all Real Property Leases have been made available to Acquiror prior to the date of this Agreement. Each Real Property Lease is unmodified except as set forth in any amendments delivered to Acquiror, true, complete and correct copies of which have been made available to Acquiror prior to the date of this Agreement, in the case of such amendments in existence as of such date, and promptly following entry into any other amendments and in no event later than five Business Days prior to the Closing Date, in the case of such amendments entered into after the date of this Agreement, and there are no understandings, oral or written, between the parties to any Real Property Lease which in any manner vary the obligations or rights of any party thereunder. Each Real Property Lease is a legal, valid and binding agreement and is in full force and effect and enforceable by Parent or such Subsidiary in accordance with its terms. Except as has not been and would not reasonably be expected to be material to the Galleria Business, (i) each of Parent and its Subsidiaries has performed all obligations required to be performed by it to date under the Real Property Leases to which it is a party and there are no disputes with respect to any Real Property Lease, (ii) neither Parent nor any of its Subsidiaries is in breach or default under any of the Real Property Leases nor, to the Knowledge of Parent, is any other party in breach or default under any such Real Property Lease and (iii) no event has occurred or failed to occur which, with the delivery of notice, the passage of time or both, would constitute such a breach or default of such Real Property Lease.

(c) Except as would not, individually or in the aggregate, be material to the Galleria Business, Parent or a Subsidiary of Parent has good, valid and marketable fee simple title to all Owned Real Property and such good, valid and marketable fee simple title is not subject to any Security Interests other than Permitted Encumbrances.

(d) No parcel of Owned Real Property or, to the Knowledge of Parent, no parcel of Leased Real Property is subject to any Order to be sold or being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor nor, to the Knowledge of Parent, has any condemnation, expropriation or taking been proposed, except as would not be material to the Galleria Business.

(e) As of the date hereof, neither Parent nor any of its Subsidiaries has received any written notice from any landlord under any of the Real Property Leases indicating that it will not be exercising any renewal options under the Real Property Leases.

3.17 Environmental Matters . (a) Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Galleria Business:

(i) insofar as it relates to the Galleria Business (including the Owned Real Property, Leased Real Property and Other Operational Real Property (collectively, the “ Real Property ”)), Parent and each of its Subsidiaries, are in compliance with all Environmental Laws (which compliance includes the possession by Parent and each of its Subsidiaries of all Governmental Approvals required pursuant to Environmental Law and compliance with the terms and conditions thereof);

(ii) there is no material Environmental Claim (with which Parent has been given written notice or of which Parent otherwise has Knowledge) pending or, to the Knowledge of Parent, threatened against Parent, any of its Subsidiaries or, to the Knowledge of Parent, against any Person whose liability for such Environmental Claims Parent or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law;

(iii) neither Parent nor any of its Subsidiaries has entered into or is subject to any outstanding Order under any Environmental Law regarding either the Galleria Business or any Real Property insofar as it relates to the Galleria Business; and

(iv) neither Parent nor any of its Subsidiaries has Released any Hazardous Materials at or from any Real Property in a manner that requires remediation under any Environmental Law.

(b) The representations and warranties contained in this Section 3.17 and in Sections 3.03 and 3.10 constitute the sole and exclusive representations and warranties of Parent relating to compliance with or Liability under any Environmental Law or Releases of Hazardous Materials.

3.18 Mercury Business Perfume Oils . (a) Section 3.18(a) of the Parent Disclosure Letter sets forth (i) a complete and accurate list of the externally developed perfume oils that are used in the Mercury Fragrance Products as of the date hereof (the “ Exclusive Third-Party Perfume Oils ”) and (ii) for each Exclusive Third-Party Perfume Oil (A) the name of the perfume oil supplier (each, an “ Existing Perfume Oil Supplier ” and, collectively, the “ Existing Perfume Oil Suppliers ”) used by Parent or any of Parent’s Affiliates as of the date hereof and (B) the name of the Mercury Fragrance Products in which such Exclusive Third-Party Perfume Oil is used as of the date hereof. The Exclusive Third-Party Perfume Oils are exclusively used in the Mercury Business and no other perfume oils (other than Exclusive Parent Perfume Oils) are used in the Mercury Fragrance Products as of the date hereof.

(b) Section 3.18(b) of the Parent Disclosure Letter sets forth a complete and accurate list of (i) Parent’s internally developed perfume oils that are used in the Mercury Fragrance Products as of the date hereof (the “ Exclusive Parent Perfume Oils ” and, together with the Exclusive Third-Party Perfume Oils, the “ Perfume Oils ”) and (ii) the name of the Mercury Fragrance Products in which such Exclusive Parent Perfume Oil is used as of the date hereof. The Exclusive Parent Perfume Oils are exclusively used in the Mercury Business and no other perfume oils (other than Exclusive Third-Party Perfume Oils) are used in the Mercury Fragrance Products as of the date hereof.

3.19 Ancillary Fragrances . (a) Sections 3.19(a)(i) and 3.19(a)(ii) of the Parent Disclosure Letter set forth (i) a complete and accurate list of the externally developed fragrances that are currently used in the Non-Mercury Products and Non-Hydroalcoholic Products as of the date hereof (the “ Third-Party Ancillary Fragrances ”) and (ii) for each Third-Party Ancillary Fragrance, the name of the fragrance supplier (each, an “ Existing Ancillary Fragrance Supplier ” and, collectively, the “ Existing Ancillary Fragrance Suppliers ”) used by Parent or any of Parent’s Affiliates as of the date hereof. The Third-Party Ancillary Fragrances set forth on Section 3.19(a)(i) of the Parent Disclosure Letter are the “ Exclusive Third-Party Ancillary Fragrances .” The Third-Party Ancillary Fragrances set forth on Section 3.19(a)(ii) of the Parent Disclosure Letter are the “ Non-Exclusive Third-Party Ancillary Fragrances .”

(b) Sections 3.19(b)(i) and Section 3.19(b)(ii) of the Parent Disclosure Letter set forth a complete and accurate list of Parent’s internally developed fragrances that are used in the Non-Mercury Products and the Non-Hydroalcoholic Products as of the date hereof (the “ Parent Ancillary Fragrances ” and, together with the Third-Party Ancillary Fragrances, the “ Non-Hydroalcoholic Fragrances ”). The Parent Ancillary Fragrances set forth on Section 3.19(b)(i) of the Parent Disclosure Letter are the “ Exclusive Parent Ancillary Fragrances .” The Parent Ancillary Fragrances set forth on Section 3.19(b)(ii) of the Parent Disclosure Letter are the “ Non-Exclusive Parent Ancillary Fragrances .”

3.20 No Other Representations or Warranties; Disclaimer; Acknowledgement by Acquiror . Except for the representations and warranties of Parent expressly set forth in this Article III and the Ancillary Agreements, neither Parent nor any other Person makes any other express or implied representation or warranty on behalf of Parent or any of its Subsidiaries (including SplitCo) with respect to SplitCo, its Subsidiaries, the Galleria Assets, the Galleria Business or the transactions contemplated by this Agreement and the Ancillary Agreements or the accuracy or completeness of the information concerning the Galleria Business provided by Parent or any of its Subsidiaries. The representations and warranties made in this Agreement and the Ancillary Agreements with respect to SplitCo, its Subsidiaries, the Galleria Assets, the Galleria Business and the transactions contemplated by this Agreement and the Ancillary Agreements are in lieu of all other representations and warranties of Parent and its Subsidiaries might have given Acquiror, including implied warranties of merchantability and implied warranties of fitness for a particular purpose. Acquiror, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including after the Closing, SplitCo), acknowledges that all other warranties that Parent and its Subsidiaries gave or might have given, or which might be provided or implied by applicable Law or commercial practice, with respect to SplitCo, its Subsidiaries, the Galleria Assets, the Galleria Business, are hereby expressly excluded. Acquiror, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including after the Closing, SplitCo), acknowledges that, except as provided herein, neither Parent nor any of its Subsidiaries nor any other Person acting on their behalf will have or be subject to any Liability or indemnification obligation to Acquiror or any other Person acting on its behalf resulting from the distribution in written or oral communication to Acquiror, or use by Acquiror of, any information, documents, projections, forecasts or other material made available to Acquiror, confidential information memoranda or management interviews and presentations in expectation of the transactions contemplated by this Agreement and the Ancillary Agreements. For the avoidance of doubt, this Section 3.20 will not have any effect on any representation or warranty made by Parent or any member of the Parent Group in this Agreement or any Ancillary Agreement.

IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR

Acquiror hereby represents and warrants to Parent that, except as (i) set forth in the applicable section or subsection of the Acquiror Disclosure Letter (interpreted as contemplated by Section 10.13 ) or (ii) to the extent disclosed in, and reasonably apparent from, any report, schedule, form or other document filed with, or furnished to, the Commission by Acquiror and publicly available prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section relating to forward-looking statements and any other similar disclosures included therein to the extent that they are primarily cautionary in nature) and as provided in Section 4.19 Parent acknowledges:

4.01 Due Organization, Good Standing and Corporate Power . Acquiror and each of its Subsidiaries is a corporation or limited liability company or the equivalent thereof duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, and has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as now being conducted, and to enter into and perform its obligations under this Agreement or the Ancillary Agreements to which it is, or will be, a party and to consummate the transactions contemplated hereby and thereby. Acquiror and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing has not been or would not reasonably be expected to be, individually or in the aggregate, material to the Acquiror’s business.

4.02 Authorization of Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements by Acquiror, and the consummation by Acquiror of the transactions contemplated hereby and thereby, have been duly authorized and approved by its board of directors (and this Agreement has been adopted by Acquiror as the sole stockholder of Merger Sub), and no other corporate or stockholder action on the part of Acquiror or any member of the Acquiror Group is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby. This Agreement has been, and the Ancillary Agreements, when executed, will be, duly executed and delivered by Acquiror and, to the extent it is a party thereto, each is (or when executed will be) a valid and binding obligation of Acquiror and Merger Sub enforceable against Acquiror and Merger Sub in accordance with its terms, subject to the Enforceability Exception.

4.03 Consents and Approvals; No Violations . Assuming that (a) the filings required under the HSR Act are made and all applicable waiting periods thereunder have been terminated or expired and any Governmental Approvals required under any other Antitrust Law have been obtained or satisfied, (b) the applicable requirements of the Securities Act and the Exchange Act are met, (c) the requirements under any applicable state securities or blue sky Laws are met, (d) the requirements of the NYSE in respect of the listing of the shares of Acquiror New Common Stock to be issued hereunder are met, (e) the filing of the Certificate of Merger and other appropriate merger documents, if any, as required by the DGCL, and the filing of the Acquiror Certificate with the Secretary of State of the State of Delaware pursuant to Section 2.05 are made and (f) the Acquiror Stockholder Approval is obtained, the execution and delivery of this Agreement and the Ancillary Agreements by Acquiror and Merger Sub and the consummation by Acquiror and Merger Sub of the transactions contemplated hereby and thereby do not and will not (i) violate or conflict with any provision of the certificate of incorporation or bylaws (or the comparable governing documents) of Acquiror or any member of the Acquiror Group, (ii) violate or conflict with any Law or Order of any Governmental Authority applicable to Acquiror or any member of the Acquiror Group or by which any of its or their properties or assets may be bound, (iii) require any Governmental Approval, or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under or give rise to any right of termination, cancellation or acceleration under or give rise to any obligation, right of termination, cancellation, acceleration or increase of any obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Contract to which any member of the Acquiror Group is a party, excluding in the case of clauses (ii) through (iv) above, conflicts, violations, approvals, breaches, defaults, rights of terminations, cancellations, accelerations, increases or losses which would not reasonably be expected, individually or in the aggregate, to be material to the Acquiror’s business.

4.04 Broker’s or Finder’s Fee . Neither Acquiror nor any of its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder or other similar agent with respect to the transactions contemplated by this Agreement or the Ancillary Agreements for which Parent or any of its Subsidiaries could become liable or obligated.

4.05 Capitalization . (g) The authorized capital stock of Acquiror consists of 1,187,754,370 shares of all classes of stock, of which 800,000,000 shares are designated as Class A Common Stock, 367,754,370 are designated as Class B Common Stock and 20,000,000 shares are designated as preferred stock, par value $0.01 per share (“ Acquiror Preferred Stock ”), each as of the date hereof, and, assuming receipt of the Acquiror Stockholder Approval and the filing of the amendment to the Amended and Restated Certificate of Acquiror with the Secretary of State of the State of Delaware, as of the Closing Date, the authorized shares of Class A Common Stock will increase to 1,000,000,000 . As of the close of business on June 30, 2015, there were 360,862,168 shares of Acquiror Common Stock issued and outstanding, of which 98,799,798 shares were designated as Class A Common Stock and 262,062,370 shares were designated as Class B Common Stock, there were 1,889,187 shares of Acquiror Preferred Stock (designated as Series A Preferred Stock, the “ Series A Preferred Stock ”) issued and outstanding, and 14,027,924 shares of Class A Common Stock were reserved for issuance upon the exercise of outstanding options (the “ Acquiror Options ”) for Acquiror Common Stock and, between such date and the date hereof, Acquiror has not issued shares of Acquiror Common Stock other than pursuant to the exercise of such options to purchase shares of Acquiror Common Stock. All issued and outstanding shares of Acquiror Common Stock have been duly authorized and validly issued and are fully paid and nonassessable.

(h) As of the date of this Agreement, there is no outstanding Acquiror Capital Stock other than those shares of Acquiror Capital Stock referenced in the second sentence of Section 4.05(a) , 4,295,566 restricted stock units granted pursuant to the Acquiror Compensation and Benefit Plans and 49,432 phantom units granted pursuant to the Non-Plan Phantom Unit Award agreements (“ Phantom Units ”). As of the date on which the Galleria Stock Amount is calculated through the Closing Date, there will be no outstanding Acquiror Capital Stock other than Class A Common Stock (including restricted stock units convertible into Class A Common Stock, Acquiror Options and Phantom Units), the shares of Class B Common Stock that will be converted into Class A Common Stock prior to the Closing as contemplated by the JAB Letter Agreement and the Series A Preferred Stock.

(i) As of the date of this Agreement, and except for the Acquiror Options, there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise pursuant to which Acquiror or any of its Subsidiaries is or may become obligated to issue shares of any Acquiror Capital Stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any Acquiror Capital Stock (collectively, “ Acquiror Equity Interests ”). There are no outstanding obligations of Acquiror to repurchase, redeem or otherwise acquire any outstanding Acquiror Capital Stock or Acquiror Equity Interests. All of the Acquiror Equity Interests outstanding as of the date hereof and outstanding as of the Closing are, and will be, exercisable, exchangeable or convertible into Class A Common Stock in accordance with the terms thereof on a one-for-one basis, other than the Series A Preferred Stock.

(j) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share (“ Merger Sub Common Stock ”). As of the date hereof, there were 100 shares of Merger Sub Common Stock issued and outstanding, all of which are owned by Acquiror.

(k) As of the date of this Agreement, no member of the Acquiror Group has any Indebtedness except for the Indebtedness that is reflected on the balance sheet of the Acquiror included in the Quarterly Report on Form 10-Q of the Acquiror for the quarter ended March 31, 2015, filed with the Commission on May 7, 2015 (to the extent reflected thereon).

(l) As of the date on which the Galleria Stock Amount is calculated through the Closing Date, the Fully Diluted Basis will be equal to:

(v) 374,890,092, representing the aggregate number of shares of Acquiror Common Stock and Acquiror Options outstanding as of the date hereof, plus

(vi) 4,295,566, representing the aggregate number of restricted stock units outstanding on the date hereof, plus

(vii) the number of Acquiror Options or restricted stock units convertible into Class A Common Stock that are issued after the date hereof and prior to the date on which the Galleria Stock Amount is calculated, which, in the aggregate, will be no greater than 15,000,000, as contemplated by Section 5.06 ,

(viii) 49,432, representing the aggregate number of Phantom Units outstanding on the date hereof, plus

(ix) 1,889,187, representing the aggregate number of shares of Series A Preferred Stock outstanding on the date hereof, plus such additional number of shares of Series A Preferred Stock that may be issued after the date hereof and prior to the date on which the Galleria Stock Amount is calculated, which will be no greater than 1,000,000, as contemplated by Section 5.06 .

(m) As of the date of this Agreement, there are no voting trusts, “poison pills” or other similar “stockholder rights plans,” agreements, understandings or Contracts to which Acquiror or any of its Subsidiaries is a party.

4.06 Intellectual Property . (e) Except as would not, individually or in the aggregate, be material to the Acquiror’s business, to the Knowledge of Acquiror, the Acquiror’s business as currently conducted by Acquiror and its Subsidiaries does not, and Acquiror’s business immediately following the Closing (other than the Galleria Business) will not, infringe, misappropriate or otherwise violate any enforceable Intellectual Property right of any third party. Except as would not, individually or in the aggregate, be material to the Acquiror’s business, during the past two years, no third party has made any written claim or demand or instituted any litigation against Acquiror or any of its Subsidiaries, or to the Knowledge of Acquiror threatened the same in writing, and neither Acquiror nor any of its Subsidiaries has received any written notice of such a claim, demand or litigation, that (i) challenges the rights of Acquiror and its Subsidiaries in respect of any of the Intellectual Property utilized by them or (ii) asserts that Acquiror or any of its Subsidiaries is or was infringing, misappropriating or otherwise violating the Intellectual Property rights of any third party. None of the Intellectual Property utilized by Acquiror or its Subsidiaries is subject to any outstanding Order that materially limits the use of such Intellectual Property by Acquiror and its Subsidiaries as currently used by Acquiror and its Subsidiaries. To the Knowledge of Acquiror, no Person is engaging in any activity that materially infringes, misappropriates or otherwise violates any of the Intellectual Property of Acquiror or its Subsidiaries.

(f) Notwithstanding whether any other representations or warranties in this Article IV could be read to apply to matters involving Intellectual Property, the representations and warranties set forth in Section 4.02 , Section 4.03 , Section 4.06 , Section 4.09(a) (and Section 4.09(b) , Section 4.09(c) and Section 4.09(d) , as applicable thereto), Section 4.11 , Section 4.12 , Section 4.14 and Section 4.16 constitute the sole and exclusive representations and warranties under this Article IV with respect to Intellectual Property.

4.07 Litigation . There are no Actions pending against Acquiror or any of its Subsidiaries or, to the Knowledge of Acquiror, threatened against Acquiror or any of its Subsidiaries (or any of their respective properties, rights or franchises), at law or in equity, or before or by any Governmental Authority, that is or would reasonably be expected to be, individually or in the aggregate, material to the Acquiror’s business. Neither Acquiror nor any of its Subsidiaries is subject to any Order that is or would reasonably to be, individually or in the aggregate, material to the Acquiror’s business.

4.08 Compliance With Laws . (n) Except as has not been and would not reasonably be expected to be material to the Acquiror’s business, Acquiror and its Subsidiaries are conducting their business in compliance with applicable Laws. None of the Governmental Approvals required for the continued conduct of the Acquiror’s business as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated hereby or by the Ancillary Agreements, except as has not been and would not reasonably be expected to be material to the Acquiror’s business.

(o) Notwithstanding the foregoing, the representations and warranties set forth in this Section 4.08 do not apply to Intellectual Property, employees and employee benefits, Taxes or environmental matters, which are addressed in Sections 4.06 , 4.10 , 4.12 (except as set forth therein) and 4.18 , respectively.

4.09 Contracts . (o) Section 4.09(a) of the Acquiror Disclosure Letter contains a list of each Contract to which Acquiror or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound that is in effect as of the date of this Agreement and that falls in one or more of the following categories (collectively, whether or not scheduled, the “ Acquiror Material Contracts ”):

(i) a Contract containing covenants binding upon Acquiror or its Subsidiaries that restrict during any period of time the ability of Acquiror or any of its Subsidiaries to compete or engage in any business or geographic area;

(ii) a Contract containing any “most favored nations,” exclusivity or similar right or undertaking in favor of any party other than Acquiror and its Subsidiaries with respect to any material goods or services purchased or sold by Acquiror or its Subsidiaries;

(iii) a lease, sublease or similar Contract with any Person under which Acquiror or any of its Subsidiaries is a lessor or sublessor of, or makes available for use to any Person, any real property;

(iv) a lease, sublease or similar Contract with any Person under which (A) Acquiror or any of its Subsidiaries is lessee of, or holds or uses, any material machinery, equipment, vehicle or other tangible personal property owned by any Person or (B) Acquiror or any of its Subsidiaries is a lessor or sublessor of, or makes available for use by any Person, any material tangible personal property owned or leased by Acquiror or its Subsidiaries, in any such case which has an aggregate future liability or receivable, as the case may be, in excess of $10,000,000 in any calendar year and is not terminable by Acquiror or such Subsidiary by notice of not more than 60 days for a cost, individually or together with any similar Contract, of less than $10,000,000;

(v) a license or sublicense or other Contract under which Acquiror or any of its Subsidiaries is licensee or licensor, or sub-licensee or sub-licensor of, or otherwise grants or is granted a right to use any material Intellectual Property used or held for use in the Acquiror Group’s business other than licenses to any shrink wrap, click wrap or other software that is generally commercially available and not customized;

(vi) a Contract for the sale of any Subsidiary or material asset or collection of assets that are material to the Acquiror Group in the aggregate, other than Contracts entered into in the Ordinary Course of the Acquiror Group’s business that provide for the sale of inventories (including any finished goods or work-in-process) or obsolete equipment;

(vii) a Contract involving the payment of more than $10,000,000 for the purchase of materials, supplies, goods, services, equipment or other assets and that is (A) with any vendor from whom Acquiror or any of its Subsidiaries purchased more than $10,000,000, in the aggregate, in the fiscal year ended June 30, 2014, or would reasonably be expected to provide for the purchase of more than $10,000,000 in the aggregate, in the fiscal year ended June 30, 2015 or any future 12-month period ended June 30 and (B) not terminable at will by Acquiror or any of its Subsidiaries on less than 60 days’ notice without penalty;

(viii) a Contract with a customer of Acquiror or any of its Subsidiaries that involves, or would reasonably be expected to involve, (A) the payment of more than $10,000,000 by such customer to the Acquiror Group in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 (other than purchase orders submitted in the Ordinary Course of the Acquiror Group’s business) or (B) the payment of more than $10,000,000 to such customer by the Acquiror Group in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 pursuant to a “joint business plan” or other similar incentive arrangement;

(ix) a Contract relating to any Indebtedness to a third party that individually is in excess of $5,000,000;

(x) a Contract under which (A) any Person has directly or indirectly guaranteed or assumed Indebtedness, liabilities or obligations of a Acquiror or any of its Subsidiaries or (B) Acquiror or any of its Subsidiaries has directly or indirectly guaranteed or assumed Indebtedness, Liabilities or obligations of another Person, in each case in excess of $5,000,000 individually or $10,000,000 in the aggregate;

(xi) a material settlement or compromise of any suit, claim, proceeding or dispute that would materially and adversely impact Acquiror or any of its Subsidiaries;

(xii) a Contract establishing or providing for any material partnership, strategic alliance, joint venture or material collaboration;

(xiii) any other Contract not made in the Ordinary Course of the Acquiror Group’s business that is material to Acquiror and its Subsidiaries; and

(xiv) a Contract that constitutes a “ Material Contract ” of Acquiror as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the Commission.

(p) Each Acquiror Material Contract is valid, binding and in full force and effect and is enforceable by and against Acquiror or one of its Subsidiaries in accordance with its terms, except as has not been and would not reasonably be expected to be material to Acquiror and its Subsidiaries. Each of Acquiror and its Subsidiaries has performed all obligations required to be performed by it to date under the Acquiror Material Contracts to which it is a party and is not in breach of or default thereunder in any respect that would reasonably be expected to be, individually or in the aggregate, material to the Acquiror’s business.

(q) Acquiror has made available to Parent a true and correct copy of each Acquiror Material Contract (or, if such Contract is not in written form, a true and correct summary of the material terms thereof).

4.10 Employee Benefits . (d) Since June 30, 2012, (i) there has not been any labor strike, work stoppage or lockout with respect to the business of Acquiror and its Subsidiaries, (ii) neither Acquiror nor Merger Sub has received written notice of any pending or threatened unfair labor practice charges against Acquiror or any of its Subsidiaries that are pending before the National Labor Relations Board or any other state, local or foreign Governmental Authority, and (iii) neither Acquiror nor Merger Sub has received written notice of any pending or threatened suits, actions or other proceedings in connection with the business of Acquiror or any of its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing before any Governmental Authority responsible for the enforcement of employment practices Laws, except, in the case of each of clauses (i), (ii) and (iii) above, for any such matters that have not been and would not reasonably be expected to be, individually or in the aggregate, material to the Acquiror’s business.

(e) To Acquiror’s Knowledge, with respect to the employees of the Acquiror Group, (i) no labor union, labor organization, works council, or other employee representative group has made a pending demand for recognition or certification, and (ii) there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. Neither Acquiror nor Merger Sub has Knowledge of any labor union organizing activities with respect to any employees of the Acquiror Group.

(f) As of the date of this Agreement, Acquiror has no actual Knowledge (without the obligation to conduct due inquiry) of any employee of the Acquiror Group being in material violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other obligation to a former employer of any such employee relating (i) to the right of any such employee to be employed by the Acquiror Group or (ii) to the knowledge or use of trade secrets or proprietary information.

(g) (i) No Liability under Title IV of ERISA has been incurred by Acquiror or any of its ERISA Affiliates which has not been satisfied in full, other than PBGC premiums that are not past due and (ii) no event has occurred and no circumstance exists that could result in Acquiror or its ERISA Affiliates incurring a Liability under Title IV of ERISA, that would result in any material Liability to Parent.

(h) With respect to each Acquiror Compensation and Benefit Plan, (i) all statutory contributions due from Acquiror or any of its Subsidiaries have been made and all amounts and Liabilities have been properly accrued and (ii) there are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge of Acquiror, threatened with respect to such Acquiror Compensation and Benefit Plan, except, in the case of each of clauses (i)-(ii) above, as would not result in a material Liability to Parent.

(i) Acquiror has made available to Parent copies or summaries of the material terms of all of the material Acquiror Compensation and Benefit Plans (including any material amendments thereto).

(j) Each Acquiror Compensation and Benefit Plan has been maintained, operated and administered in all respects in accordance with its terms and in compliance in all respects with all applicable Laws except, in each case, as would not result in material Liability to Parent.

(k) Neither the execution nor delivery of this Agreement nor the consummation of the contemplated transactions under this Agreement will, whether alone or in combination with any other event, (i) result in the accelerated vesting or payment of, or any increase in, any compensation to any employee of the Acquiror Group or (ii) result in the entitlement of any employee or, to the Knowledge of Acquiror, independent contractor or consultant of the Acquiror Group, in either case, to any material severance or termination pay or benefits.

4.11 Acquiror SEC Filings; Financial Statements; Absence of Changes; Undisclosed Liabilities . (a) Acquiror has timely filed, and will after the date of this Agreement timely file, all registration statements, prospectuses, forms, reports and documents and related exhibits required to be filed by it under the Securities Act or the Exchange Act, as the case may be, from and after December 31, 2012 (collectively, including all Commission filings filed after the date of this Agreement and prior to the Closing, the “ Acquiror SEC Filings ”). The Acquiror SEC Filings (i) were prepared or will after the date of this Agreement be prepared in all material respects in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not at the time they were filed and will not when filed after the date of this Agreement contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Acquiror is subject to the periodic reporting requirements of the Exchange Act.

(b) Each of the consolidated financial statements of Acquiror (including, in each case, any notes thereto) contained in the Acquiror SEC Filings were prepared in accordance with GAAP, consistently applied, as at the dates and for the periods presented (except as may be indicated in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q under the Exchange Act and the absence of footnote disclosures and normal and recurring adjustments), and each presented fairly in all material respects the consolidated financial position and results of operations of Acquiror and its consolidated Subsidiaries as at the dates and for the periods presented therein (subject, in the case of unaudited statements, to normal and recurring adjustments). The books and records of Acquiror and its Subsidiaries have been and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements.

(c) Since March 31, 2015, there has not occurred any event, occurrence or condition which has had or would reasonably be expected to have, individually or in the aggregate, an Acquiror MAE.

(d) Except for such matters as would not be reasonably expected to have an Acquiror MAE, since March 31, 2015, Acquiror and its Subsidiaries have been operated in the Ordinary Course of the Acquiror Group’s business.

(e) There are no Liabilities of any member of the Acquiror Group other than any such Liabilities (i) that would not be required to be reflected in financial statements (or the notes thereto) of the Acquiror’s business that were prepared in accordance with GAAP, (ii) are specifically reserved against on the financial statements included in the Quarterly Report on Form 10-Q of the Acquiror for the quarter ended March 31, 2015, filed with the Commission on May 7, 2015, or the notes thereto, (iii) have been incurred since March 31, 2015 in the Ordinary Course of Acquiror’s business, or (iv) have been incurred since March 31, 2015 outside of the Ordinary Course of Acquiror’s business but that are immaterial, taken as a whole.

(f) Since June 13, 2013, there has not occurred an Acquiror SEC Event.

(g) Since March 31, 2015, the Acquiror has not taken or failed to take any action that, had such action been taken or failed to have been taken after the date hereof, would have required Parent’s consent under Section 5.06(b)(iii)(B) of this Agreement, except as expressly provided for by this Agreement or any Ancillary Agreement.

4.12 Taxes . Except for such matters as would not reasonably be expected to have an Acquiror MAE, (a) no Security Interests for Taxes exist (other than Permitted Encumbrances), and no outstanding claims for Taxes have been asserted in writing, with respect to, Acquiror or any of its Subsidiaries, (b) Acquiror and its Subsidiaries have paid all Taxes required to be paid by them, (c) neither Acquiror nor any of its Subsidiaries has distributed stock of another Person or had its stock distributed by another Person in a transaction that was intended to be governed in whole or in part by Section 355 of the Code in the two years prior to the date of this Agreement, and (d) neither Acquiror nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that has prevented, or would reasonably be expected to prevent, the Intended Tax-Free Treatment. Except for the representations and warranties in Section 4.10 and Section 4.11 , the representations and warranties contained in this Section 4.12 constitute the sole and exclusive representations and warranties of Acquiror relating to Taxes.

4.13 Title to Properties; Security Interests . Except as would not, individually or in the aggregate, be material to the Acquiror’s business, Acquiror and its Subsidiaries have good and valid title to, or, if applicable, valid leasehold interests in or valid license or right to use, all of their assets (other than the Acquiror Owned Real Property, the title of which is the subject of Section 4.17(b) ), in each case as such property is currently being used, subject to no Security Interests other than Permitted Encumbrances.

4.14 Information To Be Supplied . The information supplied or to be supplied by Acquiror for inclusion in the Acquiror Filings to be filed with the Commission will not, on the date of its filing or, in the case of the Acquiror Form S-4 or the SplitCo Form 10/S-4, at the time it becomes effective under the Securities Act or Exchange Act, as applicable, or on the dates the Information Statement is mailed to the Acquiror Stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

4.15 Voting Requirements; Board Approval . (f) The affirmative vote or written consent of the holders of shares of Acquiror Common Stock representing at least a majority of the voting power of Acquiror (“ Acquiror Stockholder Approval ”) is the only vote of any class or series of Acquiror Capital Stock or Merger Sub’s capital stock necessary to approve this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including the Acquiror Stock Issuance, increase in the number of authorized shares of Acquiror Capital Stock and amendment to the Acquiror’s certificate of incorporation. The delivery of the Stockholder Consent will constitute Acquiror Stockholder Approval.

(g) The board of directors of Acquiror and Merger Sub have, at a meeting duly called and held, by unanimous vote, (i) approved this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby and (ii) resolved to recommend that the Acquiror Stockholders authorize the transactions contemplated hereby and approve the Acquiror Stock Issuance, increase in the number of authorized shares of Acquiror Capital Stock and amendment to the Acquiror’s certificate of incorporation. Acquiror, in its capacity as the sole stockholder of Merger Sub, has approved and adopted this Agreement.

4.16 Fairness Opinion . Acquiror has received the opinions of Barclays Capital Inc. and Morgan Stanley & Co. LLC, each dated July 8, 2015, each to the effect that, as of such date, and based upon and subject to the conditions set forth in such opinion, the Exchange Ratio is fair, from a financial point of view, to Acquiror.

4.17 Real Property . (c) Section 4.17(a) of the Acquiror Disclosure Letter sets forth a list of (i) all real property and interests in material real property owned in fee by Acquiror or any of its Subsidiaries (the “ Acquiror Owned Real Property ”), and (ii) any material real property leases, subleases, licenses or occupancy agreements to which the Acquiror or any of its Subsidiaries is a party, whether as a lessor or a lessee (the “ Acquiror Real Property Leases ,” and such real property, the “ Acquiror Leased Real Property ”).

(d) Except as would not, individually or in the aggregate, be material to the Acquiror business, Acquiror or a Subsidiary of Acquiror has good, valid and marketable fee simple title to all Acquiror Owned Real Property, and such good, valid and marketable fee simple title is not subject to any Security Interests except for Permitted Encumbrances.

(e) No parcel of Acquiror Owned Real Property or, to the Knowledge of Acquiror, no parcel of Acquiror Leased Real Property is subject to any Order to be sold or being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor nor, to the Knowledge of Acquiror, has any condemnation, expropriation or taking been proposed, except as set forth on Section 4.17(c) of the Parent Disclosure Letter.

(f) As of the date hereof, neither Acquiror nor any of its Subsidiaries has received any notice from any landlord under any of the Acquiror Real Property Leases indicating that it will not be exercising any renewal options under the Acquiror Real Property Leases.

4.18 Environmental Matters . (c) Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Acquiror’s business:

(i) Acquiror and each of its Subsidiaries, are in compliance with all Environmental Laws (which compliance includes the possession by Acquiror and each of its Subsidiaries of all Governmental Approvals required pursuant to Environmental Law and compliance with the terms and conditions thereof);

(ii) there is no material Environmental Claim (with which Acquiror has been given written notice or of which Acquiror otherwise has Knowledge) pending or, to the Knowledge of Acquiror, threatened against Acquiror, any of its Subsidiaries or, to the Knowledge of Acquiror, against any Person whose liability for such Environmental Claims Acquiror or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law;

(iii) neither Acquiror nor any of its Subsidiaries has entered into or is subject to any outstanding Order under any Environmental Law; and

(iv) neither Acquiror nor any of its Subsidiaries has Released any Hazardous Materials at or from any Acquiror Owned Real Property or Acquiror Leased Real Property in a manner that requires remediation under any Environmental Law.

(d) The representations and warranties contained in this Section 4.18 and in Sections 4.03 and 4.11 constitute the sole and exclusive representations and warranties of Acquiror relating to compliance with or Liability under any Environmental Law or Releases of Hazardous Materials.

4.19 No Other Representations or Warranties; Acknowledgment by Parent . Except for the representations and warranties of Acquiror expressly set forth in this Article IV and in the Ancillary Agreements, neither Acquiror nor any other Person makes any other express or implied representation or warranty on behalf of Acquiror or any of its Subsidiaries with respect to Acquiror or the transactions contemplated by this Agreement and the Ancillary Agreements or the accuracy or completeness of the information concerning the Acquiror Group provided by Acquiror or any of its Subsidiaries. The representations and warranties made in this Agreement and the Ancillary Agreements with respect to Acquiror and the transactions contemplated by this Agreement and the Ancillary Agreements are in lieu of all other representations and warranties Acquiror and its Subsidiaries might have given Parent, including implied warranties of merchantability and implied warranties of fitness for a particular purpose. Parent, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including prior to the Closing, SplitCo), acknowledges that all other warranties that Acquiror and its Subsidiaries gave or might have given, or which might be provided or implied by applicable Law or commercial practice, with respect to Acquiror are hereby expressly excluded. Parent, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including prior to the Closing, SplitCo), acknowledges that, except as provided herein, neither Acquiror nor any of its Subsidiaries nor any other Person acting on their behalf will have or be subject to any Liability or indemnification obligation to Parent or any other Person acting on its behalf resulting from the distribution in written or oral communication to Parent, or use by Parent of, any information, documents, projections, forecasts or other material made available to Parent, confidential information memoranda or management interviews and presentations in expectation of the transactions contemplated by this Agreement and the Ancillary Agreements. For the avoidance of doubt, this Section 4.19 will not have any effect on any representation or warranty made by Acquiror or any member of the Acquiror Group in this Agreement or any Ancillary Agreement.

V. COVENANTS

5.01 Conduct of Galleria Business Pending the Closing . (h) Except as expressly provided by this Agreement or any Ancillary Agreement, as set forth on Section 5.01 of the Parent Disclosure Letter, as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable Law or as expressly consented to in writing by Acquiror (such consent not to be unreasonably withheld, conditioned or delayed), from the date of this Agreement until the Closing (the “ Pre-Closing Period ”), Parent and each of its Subsidiaries will use its respective Commercially Reasonable Efforts to, (i) conduct the Galleria Business in the Ordinary Course of the Galleria Business in all material respects, (ii) preserve (other than the sale of Assets in the Ordinary Course of the Galleria Business) the material Galleria Assets, (iii) preserve in all material respects the material business relationships of the Galleria Business with customers, suppliers, manufacturers, distributors and others with whom the Galleria Business deals in the Ordinary Course of the Galleria Business, and (iv) maintain the goodwill and reputation of the Galleria Business in all material respects, including through advertising, marketing and promoting the products of the Galleria Business in the Ordinary Course of the Galleria Business. Notwithstanding anything in this Section 5.01 to the contrary, during the Pre-Closing Period, Parent may, without breach of this Agreement, take such actions as it determines in good faith are commercially reasonable to (w) respond to events resulting, in whole or in part, from the announcement of this Agreement and to preserve the Galleria Business and existing material employee, customer and supplier relationships (including replacing any employees of the Galleria Business who cease to be employed by Parent and its Subsidiaries), (x) consummate the transactions set forth on Section 5.01 of the Parent Disclosure Letter, (y) seek to receive any Consent in respect of the Mercury Licenses and (z) to prepare for the separation, retention or disposition of a Retained Business.

(i) Without limiting the generality of Section 5.01(a) , and except as otherwise expressly provided in this Agreement, as set forth on Section 5.01 of the Parent Disclosure Letter, as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable Law, as required to prepare for the separation, retention or disposition of any portion of the Mercury Business that Parent reasonably anticipates will be a Retained Business, or as expressly consented to in writing by Acquiror (such consent not to be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period, Parent will not, nor will it permit any of its Subsidiaries to:

(viii) (A) sell, pledge, dispose of, transfer, lease, license, guarantee, encumber or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of any Assets that are (or would otherwise be) material Galleria Assets (excluding the Galleria IP Assets, provision for which is made in Section 5.01(b)(vii) and Section 5.01(b)(viii) ), other than any dividend of cash from a Galleria Entity or any sale of Galleria Inventory (including any finished goods or work-in-process) or obsolete equipment or obsolete inventory in the Ordinary Course of the Galleria Business, or (B) except in accordance with the Split Plan Agreement, move any material Galleria Assets located at the Galleria Facilities out of the Galleria Facilities other than in the Ordinary Course of the Galleria Business, provided that such move will not affect whether or not an Asset is an Galleria Asset;

(ix) (A) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any Person or any division thereof or any assets that would be Galleria Assets, other than (x) in the Ordinary Course of the Galleria Business or (y) acquisitions of assets outside the Ordinary Course of the Galleria Business in an aggregate amount not to exceed $200,000,000 (and provided that no such acquisitions would reasonably be expected to delay or impede the consummation of the transactions contemplated hereby); or (B) other than Liabilities that would not be included in the Galleria Liabilities, incur any Indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money, except for (1) Indebtedness for borrowed money incurred in the Ordinary Course of the Galleria Business or in connection with transactions otherwise permitted by this Agreement or the Ancillary Agreements, (2) Indebtedness incurred to refinance any existing Indebtedness or (3) other Indebtedness for borrowed money under existing credit facilities;

(x) (A) issue, sell, transfer, pledge or dispose of any shares of SplitCo Common Stock or any Galleria Equity Interests or (B) split, combine, reclassify, redeem, repurchase, acquire (directly or indirectly) or encumber any shares of SplitCo Common Stock or Galleria Equity Interests;

(xi) in the case of each of the following to the extent it relates solely to the Galleria Business, the Galleria Assets, the Galleria Liabilities or any Galleria Entity, (A) make a material change in its accounting or Tax reporting principles, methods or policies, except as required by a change in GAAP, (B) make, change or revoke any material Tax election or method of accounting on which Tax reporting is based, (C) settle or compromise any material Tax claim or Liability, or enter into any material Tax closing agreement, or (D) amend any Tax Return if, with respect to clauses (B), (C) and (D), any such action would increase the Tax obligations of SplitCo or any of its Subsidiaries following the Closing;

(xii) (A) adopt, amend or terminate any Compensation and Benefit Plans, (B) increase the salaries, wage rates, target bonus opportunities, equity-based compensation, employee benefits or perquisites of any Galleria Business Employee, (C) grant or pay any benefit or amount not required under any Compensation and Benefit Plan to any Galleria Business Employee, (D) grant or pay any severance or termination pay or increase in any manner the severance or termination pay of any Galleria Business Employee or (E) take any action to accelerate the vesting or payment of any compensation or benefit under any Compensation and Benefit Plan to any Galleria Business Employee, in each case of (A), (B), (C), (D) or (E), except (1) in the Ordinary Course as applicable generally to Parent Group employees in the relevant jurisdictions, (2) in connection with the adoption or amendment of Compensation and Benefit Plans (or other practices) that are applicable generally to Parent Group employees in the relevant jurisdictions, or (3) as required (x) to comply with applicable Law, (y) by the terms of any Compensation and Benefit Plan in effect on the date hereof or (z) by the terms of any agreement of Parent or any of its Subsidiaries that is in effect on the date hereof, the existence of which agreement does not constitute a breach of any representation, warranty or covenant in this Agreement;

(xiii) (A) amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, or enter into any agreement to amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, any of the Galleria Material Contracts or enter into or assume any Contract that if in effect on the date hereof would be a Galleria Material Contract, in each case, other than in the Ordinary Course of the Galleria Business, or (B) amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, or enter into or assume any agreement to amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, any of the Shared Business Contracts in a manner that materially adversely impacts the Galleria Business, or enter into any Contract that if in effect on the date hereof would be a Shared Business Contract, in each case except in the Ordinary Course of Parent’s businesses that are covered by such Shared Business Contract (including the Galleria Business);

(xiv) license, grant any rights to or transfer any of the material Galleria IP Assets or other material Intellectual Property owned, used or held for use by the Galleria Business, other than grants of licenses in the Ordinary Course of the Galleria Business;

(xv) abandon, cancel, let lapse, fail to renew, fail to continue to prosecute, protect or defend or otherwise dispose of any of the material Galleria IP Assets that are Registered Intellectual Property or otherwise material to the Galleria Business other than failures to continue to prosecute, protect or defend in the Ordinary Course of the Galleria Business;

(xvi) enter into any settlement, or offer or propose to enter into any settlement, or otherwise compromise or waive any material claims or rights of the Galleria Business, in each case that would materially and adversely affect the Galleria Business or any Galleria Entity or limit the ability of SplitCo to conduct the Galleria Business following the Closing in any geographic area or in any other material respect;

(xvii) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of any Galleria Entity;

(xviii) amend the certificate of incorporation, bylaws or other governance documents of any Galleria Entity;

(xix) hire or transfer any individual to become an In-Scope Employee except (A) in the Ordinary Course of the Galleria Business with respect to any employee who is at, or hired into, the “Band 3” level (as such employment bands are commonly referred to within Parent’s organization as of the date of this Agreement) or below, and (B) with respect to any employee who is at, or hired into, the “Band 4” level or above (1) to fill a position within the Adjusted Galleria Business existing on the date of this Agreement (a “ Replacement Hire ”) or (2) to fill a new position added to the Adjusted Galleria Business after the date of this agreement (a “ Non-Replacement Hire ”), provided that , in either case, Parent uses Commercially Reasonable Efforts to fill the relevant position in clause (1) or clause (2) with an individual whose employment in such role would not require the establishment of a new Expatriate Package or Localization Package, and provided further that except as otherwise required by applicable Law or unless Parent determines in its sole discretion that such arrangement or action would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, no Non-Replacement Hire shall be an “ In-Scope Employee ” for purposes of this Agreement unless Acquiror elects, within 30 days following Acquiror’s receipt of notice of such employee’s hire or transfer, that such Non-Replacement Hire be included as an “In-Scope Employee”;

(xx) transfer or terminate the employment of any In-Scope Employee except (A) in the Ordinary Course of the Galleria Business with respect to any employee who is at, or hired into, the “Band 3” level or below or (B) with respect to any termination of the employment of an In-Scope Employee for cause;

(xxi) establish or enter into any Expatriate Package or Localization Package for any In-Scope Employee or Choice Employee other than:

(A) with respect to individuals hired or transferred as permitted under clause (xii)(B) above, or

(B) with respect to any employee who is at, or hired into, the “Band 3” level or below, provided that, Parent uses Commercially Reasonable Efforts to fill the relevant position with an individual whose employment in such role would not require the establishment of a new Expatriate Package or Localization Package, and provided further , that except as otherwise required by applicable Law or unless Parent determines in its sole discretion that such arrangement or action would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, if such position was previously held by an employee who did not have an Expatriate Package or Localization Package, then the individual filling such position will be a Choice Employee unless Acquiror elects within 30 days following Acquiror’s receipt of notice of such employee’s hire or transfer that such employee will not be an “In-Scope Employee”;

(xxii) change the status of any In-Scope Employee that is “Band 3” level or above to a Choice Employee;

(xxiii) make any change in any material method of accounting or accounting practice or policy with respect to the Galleria Business or any Galleria Entity, except as otherwise permitted under Section 5.01(b)(iv) or as required by applicable Law or GAAP; or

(xxiv) agree, in writing or otherwise, to take any of the foregoing actions.

(j) From the Cut-Off Date until the Closing, except as expressly provided by this Agreement, as set forth in Section 5.01(c) of the Parent Disclosure Letter, as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable Law or as expressly consented to in writing by Acquiror, Parent will cause the Galleria Business to manage its levels of Assets and Liabilities in the line item categories included in the Target Working Capital Statement in the Ordinary Course of the Galleria Business. Parent will cause the Galleria Entities, collectively, to hold an amount in cash or cash equivalents as of the Closing that, in the aggregate, is at least equal to the amount of cash and cash equivalents that are included in the calculation of Cut-Off Date Working Capital, as such amount is finally determined pursuant to Section 2.15(d) .

(k) Parent and Acquiror acknowledge and agree that (i) nothing contained in this Agreement is intended to give (and does not give) Acquiror, directly or indirectly, the right to control or direct the operations of the Galleria Business or SplitCo or the Galleria Entities prior to the Closing, and (ii) prior to the Closing, Parent will, consistent with the terms and conditions of this Agreement, control the operations of the Galleria Business and the Galleria Group.

5.02 Further Assurances; Efforts To Obtain Consents; Antitrust Clearance . (e) Generally . In addition to the actions specifically provided for elsewhere in this Agreement or in any Ancillary Agreement, each of the Parties will cooperate with each other and use (and will cause their respective Subsidiaries and Affiliates to use) their reasonable best efforts, prior to, at and after the Closing Date, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements as promptly as practicable, including, if applicable, forming legal entities, opening bank accounts and reaffirming any consents, approvals or waivers previously granted; provided , however , that (i) with respect to the matters that are the subject of Section 1.08 , such matters will be governed by that Section instead of this Section 5.02(a) following the Closing, (ii) except as otherwise provided in Section 5.02(b) - (c) , neither Parent nor Acquiror will be required to make any non-de minimis payments, incur any non-de minimis Liability or offer or grant any non-de minimis accommodation (financial or otherwise) to any third party in connection with obtaining any Consent or Governmental Approval, (iii) subject to Section 1.09 , the Acquiror will be solely responsible for obtaining the Consents required in respect of the Mercury Licenses (provided that Parent will reasonably cooperate with Acquiror’s requests in respect thereof) and (iv) for the avoidance of doubt, this Section 5.02 will not be deemed to limit in any respect Parent’s exercise of discretion under Section 2.01 or Section 2.02 .

(f) Requisite Antitrust Filings . Parent and Acquiror will comply fully with all applicable notification, reporting and other requirements of applicable Antitrust Laws in connection with the transactions contemplated by this Agreement. Parent and Acquiror, as soon as practicable after the date of this Agreement, and in any event within 15 days after the date of this Agreement, will furnish to the other on an outside-counsel basis such necessary information and assistance as the other may reasonably request so as to enable the Parties to evaluate which jurisdictions may require, under Antitrust Laws, notification or reporting of the transactions contemplated by this Agreement and the Ancillary Agreements. As soon as practicable after the end of such 15-day period, and in any case, within 30 days of the date of this Agreement, each of Parent and Acquiror will determine and identify in writing a list of jurisdictions (the “ Identified Jurisdictions ”), where in its reasonable opinion, based on such exchange of information and assistance and the advice of appropriately qualified outside counsel, a failure to file would be reasonably likely to expose it to a risk of financial penalties or other sanctions (including post-Closing sanctions or remedies such as the unwinding of the transactions). Parent and Acquiror, as soon as practicable after the end of such 30 day period, will file the required notifications with the appropriate Governmental Authorities in the Identified Jurisdictions pursuant to and in compliance with the HSR Act and make other filings under Antitrust Laws in those jurisdictions. In the event that Parent and Acquiror are unable to agree on the list of Identified Jurisdictions within 30 days of the date of this Agreement, then Parent and Acquiror will submit their respective lists of Identified Jurisdictions on which they disagree (each, a “ Potential Identified Jurisdiction ”) to an internationally recognized law firm having expertise in antitrust matters and with no material relationships with either Parent or Acquiror (such law firm to be agreed by Parent and Acquiror in good faith and if they are unable to agree, to be drawn by lot from up to three such firms submitted by each of Parent and Acquiror). Parent and Acquiror will use their respective Commercially Reasonable Efforts to cause the selected firm to select any additional Identified Jurisdictions from the Potential Identified Jurisdictions within ten Business Days, based solely on the information that has been shared between the Parties pursuant to, and the standards set forth in, this Section 5.02(b) . Parent and Acquiror’s agreed list of Identified Jurisdictions, plus any additional jurisdictions identified by such law firm, will be the “ Identified Jurisdictions .” Parent and Acquiror will share the costs and expenses of the law firm equally. Parent and Acquiror will as soon as practicable file any additional information reasonably requested by any Governmental Authority in connection with any Antitrust Law.

(g) Efforts To Obtain Antitrust Approvals . (h) Parent and Acquiror will each use reasonable best efforts to obtain, or terminate, as the case may be, as soon as practicable, the Governmental Approvals required by any Antitrust Law (the “ Antitrust Approvals ”) that may be or become necessary for the performance of its obligations under this Agreement, the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby and will cooperate fully with each other in promptly seeking to obtain such Antitrust Approvals or terminate any waiting period thereunder, all such actions to be effective prior to the Closing. Acquiror and Parent will cooperate in connection with the antitrust defense of the transactions contemplated hereby in any investigation or litigation by, or negotiations with, any Governmental Authority or other Person relating to the transactions contemplated hereby or regulatory filings under applicable Antitrust Laws. Without limiting the foregoing and subject to applicable legal limitations and the instructions of any Governmental Authority, each of Parent and Acquiror agrees with respect to obtaining any Antitrust Approval to (A) cooperate and consult with each other, (B) furnish to the other such necessary information and assistance as the other may reasonably request in connection with its preparation of any notifications or filings, (C) keep each other apprised of the status of matters relating to the completion of the transactions contemplated thereby, including promptly furnishing the other with copies of notices or other communications received by such party from, or given by such party to, any third party or any Governmental Authority with respect to such transactions, (D) permit the other Party to review and consider in good faith the other party’s reasonable comments in any communication to be given by it to any Governmental Authority with respect to obtaining the necessary Antitrust Approvals, (E) provide prompt notice to the other Party of any meeting or substantive discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated hereby, and (F) not participate in any meeting or substantive discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated hereby unless, to the extent not prohibited by such Governmental Authority, it gives the other party the opportunity to attend, participate and observe; provided that Parent and Acquiror shall not be required to provide the other with information to the extent that it is commercially sensitive; provided , further, that such commercially sensitive information will be made available only to legal counsel of the recipient Party and the recipient Party shall procure that such legal counsel shall not further disclose such information without the prior written consent of the relevant disclosing Party.

(xxv) Subject to the last sentence of this clause (ii) and to Section 5.02(c)(iii) , in furtherance and not in limitation of the covenants contained in Section 5.02(c)(i) or any other provision of this Agreement, Acquiror will offer to take (and if such offer is accepted, commit to take) all necessary steps to eliminate impediments under any Antitrust Law that may be asserted by any Governmental Authority with respect to the transactions contemplated hereby so as to permit such transactions to be consummated as promptly as practicable and to prevent a prohibition decision or the entry of any Order (or if such Order is so entered, to eliminate such Order or otherwise cause it to be satisfied or cease to be a restraint on such transactions) sought by any Governmental Authority or private Person under any Antitrust Law that would result in the failure of any condition to the obligations of the Parties to consummate the transactions contemplated hereby to be satisfied. Such steps may include, whether effected by consent decree, hold separate order or otherwise, (A) the sale, divestiture or disposition of such assets or businesses of Acquiror or, effective as of the Closing, such assets of the Galleria Business and (B) committing to take any action which Acquiror is capable of taking, including agreements that limit Acquiror’s freedom of action with respect to, or its ability to retain, any of the Galleria Business, services or assets of Acquiror or any of its Affiliates or any Assets of the Galleria Business. Notwithstanding the foregoing, (1) in no case will Acquiror (or, if applicable, Parent) be required pursuant to this clause (ii) to offer or commit to take any step that is not conditioned upon the occurrence of the Closing, (2) in no event will Acquiror offer or commit to take, or cause or permit SplitCo or any of its Subsidiaries to offer or commit to take, any action prohibited under the Tax Matters Agreement and (3) nothing in this clause (ii) will be deemed to modify the arrangements set forth in Schedule 1.09 in respect of the Mercury Licenses.

(xxvi) Notwithstanding any other provision of this Agreement (but subject to compliance with Acquiror’s obligation to use reasonable best efforts to obtain, or terminate, the Antitrust Approvals as soon as practicable pursuant to Section 5.02(c)(i) ), Acquiror will (A) have the right to determine and direct the strategy and process by which the parties will seek, and to make the final decision on which steps to take in obtaining, the Antitrust Approvals and (B) take the lead in all joint meetings and communications with any Governmental Authority.

(i) With respect to any Retained Licenses, the Retained Businesses and any Assets that are Excluded Assets by virtue of Section 1.09 , all obligations under this Section 5.02 will cease as of any Retained Business Cut-Off Date. Notwithstanding the foregoing, prior to any Retained Business Cut-Off Date, this Section 5.02 will remain in full force and effect with respect to all elements of the Galleria Business that had not yet become Retained Businesses without giving effect to Section 1.09 .

5.03 Public Announcements . The press release(s) announcing the execution and delivery of this Agreement and the transactions contemplated hereby will be in the forms attached as Exhibits B-1 and B-2 (the “ Transaction Announcement ”). The Parties further agree that the Acquiror investor presentation to be made in connection with the announcement of the transactions contemplated by this Agreement will be in substantially the form previously agreed to by Parent and Acquiror and that both the initial press release and the investor presentation concerning the transactions contemplated hereby will be filed by Acquiror as exhibits to a Form 8-K filing promptly after the execution of this Agreement. From the date hereof through the Closing, and without limiting the effect of Section 5.12 , neither Parent nor Acquiror will publish any press releases or make other public statements (including to securities analysts) that contradicts the Transaction Announcement with respect to this Agreement, the Ancillary Agreements and the transactions contemplated hereby (or the portion thereof relating to this Agreement, the Ancillary Agreements and the transactions contemplated hereby), except as such Party determines in good faith is required by Law or by obligations pursuant to any listing agreement with any national securities exchange after consultation with counsel (in which case, such Party will consult with the other Party to the extent reasonably practicable under the circumstances prior to making such disclosure and will only disclose that information that is required by Law based upon advice of counsel), without the prior approval of the other Party, such approval not to be unreasonably withheld, conditioned or delayed.

5.04 Notification of Certain Matters . Each of Parent and Acquiror will give prompt written notice to the other of (a) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated hereby and (b) any Action commenced or threatened in writing against, relating to or involving or otherwise affecting it or any of its Affiliates that relate to the consummation of the transactions contemplated hereby.

5.05 Financial Statements . (g) As soon as reasonably practicable following the Final Retained Business Cut-Off Date and using its Commercially Reasonable Efforts to deliver within 60 Business Days of the Final Retained Business Cut-Off Date, Parent will provide Acquiror with the combined audited financial statements of the Adjusted Galleria Business, including the balance sheets of June 30, 2015, June 30, 2014 and June 30, 2013, and the income statements of the Adjusted Galleria Business for the fiscal years ended June 30, 2015, June 30, 2014 and June 30, 2013, together with the notes thereto and accompanied by unqualified opinions of the independent accountants.

(h) Parent will also provide Acquiror with (i) quarterly combined unaudited financial statements of the Adjusted Galleria Business as of and for each fiscal quarter no later than 60 days after the end of each fiscal quarter, beginning with the fiscal quarter ending September 30, 2015, including the balance sheets and the income statement of the Adjusted Galleria Business, together with the notes thereto, and (ii) the combined audited financial statements of the Adjusted Galleria Business as of and for the fiscal year ending on June 30, 2016 no later than 90 days after the end of such fiscal year, including the balance sheets and the income statement of the Adjusted Galleria Business, together with the notes thereto and accompanied by unqualified opinions of the independent accountants.

5.06 Conduct of Acquiror Pending The Closing . (e) Except as expressly provided by this Agreement or any Ancillary Agreement, as set forth on Section 5.06 of the Acquiror Disclosure Letter, as required by applicable Law or as expressly consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period Acquiror and each of its Subsidiaries will use its respective Commercially Reasonable Efforts to, (i) conduct the Acquiror’s business in the Ordinary Course of the Acquiror’s business in all material respects, (ii) preserve (other than the sale of Assets in the Ordinary Course of the Acquiror’s business) the material Assets of the Acquiror and its Subsidiaries, (iii) preserve in all material respects the material business relationships of the Acquiror business with customers, suppliers, manufacturers, distributors and others with whom the Acquiror business deals in the Ordinary Course of the Acquiror business, and (iv) maintain the goodwill and reputation of the Acquiror business in all material respects, including through advertising, marketing and promoting the products of the Acquiror business in the Ordinary Course of the Acquiror business. Notwithstanding the preceding sentence, during the Pre-Closing Period, Acquiror may, without breach of this Agreement, take such actions as it determines in good faith are commercially reasonable to (w) respond to events resulting, in whole or in part, from the announcement of this Agreement, (x) consummate transactions set forth on Section 5.06 of the Acquiror Disclosure Letter, (y) preserve the Acquiror business and existing material employee, customer and supplier relationships (including replacing any employees of the Acquiror business who cease to be employed by Acquiror and its Subsidiaries) and (z) seek to receive any Consent in respect of the Mercury Licenses.

(f) Without limiting the generality of Section 5.06(a) , and except as otherwise provided in this Agreement, as set forth on Section 5.06 of the Acquiror Disclosure Letter, as required by applicable Law or as expressly consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period, Acquiror will not, nor will it permit any of its Subsidiaries to:

(i) sell, pledge, dispose of, transfer, lease, license, guarantee, encumber or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of any Assets that are (or would otherwise be) material to the Acquiror business (excluding Assets constituting Intellectual Property, provision for which is made in Section 5.06(b)(vii) and Section 5.06(b)(viii) ), other than any sale of product inventories, raw and packaging materials, Store Room Inventory, Goods in Transit, parts, work-in-process, finished goods and products, in each case to the extent it is primarily used or held for primary use in the Acquiror’s business (including any finished goods or work-in-process) or obsolete equipment or obsolete inventory in the Ordinary Course of the Acquiror business;

(ii) declare, set aside, make or pay any dividends or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (other than (x) regular annual cash dividends not in excess of $0.25 per share of Acquiror Common Stock declared and paid in the Ordinary Course and consistent with past practice, and (y) dividends payable by controlled Subsidiary of Acquiror to Acquiror or another wholly owned Subsidiary of Acquiror), enter any agreement with respect to the voting of Acquiror Capital Stock or purchase or otherwise acquire, directly or indirectly, any Acquiror Capital Stock or Acquiror Equity Interests;

(iii) (A) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any Person or any division thereof or any Assets, other than (x) in the Ordinary Course of the Acquiror business or (y) acquisitions of assets outside the Ordinary Course of the Acquiror’s business in an aggregate amount not to exceed $200,000,000 (and provided that no such acquisitions would reasonably be expected to delay or impede the consummation of the transactions contemplated hereby); or (B) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money, except for (1) indebtedness for borrowed money incurred in the Ordinary Course of the Acquiror business or in connection with the transactions otherwise permitted by this Agreement or the Ancillary Agreements, (2) indebtedness incurred to refinance any existing Indebtedness or (3) other indebtedness for borrowed money under existing credit facilities (without any increase in the aggregate amount outstanding over the amount outstanding thereunder on the date of the Transaction Agreement);

(iv) (A) issue, sell, transfer, pledge, retire, extinguish, terminate or dispose of any shares of Acquiror Common Stock, other Acquiror Capital Stock, equity securities of Acquiror’s subsidiaries or Acquiror Equity Interests, other than in connection with the Acquiror Stock Issuance, (B) split, combine, reclassify, redeem, repurchase, acquire (directly or indirectly) or encumber any shares of Acquiror Common Stock or any other Acquiror Capital Stock or equity securities of Acquiror’s subsidiaries, or (C) fail to take any such actions as may be necessary to make the representation set forth in the last sentence of Section 4.05(b) true and correct;

(v) (A) make a material change in its accounting or Tax reporting principles, methods or policies, except as required by a change in GAAP, (B) make, change or revoke any material Tax election or method of accounting on which Tax reporting is based, (C) settle or compromise any material Tax claim or Liability, or (D) amend any material Tax Return;

(vi) (A) adopt, amend or terminate any Acquiror Compensation and Benefit Plans, (B) increase the salaries, wage rates, target bonus opportunities, equity-based compensation, employee benefits or perquisites of any Acquiror Group employee, (C) grant or pay any benefit or amount not required under any Acquiror Compensation and Benefit Plan to any Acquiror Group employee, (D) grant or pay any severance or termination pay or increase in any manner the severance or termination pay of any Acquiror Group employee or (E) take any action to accelerate the vesting or payment of any compensation or benefit under any Acquiror Compensation and Benefit Plan to any Acquiror Group employee, in each case of (A), (B), (C), (D) or (E), except (1) in the Ordinary Course as applicable generally to Acquiror Group employees in the relevant jurisdictions, (2) in connection with the adoption or amendment of Acquiror Compensation and Benefit Plans (or other practices) that are applicable generally to Acquiror Group employees in the relevant jurisdictions, or (3) as required (x) to comply with applicable Law, (y) by the terms of any Acquiror Compensation and Benefit Plan in effect on the date hereof or (z) by the terms of any agreement of Acquiror or any of its Subsidiaries that is in effect on the date hereof, the existence of which agreement does not constitute a breach of any representation, warranty or covenant in this Agreement; provided , further , that in no event shall Acquiror issue or grant any Acquiror Capital Stock or Acquiror Equity Interests during the period of time between the date as of which the Galleria Stock Amount is determined and the Closing;

(vii) license, grant any rights to or transfer any material Intellectual Property owned, used or held for use by the Acquiror business, other than grants of licenses in the Ordinary Course of the Acquiror business;

(viii) abandon, cancel, let lapse, fail to renew, fail to continue to prosecute, protect or defend or otherwise dispose of any of the material Assets that constitute Intellectual Property of the Acquiror business other than failures to continue to prosecute, protect or defend in the Ordinary Course of the Acquiror business;

(ix) enter into any settlement, or offer or propose to enter into any settlement, or otherwise compromise or waive any material claims or rights of the Acquiror business, in each case that would materially and adversely affect the Acquiror business or limit the ability of the Acquiror Group to conduct the Acquiror business following the Closing in any geographic area or in any other material respect;

(x) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Acquiror or any of its Subsidiaries;

(xi) amend the certificate of incorporation, bylaws or other governance documents of the Acquiror or any of its Subsidiaries, except as expressly contemplated by this Agreement;

(xii) make any change in any material method of accounting or accounting practice or policy with respect to the Acquiror business or the business of any of Acquiror’s subsidiaries, except as otherwise permitted under Section 5.06(b)(v) or as required by applicable Law or GAAP;

(xiii) fail to comply with any requirements or other obligations under any securities Laws that are applicable to Acquiror, including in respect of any reports, registration statements or other documents that are filed (or are required to be filed) with the Commission or any other Governmental Authority (including in respect of any reports that may be or are furnished rather than filed) that would materially and adversely affect the Acquiror business or limit the ability of the Acquiror Group to consummate the transactions contemplated hereunder or otherwise conduct the Acquiror business following the Closing in any geographic area or in any other material respect;

(xiv) agree, in writing or otherwise, to take any of the foregoing actions.

(g) Parent and Acquiror acknowledge and agree that nothing contained in this Agreement is intended to give (and does not give) Parent, directly or indirectly, the right to control or direct the operations of the Acquiror’s business or Acquiror or its Affiliates prior to the Closing.

5.07 Access . (p) From the date hereof to the Closing, to the extent permitted by Law, each of Parent and Acquiror will allow all designated Representatives of the other Party access to the extent reasonably practicable upon reasonable notice to the books, records, files, correspondence, audits and properties pertaining to the business and affairs of the Galleria Business and Acquiror and its Subsidiaries including as to matters that might arise outside the Ordinary Course of the Galleria Business or the business of the Acquiror Group; provided , however , that (i) no investigation pursuant to this Section 5.07 will affect any representation or warranty given by any Party hereunder or any closing condition, indemnity obligation or other provision and (ii) notwithstanding the provision of information or investigation by any Party, no Party will be deemed to make any representation or warranty except as expressly set forth in this Agreement. Notwithstanding the foregoing, (A) no Party will be required to provide any information which it determines in good faith it may not provide to the other Party by reason of applicable Law (including any information in confidential personnel files), or which such Party determines in good faith constitutes information protected by attorney-client or other similar privilege; provided , however , that if any information is so prohibited to be provided, the applicable Party will use Commercially Reasonable Efforts to take those actions reasonably necessary so that such Party is able to provide such information to the other Party as promptly as possible and (B) no Party will be required to provide access to any of its properties in a manner that will result in damage to such property or for the purpose of performing any invasive onsite procedure or investigation such as a Phase II Environmental Site Assessment or other invasive onsite environmental sampling, investigation or study, without the other Party’s written consent, which may be granted or denied in its discretion. Each of Parent and Acquiror agrees that it will not, and will cause its respective Representatives not to, use any information obtained pursuant to this Section 5.07 for any purpose unrelated to this Agreement and the Ancillary Agreements. All information provided by a Party to the other Party hereunder will be kept confidential to the same extent as would be applicable if the Confidentiality Agreement were in effect.

(q) Without limiting the generality of the foregoing:

(i) each of Parent and Acquiror will deliver or otherwise make available for inspection to the other Party within 60 days after the date of this Agreement true, complete and correct copies and results of any material reports, data, investigations, audits, assessments (including Phase I environmental site assessments and Phase II environmental site assessments) studies, analyses, tests or monitoring in the possession of or reasonably available to Parent or Acquiror, as applicable, or any of their respective Subsidiaries that were prepared during the five years prior to the date of this Agreement pertaining to: (i) any unresolved Environmental Claims; (ii) any Hazardous Materials in, on, beneath or adjacent to any Real Property or any property formerly owned, operated or leased by Parent or Acquiror or any of their respective Subsidiaries; or (iii) Parent’s or Acquiror’s or any of their respective Subsidiaries’ compliance with applicable Environmental Laws, in each case relating to, resulting from or arising out of the operation or conduct of the Galleria Business (in the case of Parent) or the Acquiror’s business (in the case of Acquiror); and

(ii) after the date hereof and prior to the Closing, Parent will deliver such information as Acquiror may reasonably request regarding the identity of the Mercury Fragrance Products and Non-Mercury Fragrance Products and Non-Hydroalcoholic Products in which Parent Ancillary Fragrances are utilized, including a listing of the names of such products, such delivery to be made reasonably promptly.

5.08 Acquiror Stockholder Consent; Preparation of SEC Filings . (r) No later than 24 hours after the execution of this Agreement and in lieu of calling a meeting of the Acquiror’s shareholders, Acquiror shall submit a form of irrevocable written consent attached hereto as Exhibit C to a shareholder representing at least 50.1% of the voting power represented by the outstanding shares of Acquiror Common Stock (such written consent, as duly executed and delivered by such shareholder, the “ Stockholder Consent ”). As soon as practicable upon receipt of the Stockholder Consent, Acquiror will provide Parent with a copy of such Stockholder Consent. In connection with the Stockholder Consent, Acquiror shall take all actions necessary to comply, and shall comply in all respects, with the DGCL, the Acquiror’s certificate of incorporation and the Acquiror Bylaws.

(s) As soon as reasonably practicable following the date of this Agreement and after the financial statements referenced in Section 5.05 have become available, Parent and Acquiror will jointly prepare, and (i) Acquiror will file with the Commission a Registration Statement on Form S-4 (the “ Acquiror Form S-4 ”) to register the shares of Acquiror New Common Stock to be issued in the Merger, and prepare and file with the Commission an information statement of the type contemplated by Rule 14c-2 promulgated under the Exchange Act related to the Transaction and this Agreement (as amended or supplemented from time to time, the “ Information Statement ”), (ii) SplitCo will file with the Commission a registration statement on Form 10 and/or a registration statement on Form S-4 (the “ SplitCo Form 10/S-4 ”) to register the shares of SplitCo Common Stock to be distributed in the Distribution, (iii) Parent will file with the Commission a Schedule TO (the “ Schedule TO ”, together with the Acquiror Form S-4, the Information Statement and the SplitCo Form 10/S-4, the “ SEC Filings ”) if Parent elects to effect the Distribution in whole or in part by means of an Exchange Offer and (iv) the Parties will file such other appropriate documents as may be applicable. Each of Parent and Acquiror will use their reasonable best efforts to have the SEC Filings cleared or declared effective, as applicable, under the Exchange Act or Securities Act, as applicable, as promptly as practicable after such filing (including by responding to comments by the Commission and subject to the satisfaction or waiver of the applicable conditions in Article VII and it being understood that the SEC Filings will not be filed until after the financial statements referenced in Section 5.05 have become available). As promptly as practicable after the Information Statement shall have been cleared by the Commission (or after 10 calendar days have passed since the filing of the preliminary Information Statement with the Commission without notice from the Commission of its intent to review the Information Statement), Acquiror shall cause the Information Statement to be mailed to its shareholders and to be filed as required. Each of Acquiror and Parent will also take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified) required to be taken under any applicable state securities Laws in connection with, in the case of Acquiror, the issuance of Acquiror New Common Stock in the Merger and, in the case of Parent, the issuance of SplitCo Common Stock in the Distribution.

(t) Parent will furnish all information concerning Parent and SplitCo, and Acquiror will furnish all information concerning Acquiror and Merger Sub, as may be reasonably requested in connection with any such action and the preparation, filing and distribution of each of the SEC Filings. Each of Parent and Acquiror shall otherwise promptly cooperate as the other Party may reasonably request in connection with the preparation and filing of each of the SEC Filings, including, without limitation, assistance with the preparation of the pro forma financial information as necessary. No filing of, or amendment or supplement to the Information Statement or the Acquiror Form S-4 will be made by Acquiror, no filing of, or amendment or supplement to, the SplitCo Form 10/S-4 will be made by SplitCo and no filing of, or amendment or supplement to, the Schedule TO will be made by Parent, in each case without providing the other Parties a reasonable opportunity to review and comment thereon. If at any time prior to the Effective Time any information relating to Parent or Acquiror or any of their respective Affiliates, officers or directors should be discovered by Parent or Acquiror which should be set forth in an amendment or supplement to any of the Information Statement, as applicable, the Acquiror Form S-4, the SplitCo Form 10/S-4 or the Schedule TO, so that any such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information will promptly notify the other Parties and an appropriate amendment or supplement describing such information will be promptly filed with the Commission and, to the extent required by Law, disseminated to the applicable stockholders. The Parties will notify each other promptly of the receipt of any comments from the Commission or its staff and of any request by the Commission or its staff for amendments or supplements to any of the SEC Filings or for additional information and will supply each other with copies of all correspondence between it or any of its representative, on the one hand, and the Commission or its staff, on the other hand, with respect thereto and will respond as promptly as practicable to any such comments or requests.

5.09 No Solicitation . (l) Acquiror will, and will cause its Representatives to, cease immediately any discussions and negotiations regarding any proposal that constitutes, or may reasonably be expected to lead to, an Acquiror Takeover Proposal. Except as provided in Section 5.09(b) , Acquiror will not, nor will it authorize or permit any of its Subsidiaries to, nor will it authorize or permit any Representative of Acquiror or any of its Subsidiaries to (and will instruct such Representatives not to), directly or indirectly (i) solicit, initiate or encourage the submission of any Acquiror Takeover Proposal or (ii) participate in any discussions or negotiations regarding, or furnish to any Person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquiror Takeover Proposal. Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in the two preceding sentences by any Representative or Affiliate of Acquiror or any of its Subsidiaries, whether or not such Person is purporting to act on behalf of Acquiror or any of its Subsidiaries or otherwise, will be deemed to be a breach of this Section 5.09 by Acquiror.

(m) Notwithstanding the provisions of Section 5.09(a) , prior to receipt of the Acquiror Stockholder Approval, Acquiror may, if the failure to take such action would be inconsistent with the fiduciary duties of the Board of Directors of Acquiror to the stockholders of Acquiror under applicable Law, as determined in good faith by such board after consulting with outside legal counsel, in response to a Qualifying Acquiror Takeover Proposal (and subject to compliance with the provisions of this Section 5.09 ):

(i) furnish information with respect to Acquiror to the Person making such Qualifying Acquiror Takeover Proposal and its Representatives pursuant to a confidentiality agreement not less restrictive of the other Party than the Confidentiality Agreement (provided that all such information has previously been provided to Parent or is provided to Parent prior to or substantially concurrent with the time it is provided to such Person); and

(ii) participate in discussions and negotiations with such Person and its Representatives regarding such Qualifying Acquiror Takeover Proposal.

(n) Neither the Board of Directors of Acquiror nor any committee thereof may (i) withdraw or modify in a manner adverse to Parent or SplitCo, or publicly propose to withdraw or modify in a manner adverse to Parent or SplitCo, the approval, recommendation or declaration of advisability by the Board of Directors of Acquiror of this Agreement, the Ancillary Agreements or any of the transactions contemplated hereby or thereby, including the Acquiror Stockholder Approval, (ii) approve, adopt or recommend, or permit Acquiror or any of its Subsidiaries to enter into, any letter of intent, agreement in principle, acquisition agreement, option agreement, joint venture agreement, merger agreement or similar agreement relating to any Acquiror Takeover Proposal, or (iii) approve, adopt or recommend, or publicly propose to approve, adopt or recommend, any Acquiror Takeover Proposal. Notwithstanding the foregoing, if, prior to receipt of the Acquiror Stockholder Approval, the Board of Directors of Acquiror receives an Acquiror Superior Proposal and as a result thereof the Board of Directors of Acquiror determines in good faith, after consulting with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties to the stockholders of Acquiror under applicable Law, then, on the fifth Business Day following Parent’s receipt of written notice from Acquiror, the Board of Directors of Acquiror may withdraw or modify its recommendation of the Acquiror Stockholder Approval and, in connection therewith, recommend such Acquiror Superior Proposal; provided that, during such five-Business Day period, Acquiror will be obligated to negotiate in good faith with Parent and SplitCo any modification to this Agreement proposed by Parent or SplitCo; provided , further , that in the event of any material change to the material terms of such Acquiror Superior Proposal, Acquiror shall have delivered to Parent an additional notice and the notice period shall have recommenced.

(o) Acquiror will, as promptly as reasonably practicable (and in any case within 24 hours), advise Parent orally and in writing of any Acquiror Takeover Proposal or any inquiry with respect to or that could reasonably be expected to lead to any Acquiror Takeover Proposal, and the identity of the Person making any such Acquiror Takeover Proposal or inquiry and the material terms of any such Acquiror Takeover Proposal or inquiry. Acquiror will (i) keep Parent reasonably informed of the status including any change to the material terms of any such Acquiror Takeover Proposal or inquiry and (ii) provide to Parent as promptly as reasonably practicable (and in any case within 24 hours) after receipt or delivery thereof with copies of all correspondence and other written material sent or provided to Acquiror from any third party in connection with any Acquiror Takeover Proposal or sent or provided by Acquiror to any third party in connection with any Acquiror Takeover Proposal.

(p) Nothing contained in this Section 5.09 will prohibit Acquiror from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any required disclosure to Acquiror’s stockholders if, in the good faith judgment of the Board of Directors of Acquiror after consulting with outside legal counsel, failure so to disclose would be inconsistent with its obligations under applicable Law; provided , however , that this Section 5.09(e) will not eliminate or modify (x) Acquiror’s obligations under the proviso in Section 5.09(b) or (y) the effect that taking and disclosing any such position would otherwise have under this Agreement (including under Section 8.01(d)(i) ).

(q) For purposes of this Agreement:

(i) “ Acquiror Takeover Proposal ” means (A) any proposal for a merger, consolidation, dissolution, recapitalization or other business combination involving Acquiror, (B) any proposal or offer for the issuance by Acquiror of over 15% of its equity securities as consideration for the assets or securities of another Person, or (C) any proposal or offer to acquire in any manner, directly or indirectly, over 15% of the equity securities or consolidated assets of Acquiror, or assets or business that constitute over 15% of the consolidated revenues or net income of Acquiror, in each case other than the transactions contemplated hereby.

(ii) “ Qualifying Acquiror Takeover Proposal ” means a bona fide, written Acquiror Takeover Proposal that (A) is made by a Person the Board of Directors of Acquiror determines, in good faith, after consulting with outside counsel and independent financial advisors, is reasonably capable of making an Acquiror Superior Proposal, (B) the Board of Directors of Acquiror determines, in good faith, after consulting with its independent financial advisor, constitutes or is reasonably likely to lead to an Acquiror Superior Proposal, and (C) that was not solicited by Acquiror and did not otherwise result from a breach of this Section 5.09 .

(iii) “ Acquiror Superior Proposal ” means any bona fide proposal made by a third party to acquire more than 50% of the equity securities or all or substantially all the assets of Acquiror, pursuant to a tender or exchange offer, a merger, a consolidation, a liquidation or dissolution, a recapitalization, a sale of all or substantially all its assets or otherwise, on terms which the Board of Directors of Acquiror determines in its good-faith judgment after consulting with its independent financial advisor (A) to be superior from a financial point of view to the holders of Acquiror Common Stock than the transactions contemplated hereby, taking into account all the terms and conditions of such proposal and this Agreement (including any proposal by Parent to amend the terms of the transactions contemplated hereby) and (B) is reasonably capable of being completed, taking into account all financial, regulatory, legal and other aspects of such proposal.

5.10 NYSE Listing . Acquiror will use its reasonable best efforts to cause the shares of Acquiror Common Stock to be issued in connection with the Merger to be listed on the NYSE as of the Effective Time, subject to official notice of issuance.

5.11 Required Amendments . Except as otherwise provided in respect of amendments to the Transition Plan (and any resulting changes to the Transition Services Agreement and the schedules thereto) in Section 5.21 , the Parties will cooperate and negotiate in good faith with respect to any amendment to the Transaction Documents reasonably requested by a Party in order to enable its counsel to deliver the written opinion(s) contemplated by Sections 7.02 or 7.03 of this Agreement, as the case may be (any such amendment, a “ Proposed Amendment ”). Neither Party will withhold its consent to a Proposed Amendment that (i) does not result in any change in the Merger Consideration, (ii) is not materially adverse to the interests of any Party, and (iii) does not unreasonably impede or delay consummation of the Distribution or the Merger. Any Proposed Amendment that the Parties consent to will be reflected through the execution of appropriate written amendments to the applicable Transaction Documents.

5.12 Capital Transactions . (j) Galleria Commitment Letter . Attached hereto as Exhibit L is a true and complete fully executed copy of the commitment letter relating to the Galleria Credit Facility (the “ Galleria Commitment Letter ”). The Galleria Credit Facility will remain outstanding, without amendment and without amortization, for at least one year following the Closing Date; provided , however , that, if SplitCo receives a Bank Letter, SplitCo will be permitted to refinance the Galleria Facility with new debt (the “ Refinanced Facility ”) that has substantially similar terms, the same maturity date, and the same prepayment restrictions as the Galleria Credit Facility. SplitCo must be the primary obligor on the Refinanced Facility and must remain the primary obligor on the Refinanced Facility at all times during such remaining term. After the Closing, Acquiror shall be permitted to guarantee SplitCo’s obligations under the Galleria Credit Facility or the Refinanced Facility, if, in each case, SplitCo receives a Bank Letter. To the extent any prepayments of the Galleria Credit Facility or the Refinanced Facility are permitted hereunder, such prepayments will be made, in each case, solely (I) out of SplitCo’s and its Subsidiaries’ operating cash flows generated on or after the Closing Date or (II) as otherwise required by the terms of the Galleria Credit Facility or the Refinanced Facility, as applicable.

(k) Creation of Galleria Credit Facility . Parent will cause SplitCo to use its Commercially Reasonable Efforts to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Galleria Financing on the terms and conditions described in the Galleria Commitment Letter, including using its Commercially Reasonable Efforts to, negotiate and enter into the Galleria Credit Documents on the terms and conditions contemplated by the Galleria Commitment Letter and after reasonable consultation with Acquiror. If any portion of the Galleria Financing becomes, or would reasonably be expected to become, unavailable on the terms and conditions contemplated in the Galleria Commitment Letter (after taking into account, and exercising, any flex terms), or if the monies borrowed under the Galleria Financing are insufficient to fund the payment of the Recapitalization Amount by SplitCo, then, notwithstanding anything to the contrary herein:

(xv) if any portion of the Galleria Financing becomes, or would reasonably be expected to become, unavailable on such terms and conditions, SplitCo will seek to obtain alternative financing (and in such circumstance if alternative financing is available, SplitCo may obtain such alternative financing), including from alternative sources, in an amount sufficient to replace any unavailable portion of the Galleria Financing on terms and conditions that are substantially similar in all material respects to the terms of the Galleria Commitment Letter and after reasonable consultation with Acquiror; and

(xvi) if the Galleria Financing is insufficient to so fund the payment of the Recapitalization Amount by SplitCo, SplitCo will seek to obtain additional financing (and in such circumstance if additional financing is available, SplitCo may obtain such additional financing), including from alternative sources, in an amount sufficient to borrow such additional monies as may be necessary to fund such shortfall, which additional financing will be on the most favorable terms reasonably available under the circumstances and after reasonable consultation with Acquiror (and, in a circumstance in which the amount of the Galleria Financing reflected in the Galleria Commitment Letter, together with any additional financing obtained pursuant to this clause (ii), is insufficient to so fund the payment of the Recapitalization Amount, the Parties will negotiate in good faith so as to provide Parent with equivalent value) (the arrangements in clauses (i) and (ii) collectively, an “ Alternative Financing ”);

provided that the terms of any such Alternative Financing must be consistent with the Intended Tax-Free Treatment as determined by Parent in its sole discretion. All references herein to the Galleria Financing will be deemed to include such Alternative Financing and all references to Galleria Credit Documents will include the applicable documents for the Alternative Financing.

(l) Cooperation Regarding Galleria Credit Facility . Each of Parent and Acquiror will reasonably cooperate with SplitCo in connection with completing the Galleria Financing, including (i) using (and causing their respective Subsidiaries to use) Commercially Reasonable Efforts to assist SplitCo in satisfying all conditions precedent to be satisfied by SplitCo or any Galleria Subsidiary in the Galleria Credit Documents, (ii) providing information regarding the Galleria Business that is reasonably requested by the Debt Financing Sources and their representatives, including such information required by the Galleria Commitment Letter, (iii) permitting the Debt Financing Sources and their representatives access to the Galleria Business and the relevant businesses of Acquiror and its Subsidiaries, respectively, (iv) participating in, and assisting with, marketing efforts related to the Galleria Credit Facility, including causing its management team and other representatives to participate in (A) meetings with prospective lenders, (B) bank meetings in connection with the financing and (C) meetings with ratings agencies and other parties deemed appropriate, (v) causing members of their respective accounting firms to participate in drafting sessions related to the offering materials, if any, for the financing contemplated by the Galleria Credit Documents and (vi) delivery of documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act (as may be amended from time to time). Parent hereby consents to the use of all logos associated with the Galleria Business in connection with obtaining the Galleria Credit Facility; provided , however , that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage the Galleria Business, Parent, SplitCo or any of their Subsidiaries.

(m) Cooperation Regarding Distribution . Acquiror will cooperate with Parent in connection with the preparation of all documents and the making of all filings required in connection with the Distribution. Parent will be permitted to reasonably direct and control the efforts of the Parties in connection with the Distribution, and Acquiror will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things reasonably necessary to facilitate the Distribution as reasonably directed by Parent. Without limiting the generality of the foregoing, Acquiror will and will cause its employees, advisors, agents, accountants, counsel and other representatives to, as reasonably directed by Parent, cooperate in and take the following actions: (i) participating in meetings, drafting sessions, due diligence sessions, management presentation sessions, and “road shows” in connection with the Distribution (including any marketing efforts), (ii) furnishing to any dealer manager or other similar agent participating in the Distribution (A) “cold comfort” letters from Acquiror’s independent public accountants in customary form and covering such matters as are customary for an underwritten public offering (including with respect to events subsequent to the date of financial statements included in any offering document) and (B) opinions and negative assurance letters of Acquiror’s counsel in customary form and covering such matters as may be reasonably requested, and (iii) furnishing all historical and forward-looking financial and other pertinent financial and other information that is available to Acquiror and is reasonably required in connection with the Distribution and permitting the prospective underwriters and other parties involved in the Distribution to evaluate Acquiror’s current assets, cash management and accounting systems, and policies and procedures relating thereto, for the purpose of establishing necessary arrangements with respect to the Distribution. Without limiting the foregoing, (x) Acquiror will participate, as reasonably requested by Parent, in a two-week equity “road show” to take place prior to the consummation of the Distribution (which may be for a shorter period, at Parent’s option), and will make available individual members of its senior personnel (including its CEO and CFO) for participation in this road show as reasonably requested and specified by Parent, (y) Acquiror will make available individual members of its senior personnel for participation as reasonably requested and specified by Parent for participation in meeting with analysts (both “sell-side” and otherwise) and will reasonably coordinate and cooperate with Parent in connection with such meetings, and (z) the Parties will perform the marketing activities set forth in Section 5.13(c) of the Parent Disclosure Letter as provided therein.

(n) Acquiror Refinancing . Attached hereto as Exhibit M is a true and complete fully executed copy of the commitment letter relating to the Acquiror Financing (the “ Acquiror Commitment Letter ”). From the date hereof through the Closing Date, each of Parent and SplitCo will cooperate in a commercially reasonable manner with Acquiror in connection with the efforts of Acquiror to complete the Acquiror Financing, including (i) providing information regarding the Galleria Business that is reasonably requested by the Debt Financing Sources and their representatives, including such information required by the Acquiror Commitment Letter, (ii) permitting the Debt Financing Sources and their representatives reasonable access to the Galleria Business, (iii) participating in, and assisting with, marketing efforts related to such refinancing, including causing management team and other representatives to participate in (A) meetings with prospective lenders, (B) bank meetings in connection with any refinancing and (C) meetings with ratings agencies and other parties deemed appropriate and (iv) delivery of documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act. Parent hereby consents to the use of all logos associated with the Galleria Business in connection with obtaining the Acquiror Financing; provided , however , that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage the Galleria Business, Parent, SplitCo or any of their Subsidiaries. Acquiror will use its Commercially Reasonable Efforts to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Acquiror Financing on the terms and conditions described in the Acquiror Commitment Letter, including using its Commercially Reasonable Efforts to (x) negotiate and enter into the credit agreement and related agreements and documents in respect thereof on the terms and conditions contemplated by the Acquiror Commitment Letter, (y) obtain the financing contemplated thereby (which will be deemed to include exercising any flex terms if necessary) and (z) obtain alternate refinancing if any portion of the Acquiror Financing becomes, or would reasonably be expected to become, unavailable; provided , further , that Acquiror shall have the right to modify or waive any of its rights under the Acquiror Commitment Letter, and/or substitute other debt financing for all or any portion of the Acquiror Financing from the same and/or alternative financing sources, in order to obtain more favorable terms with respect thereto, to the extent that such terms are, at such time, generally available in the market to companies that are similarly situated from a credit perspective to Acquiror; provided , however , that Acquiror shall provide written notice to Parent at least 5 Business Days prior to any such proposed modification or waiver; and provided , further , however , that any such modification to or waiver of any provision of the Acquiror Commitment Letter or such substitute debt financing for all or a portion of the Acquiror Financing shall not (i) reduce the aggregate amount of the Acquiror Financing (such that the aggregate funds that would be available to Acquiror would not be sufficient to provide the funds required to consummate such refinancing), (ii) add or expand the conditions precedent or contingencies to the funding of the Acquiror Debt Financing as set forth in the Acquiror Commitment Letter, (iii) materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, as determined by Parent in its sole discretion or (iv) unreasonably impede or delay the satisfaction of the conditions set forth in Article VII .

5.13 Agreement for Exchange of Information . (a) Generally . (i) Except as otherwise provided in the Transition Services Agreement or as prohibited by applicable Law, each Party, on behalf of its respective Group, will provide, or cause to be provided, to the other Party’s Group, at any time after the Closing Date and until the sixth anniversary of the Closing Date, as soon as reasonably practicable after written request therefor, any Shared Information in its possession or under its control. Each of Parent and Acquiror agree to make their respective personnel available during regular business hours to discuss the Information exchanged pursuant to this Section 5.13 .

(ii) Each Party will provide to the other such Information as the other may from time to time reasonably request in order to prepare its financial statements and satisfy its public reporting obligations.

(iii) Prior to the Closing, each Party will take measures that it determines in good faith to be appropriate to ensure that any competitively sensitive Shared Information from one Party is not disclosed to the other Party’s personnel involved in a competing business.

(b) Ownership of Information . Any Information owned by a Party that is provided to the other Party pursuant to this Section 5.13 remains the property of the Party that owned and provided such Information. Each Party will, and will cause members of their respective Groups to, remove and destroy any hard drives or other electronic data storage devices from any computer or server that is reasonably likely to contain Information that is protected by this Section 5.13 and that is transferred or sold to a third party or otherwise disposed of in accordance with Section 5.13(c) , unless required by Law or bona fide document retention policies to retain such materials.

(c) Record Retention . Each Party agrees to use its Commercially Reasonable Efforts to retain all Information that relates to the operations of SplitCo and the Galleria Business in its respective possession or control at the Business Transfer Time in accordance with their respective then-existing document retention policies, as such policies may be amended from time to time.

(d) Other Agreements Providing for Exchange of Information . The rights and obligations granted under this Section 5.13 are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in this Agreement and any Ancillary Agreement.

(e) Compensation for Providing Information . The Party requesting Information will reimburse the other Party for the reasonable out-of-pocket costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party.

(f) Production of Witnesses; Records; Cooperation . (g) After the Closing Date, except in the case of any Action by one Party or its Affiliates against another Party or its Affiliates, each Party will use its Commercially Reasonable Efforts to make available to each other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents are reasonably requested in connection with any Action in which the requesting Party may from time to time be involved.

(v) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third-Party Claim, the other Party will use Commercially Reasonable Efforts to make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents are reasonably requested in connection with such defense, settlement or compromise, or the prosecution, evaluation or pursuit thereof, as the case may be.

(vi) The obligation of the Parties to provide witnesses pursuant to this Section 5.13 is intended to be interpreted in a manner so as to facilitate cooperation and will include the obligation to provide as witnesses managers and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict.

(h) Restrictions . Except as expressly provided in this Agreement or any Ancillary Agreement, no Party or member of such Party’s Group grants or confers rights of license in any Information owned by any member of such Party’s Group to any member of the other Party’s Group hereunder.

5.14 Privileged Matters . (h) As to all communications among counsel for Parent or the Parent Group (including Jones Day and in-house counsel of Parent or the Parent Group), Parent and any other member of the Parent Group that relate in any way to the transactions contemplated by this Agreement or to Excluded Liabilities (collectively, the “ Privileged Communications ”), the attorney-client privilege and the expectation of client confidence belongs to Parent and may be controlled by Parent and will not pass to or be claimed by Acquiror, SplitCo, any Galleria Entity or any of their respective Affiliates. The Privileged Communications are the property of Parent, and from and after the Closing none of Acquiror, SplitCo, any Galleria Entity, any other member of the Acquiror Group or any Person purporting to act on behalf of or through the Acquiror (including a Continuing Employee), SplitCo, any Galleria Entity or any other member of the Acquiror Group will seek to obtain such communications, whether by seeking a waiver of the attorney-client privilege or through other means. As to any such Privileged Communications prior to the Closing Date, Acquiror, SplitCo, each Galleria Entity and each other member of the Acquiror Group, together with any of their respective Affiliates, successors or assigns, further agree that no such Person may use or rely on any of the Privileged Communications in any action against or involving any of the Parties after the Closing. The Privileged Communications may be used by Parent or any other member of the Parent Group in connection with any dispute that relates in any way to the transactions contemplated by this Agreement, including in any claim for indemnification brought by Acquiror. Notwithstanding the foregoing, in the event that a dispute arises between Acquiror, SplitCo any Galleria Entity or any of their Affiliates and a third party (other than a Party or any of their respective Affiliates) after the Closing, Acquiror may assert the attorney-client privilege to prevent disclosure of confidential communications by counsel for Parent or the Parent Group to such third party; provided , however , that neither Acquiror nor any of its Affiliates may waive such privilege without the prior written consent of Parent.

(i) Upon receipt by Acquiror or any of its Affiliates of any subpoena, discovery or other request from any third party that actually or arguably calls for the production or disclosure of Privileged Communications or if Acquiror or any of its Affiliates obtains knowledge that any current or former employee of Acquiror receives any subpoena, discovery or other request from any third party that actually or arguably calls for the production or disclosure of Privileged Communications Acquiror will promptly notify Parent of the existence of the request and will provide Parent a reasonable opportunity to assert any rights it may have under this Section 5.14 or otherwise to prevent the production or disclosure of Privileged Communications. Acquiror will not, and will cause its Affiliates not to, produce or disclose to any third party any of the Privileged Communications under this Section 5.14 unless (i) Parent has provided its express written consent to such production or disclosure or (ii) a court of competent jurisdiction has entered an Order finding that the Privileged Communications are not entitled to protection from disclosure under any applicable privilege, doctrine or rule.

(j) The access to Information, witnesses and individuals being granted pursuant to Section 5.13 and the disclosure to Parent and Acquiror of Privileged Communications relating to the Galleria Business pursuant to this Agreement in connection with the transactions contemplated hereby will not be asserted by Parent or Acquiror to constitute, or otherwise deemed, a waiver of any Privilege that has been or may be asserted under this Section 5.14 or otherwise. Nothing in this Agreement will operate to reduce, minimize or condition the rights granted to Parent and Acquiror in, or the obligations imposed upon Parent and Acquiror by, this Section 5.14 .

5.15 Restriction on Hiring . (c) Parent agrees that for a period of 24 months from the Closing Date, Parent will not, and will cause each other member of the Parent Group not to, without obtaining the prior written consent of Acquiror, directly or indirectly, employ any Continuing Employee (after giving effect to any employee transfers contemplated in this Agreement); provided , however , that any member of the Parent Group may hire any such Person if such Person’s employment has been terminated by the Acquiror Group for any reason or such Person has been given notice of such termination, in either case, prior to any direct or indirect solicitation by any member of the Parent Group (other than solicitations by means of a general media advertisement).

(d) Acquiror agrees that for a period of 12 months from the Closing Date, Acquiror will not, and will cause each other member of the Acquiror Group not to, without obtaining the prior written consent of Parent, directly or indirectly, employ any employee of Parent or any member of the Parent Group who held a position with a seniority level of “Band 3” or higher (as such employment bands are commonly referred to within Parent’s organization as of the date of this Agreement) and with whom Acquiror had direct contact through face-to-face meetings or conference calls during the course of negotiating the transactions contemplated by this Agreement or the Ancillary Agreements (other than as expressly contemplated by this Agreement with respect to employees of the Galleria Business); provided , however , that any member of the Acquiror Group may hire any such Person if such Person’s employment has been terminated by the Parent Group for any reason whatsoever or such Person has been given notice of such termination, in either case, prior to any direct or indirect solicitation by any member of the Acquiror Group (other than solicitations by means of a general media advertisement).

(e) Parent agrees that for a period of 12 months from the Closing Date, Parent will not, and will cause each other member of the Parent Group not to, without obtaining the prior written consent of Acquiror, directly or indirectly, employ any employee of Acquiror or any member of the Acquiror Group who held a position with a seniority level of “Level F” or higher (as such employment bands are commonly referred to within Acquiror’s organization as of the date of this Agreement) and with whom Parent had direct contact through face-to-face meetings or conference calls during the course of negotiating the transactions contemplated by this Agreement or the Ancillary Agreements; provided , however , that any member of the Parent Group may hire any such Person if such Person’s employment has been terminated by the Acquiror Group for any reason whatsoever or such Person has been given notice of such termination, in either case, prior to any direct or indirect solicitation by any member of the Parent Group (other than solicitations by means of a general media advertisement).

5.16 Intellectual Property Assignment/Recordation . Each Party will be responsible for, and will pay all expenses (whether incurred before or after the Business Transfer Time) involved in notarization, authentication, legalization or consularization of the signatures of any of the representatives of its Group on any of the Transfer Documents relating to the transfer of Intellectual Property. Acquiror will be responsible for, and will pay, all expenses (whether incurred before or after the Business Transfer Time) relating to, the recording of any such Transfer Documents relating to the transfer of Intellectual Property from any member of the Parent Group to any member of the Acquiror Group with any Governmental Authorities as may be necessary or appropriate (other than expenses with respect to correcting or updating information that, immediately prior to the Closing Date, is incorrect or has not been updated with any Governmental Authorities concerning the Registered Intellectual Property immediately prior to the Closing Date and which is required to be corrected or updated in order to validly and effectively transfer such Registered Intellectual Property from a member of the Parent Group (other than any Galleria Group members) to a member of the Galleria Group, which shall be corrected and paid for by Parent).

5.17 Use of Parent Names and Marks . (e) “ Parent Names and Marks ” means the names and marks “P&G” and “Procter & Gamble”(in any style or design), and any Trademark derived from, confusingly similar to or including any of the foregoing. Subject to the terms and conditions of this Section 5.17 , Parent, on behalf of itself and its Affiliates as necessary, hereby grants to SplitCo and the Galleria Entities a limited, non-transferable, non-sublicensable (except to the extent licensed to third parties by the Parent Group in the Galleria Business prior to the Closing), non-exclusive, royalty-free license, for the six-month period following the Closing Date (the “ Transition Period ”), to use the Parent Names and Marks in connection with the Galleria Business in the manner set forth in Section 5.17(d) . Acquiror and SplitCo will use Commercially Reasonable Efforts to transition from use of the Parent Names and Marks as soon as reasonably practicable and in any event prior to expiration of the Transition Period. Except as expressly provided in this Section 5.17 or Section 5.27 , Parent reserves for itself and its Affiliates all rights in the Parent Names and Marks, and no other rights therein are granted to SplitCo, any Galleria Entity, member of the Acquiror Group or any of their respective Affiliates, whether by implication, estoppel or otherwise. All use of the Parent Names and Marks by the Galleria Entities will inure to the benefit of Parent and its Affiliates.

(f) As soon as practicable following the Closing Date, and in any event prior to the expiration of the Transition Period, Acquiror will, and will cause the other members of the Acquiror Group (including SplitCo and the Galleria Entities) to, (i) change the name of any Galleria Entity whose name includes any Parent Names and Marks to a name that does not include any of the Parent Names and Marks, (ii) remove all publicly accessible references to Parent Names and Marks from any internet or other electronic communications vehicles, including internet domain names and from the content of any internet websites within the Galleria Assets, and remove all links to any internet domains of Parent or any of its Affiliates from any of the foregoing, (iii) remove or irreversibly cover or modify all Parent Names and Marks from or destroy any packaging bearing any of the Parent Names and Marks, except that SplitCo and the Galleria Entities may continue to sell inventories of finished goods existing or in-process as of the Closing Date and included in the Galleria Assets until the expiration of the applicable shelf lives of such products; provided , however , that Acquiror and its Affiliates use their Commercially Reasonable Efforts to sell such existing inventories prior to the sale of subsequently manufactured or packaged products, and (iv) remove or irreversibly cover or modify all Parent Names and Marks from or destroy any product literature, store displays and similar publicly accessible materials bearing any of the Parent Names and Marks.

(g) For all other uses of the Parent Names and Marks not specifically identified in Section 5.17(b) (e.g., signage, business cards and stationery), for up to 90 days after the Closing Date, in each applicable jurisdiction, SplitCo and the Galleria Entities may continue to use the Parent Names and Marks on the same materials and in substantially the same manner as used by the Galleria Business during the 90-day period preceding the Closing. In each applicable jurisdiction, as soon as practicable following the Closing Date, and, in any event within 90 days after the Closing Date, Acquiror will, and will cause the other members of the Acquiror Group to, remove or irreversibly cover or modify all Parent Names and Marks from or destroy any such other publicly accessible materials bearing any of the Parent Names and Marks.

(h) In no event will SplitCo or any of the Galleria Entities use, and Acquiror will, and will cause the other members of the Acquiror Group to not use, any of the Parent Names and Marks that are subject to the license under this Section 5.17 after the Closing in any manner or for any purpose other than in the same or substantially same manner that such Parent Names and Marks were being used by the Galleria Business during the 12-month period preceding the Closing. Without limiting the generality or effect of the foregoing, all products sold by the Galleria Business using any Parent Name or Mark will be of high quality, consistent in nature and quality with such products as sold by the Galleria Business in the 12-month period preceding Closing. Parent reserves the right to reasonably inspect the Galleria Business’ quality control of the products sold bearing and uses of a Parent Name or Mark and other compliance with the terms of the license granted under this Section 5.17 , in each of the foregoing cases, upon reasonable prior written notice to Acquiror and during normal business hours.

(i) The license granted under this Section 5.17 may be terminated by written notice if Acquiror, SplitCo or any Galleria Entity is in material breach of any provision hereof that remains uncured for more than ten days after written notice thereof from Parent, provided that such termination shall not be effective if Acquiror, SplitCo or the Galleria Entity, as applicable, is using Commercially Reasonable Efforts to cure or otherwise remedy such breach. Upon such termination of the license granted hereunder for any reason, Acquiror and its Affiliates will not use any of the Parent Names and Marks hereunder.

(j) For purposes of clarity, nothing in this Section 5.17 shall preclude any uses of the Parent Names and Marks that are required or otherwise not prohibited under applicable Law (e.g., fair use).

5.18 Removal of Tangible Assets . (a) Prior to the Business Transfer Time, the Parties will discuss in good faith the process and timing for moving to a Galleria Facility all tangible Galleria Assets that are located at any facilities of any member of the Parent Group that are not Galleria Facilities and are reasonably able to be moved, including the feasibility of moving such Galleria Assets prior to the Business Transfer Time. Following such discussions, Parent will determine whether such Galleria Assets should be moved prior to or at the Business Transfer Time, and Parent will cause such Galleria Assets to be moved at the applicable time from such facilities to a Galleria Facility (except, in the case of any Galleria Assets that are utilized by Parent in connection with the performance of a service under the Transition Services Agreement, which will be removed as promptly as reasonably practicable following the termination of such service and in accordance with the Transition Services Agreement). Any move of Galleria Assets pursuant to this Section 5.18 , whether prior to or after the Business Transfer Time, will be in a manner so as not to cause substantial damage to such Galleria Assets; provided , that Acquiror will be responsible for the installation of such property within SplitCo’s facilities.

(b) Except as may be otherwise provided in the Transition Services Agreement or otherwise agreed to by the Parties, all tangible Excluded Assets (if any) that are located at any of the Galleria Facilities will be removed from such facilities prior to the Closing, at Parent’s expense and in a manner so as not to unreasonably interfere with the operations of any member of the Acquiror Group and to not cause substantial damage to such Galleria Facility; provided , that Parent will remove any Excluded Assets that remain at any such Galleria Facilities in connection with the performance of services under the Transition Services Agreement as promptly as reasonably practicable after the termination of such service pursuant to the same terms and conditions stated above in this Section 5.18(b) .

5.19 Works Council Cooperation . To the extent required by applicable Law or labor agreement or any agreement with employee representatives, in each case in connection with the transfer of the In-Scope Employees to employment with SplitCo and its Subsidiaries and the other transactions contemplated hereby, Parent will, or will cause one of its Subsidiaries to, make any notifications to, and consultations with, works councils, economic committees, unions or similar bodies with respect to the In-Scope Employees. Parent and Acquiror will each provide, and will cause each of their Subsidiaries to provide, and will use their reasonable best efforts to cause each of their respective representatives, including legal, human resources and regulatory, to provide, all cooperation reasonably requested by the other Party in connection with satisfying its obligations with respect to any works council, economic committee, union or similar body, including all notifications and consultations and other processes (including meetings with any such body) necessary to effectuate the transfer of the In-Scope Employees to employment with SplitCo and its Subsidiaries at the Business Transfer Time and the other transactions contemplated hereby, which will include any required notifications and consultations and other processes required to either (a) obtain an opinion or acknowledgment from any works council, economic committee, union or similar body or (b) establish that the Parties are permitted to effect the transactions contemplated hereby without such opinion or acknowledgment. Such cooperation will include the provision of any information and consultation required by applicable Law, the terms of any Contract or as reasonably requested by the other Party. Each of Acquiror and Parent will make available its representatives at such times and in such places as the other Party may reasonably request for purposes of discussions with representatives of any such works council, economic committee, union or similar body. Parent and its Subsidiaries will promptly notify Acquiror (and provide copies) of any binding commitments or final agreements with any works council, economic committee, union or similar body in the information and/or consultation or other procedures with respect to the In-Scope Employees in respect of the transactions contemplated hereby. Parent and its Subsidiaries will not make any binding commitment or final agreement with any such works council, economic committee, union or similar body (or in each case, to any representatives thereof) for which the Acquiror Group may be liable after the Closing, without the written consent of Acquiror, which will not be unreasonably withheld, conditioned or delayed.

5.20 Insurance Matters . From and after the Closing, Acquiror will not, and will cause its Affiliates not to, assert any claim against any insurance policies or practices of Parent and its Affiliates under any captive insurance policies, fronted insurance policies, surety bonds or corporate insurance policies or practices, or any form of self-insurance whatsoever; provided , however , that (a) Parent and Acquiror agree that all claims with respect to insured events occurring prior to the Closing will be administered in accordance with the terms of Parent’s or its Subsidiaries’ third-party policies, if any, and coverage applicable to such claims, (b) Acquiror will receive the benefit of such third-party policies with respect to such claims to the extent losses occurring prior to the Closing related to Galleria Assets are covered notwithstanding the consummation of the transactions contemplated by this Agreement, and (c) Parent will receive the benefit of such policies with respect to such claims to the extent losses related to Liabilities other than Galleria Liabilities are covered notwithstanding the consummation of the transactions contemplated by this Agreement and provided that in the case of clauses (b) and (c) such recovery will be net of any deductibles or self-insured retention amounts, costs of any retroactive insurance premiums or other amounts paid or expenses incurred in connection with any insured claims made after the Closing under any such policies that relate to the period prior to Closing or any amounts paid by Parent pursuant to Article IX in respect of the applicable Liabilities (it being understood that Parent will have the right to determine whether or not to make any claim against Parent’s insurance policies).

5.21 Restructuring of Galleria Business; Transition Plan . (a) Transition Plan . During the 90-day period immediately following the date of this Agreement, Parent and Acquiror will develop a plan as provided in this Section 5.21 (as the same may be amended or supplemented from time to time, the “ Transition Plan ”) that sets forth reasonable detail regarding (i) the establishment prior to the Closing of such internal functions of SplitCo as may be necessary so as to allow Acquiror to operate SplitCo immediately after the Closing in a commercially reasonable manner in all material respects (which may take into account the functions that will be provided by Acquiror’s existing business and resources and also the transition services that are referenced in Exhibit D or otherwise permitted by clause (ii) of this sentence), and (ii) preparation for the receipt of the transition services referenced in Exhibit D ; provided , however , that Acquiror may reasonably request other services if such services are not expressly listed as “Excluded” on Exhibit D , but Exhibit D shall be amended solely to the extent that Parent determines, in its sole discretion, such amendment would not materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby.

(b) Preparation of Transition Plan . Parent and Acquiror will provide to each other no later than 5 days after the date of this Agreement the names of their transition team leaders. Within 30 days of the date of this Agreement, Parent will prepare a draft Transition Plan and present such plan to Acquiror (the “ Original Proposal ”). The Parties will discuss in good faith during the 30 day period following the delivery of the Original Proposal to Acquiror any desired changes to the Original Proposal; provided , that no such proposed amendment will result in an increase by more than a de minimis amount in the nature and scope of the services ultimately provided by Parent to SplitCo pursuant to the transition services described in Exhibit D , as such may be amended from time to time in accordance with Section 5.21(a) . In the event of any disagreement with respect to the preparation of the Transition Plan that continues to be unresolved at the end of this second 30 day period, each of Parent and Acquiror will refer such disagreement to an executive officer of Parent and Acquiror (as applicable), which executive officers will negotiate in good faith to resolve such disagreement within 30 days. In the event that such negotiations are unable to resolve such disagreement, then the Transition Plan will be completed as proposed by Parent (after taking into account any points of agreement between Parent and Acquiror), provided , that the Transition Plan must be commercially reasonable, consistent with the Intended Tax-Free Treatment and reasonably capable of completion by the End Date.

(c) Proposed Changes After Transition Plan Is Finalized . After the Transition Plan is completed as contemplated by Section 5.21(b) , either Parent or Acquiror can propose amendments to such Transition Plan. The adoption of such amendments will be subject to the consent of the other Party after good faith consideration, taking into account the impacts of such a change on the Intended Tax-Free Treatment and the ability to complete the Closing by the End Date; provided , however , that no such proposed amendment will result in an increase by more than a de minimis amount in the nature and scope of the services ultimately provided by Parent to SplitCo pursuant to the transition services described in Exhibit D , as such may be amended from time to time in accordance with Section 5.21(a) .

(d) Execution of Transition Plan . Parent will, and will cause the other members of the Parent Group to, commence implementation of the Transition Plan promptly after the Transition Plan is finalized as contemplated by Section 5.21(b) , and will use Commercially Reasonable Efforts to complete the Transition Plan no later than the Business Transfer Time. Parent will provide Acquiror with monthly reports on the progress of implementation of the Transition Plan and expenditures in connection therewith, together with reasonable detail regarding such expenditures. In the event that an action proposed to be taken by Parent or any of its Subsidiaries in connection with the Restructuring would be permitted or prohibited pursuant to Section 5.01 but would conflict with a provision of the Transition Plan, the Transition Plan will control.

(e) Transfer of Accounts Receivable . Prior to the Cut-Off Date and prior to the Closing, Parent will cause (i) all accounts receivable that are either (A) primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily related to the Salon Professional Business and (ii) all other rights to payment and security for payments to the extent they relate to the Galleria Business to be held by a member of the Galleria Group.

(f) Set-Up of UPC/EAN Codes; Packaging; Transition of Parent Names and Marks . In connection with the Restructuring and implementation of the Transition Plan, Parent will commence, prior to the Closing, Commercially Reasonable Efforts to (i) establish UPC, EAN and similar codes for the Galleria Entities insofar as such entities do not currently have their own such codes, (ii) modify the packaging and related written materials of the Galleria Business used to advertise, promote, market and sell its products so as to remove any Parent Names and Marks that appear on such packaging and materials, (iii) commence the changes contemplated in Section 5.17 prior to the Closing, all of the foregoing in reasonable consultation and cooperation with Acquiror (it being understood that the activities referenced in this Section 5.21(f)(i)-(iii) may not be completed as of the Closing, in which case, in addition to use of the Parent Names and Marks permitted pursuant to Section 5.17 , the Galleria Entities will be permitted to use the UPC, EAN and similar codes of the Parent Group for a reasonable period of time following the Closing) and (iv) establish for the Galleria Entities an accumulation of inventory of all Products incorporating or manufactured using any of the Excluded Technologies set forth on Section 5.21(f) of the Parent Disclosure Letter that will not be licensed (other than pursuant to a sell-off license) to SplitCo following the Closing, which accumulation is sufficient to meet sales of such Products from the Closing through the 2016 holiday season, as measured by the average sales of such Products during the corresponding period in the three (3) years prior to Closing. To the extent that any inventory build-up contemplated by such clause (iv) would take place between the Cut-Off Date and the Closing Date, the Cut-Off Date Working Capital will include Parent’s good faith projection of the amount of such inventory that would be present as of the Closing Date.

(g) Control of Galleria Entity Structuring . Authorized representatives of Parent and Acquiror will use their reasonable best efforts to meet, within 30 days and then again within 60 days after the date hereof, to discuss (i) the material Galleria Assets that are held and the material Galleria Liabilities that are owed, as of such date, by Parent or any of its Affiliates and that will be held by, transferred to or assumed by, as the case may be, a Galleria Entity prior to the Closing, and (ii) any Tax or other objectives that Acquiror desires that Parent take into account in effecting the Galleria Transfer (the “ Acquiror Restructuring Goals ”). Parent will use its reasonable best efforts to provide Acquiror, not more than 90 days after the date hereof, with schedules identifying or describing any (1) Galleria Assets that are held, and Galleria Liabilities that are owed, as of such date by Parent or any of its Affiliates and that will be held by, transferred to or assumed by, as the case may be, a Galleria Entity prior to the Closing and (2) any Excluded Assets that are held, and Retained Liabilities that are owed, as of such date by the Galleria Entities and that will be transferred to or assumed by, as the case may be, Parent or any of its Affiliates (other than a Galleria Entity) prior to the Closing (the schedules described in clause (1) and clause (2) immediately above, collectively, the “ Restructuring Schedules ”). Within 15 days after receipt of the Restructuring Schedules, Acquiror will notify Parent in writing of any revisions to the Acquiror Restructuring Goals, and Parent will, after giving good faith consideration to the Acquiror Restructuring Goals as revised herein, (x) preliminarily determine, in its sole discretion, the manner in which each Galleria Asset and Galleria Liability is Conveyed to SplitCo or any of its Subsidiaries, including whether a particular Galleria Asset is contributed or Galleria Liability is Conveyed directly to SplitCo or another member of the Galleria Group or is included as an asset or liability of an entity whose equity interests are contributed to SplitCo (collectively, the “ Galleria Entity Structuring ”), and (y) use its reasonable best efforts to provide Acquiror, within 45 days after receipt of Acquiror’s written notification regarding any revisions to the Acquiror Restructuring Goals, with a reasonably detailed step plan illustrating the steps pursuant to which Parent believes as of such date that Parent will implement the Galleria Entity Structuring (such step plan, the “ Galleria Entity Structuring Step Plan ”). Within 30 days after receipt of the Galleria Entity Structuring Step Plan, Acquiror will notify Parent in writing of any comments to such plan. Parent will: (i) consult with Acquiror in good faith regarding Acquiror’s written comments to the Galleria Entity Structuring Step Plan, (ii) provide Acquiror with an opportunity to review any contemplated revisions to the Galleria Entity Structuring Step Plan; (iii) in its sole discretion, finalize the Galleria Entity Structuring and (iv) promptly provide a copy of the final Galleria Entity Structuring Step Plan to Acquiror.

(h) Transition Services Agreement . As soon as reasonably practicable after determination of the Transition Plan, the Parties will negotiate in good faith the schedule of services for the Transition Services Agreement to be entered into by and between Parent and SplitCo at the Closing, for the provision of the services and access contemplated by the Transition Services Agreement, Section 5.21(a) and Exhibit D for a term of six months following the Closing Date, plus any extension of such term expressly permitted under the Transition Services Agreement. Notwithstanding anything to the contrary contained in this Agreement, none of Parent or any of its Affiliates will make any substantive business decisions with respect to the Galleria Business in performing any services for SplitCo pursuant to the Transition Services Agreement.

(i) Restructuring Documentation . Parent will provide any proposed agreements, certificates of formation or other governing documents, instruments of conveyance and other similar documents relating to the Restructuring (collectively, the “ Restructuring Documents ”) to Acquiror for its review a reasonable amount of time prior to execution of each such Restructuring Document (or, if not executed, prior to the effectiveness of each such Restructuring Document). Parent will, in good faith, consider any reasonable request by Acquiror in such Restructuring Documents, provided that, to the extent Acquiror has not informed Parent of any requested changes within five Business Days of its receipt of any Restructuring Document, such Restructuring Document will be deemed to be satisfactory. All Restructuring Documents will be consistent with the terms of the Agreement and will not impose any additional Liabilities or obligations on SplitCo, Acquiror or any other party beyond those contemplated in this Agreement. For the avoidance of doubt, nothing in this Agreement will be deemed to permit Acquiror to control or direct any aspect of the Galleria Entity Structuring, which will be determined by Parent as provided in Section 5.21(g) .

5.22 Confidentiality . (a) The Parties acknowledge that in connection with the transactions contemplated hereby, the Parties have disclosed to each other Information which the Parties consider proprietary and confidential (“ Confidential Information ”). For the avoidance of doubt, any information disclosed by or on behalf of the Parties under the Confidentiality Agreement that is subject to the confidentiality obligations contained therein will be, and will be deemed to be, Confidential Information for purposes of this Agreement and will be subject to all of the terms and conditions of this Agreement, including the restrictions on the disclosure of such Confidential Information contained herein. The Parties agree that, after the Closing, Information that constitutes an Galleria Asset will be Confidential Information of Acquiror and Acquiror will not be subject to this Section 5.22 (except for Section 5.22(c) ) with respect to such information, and Parent will be deemed to be the Receiving Party of such Confidential Information for purposes of Section 5.22(b) .

(b) Each Party receiving Confidential Information (the “ Receiving Party ”) recognizes and acknowledges:

(iii) that Confidential Information of the other Party may be commercially valuable proprietary products of such Party, the design and development of which may have involved the expenditure of substantial amounts of money and the use of skilled development experts over a long period of time and which afford such Party a commercial advantage over its competitors;

(iv) that the loss of this competitive advantage due to unauthorized disclosure or use of Confidential Information of such Party may cause great injury and harm to such Party; and

(v) that the restrictions imposed upon the Parties under this Section 5.22 are necessary to protect the secrecy of Confidential Information and to prevent the occurrence of such injury and harm. The Parties agree that:

(A) disclosure of Confidential Information will be received and held in confidence by the Receiving Party and that such Receiving Party will not, without the prior written consent of the Party from whom such Confidential Information was obtained (the “ Disclosing Party ”), disclose, divulge or permit any Person to obtain any Confidential Information disclosed by the Disclosing Party (whether or not such Confidential Information is in written or tangible form), other than to Subsidiaries of the Receiving Party and their employees and agents, in each case, who have a need to know such Confidential Information and who are bound in writing by duties of confidentiality and non-use obligations with respect to such Confidential Information no less protective of the Disclosing Party than those set forth herein;

(B) the Receiving Party will take such steps as may be reasonably necessary to prevent the disclosure of Confidential Information to others; and

(C) the Receiving Party will use the Information only in connection with the transactions contemplated hereby to perform its and its Group’s obligations, or to exercise its rights, under this Agreement and the Ancillary Agreements.

(i) which is already known to the Receiving Party other than any member of Parent Group with respect to Confidential Information related to the Galleria Business or any of the Galleria Entities, or is information generally available to the public;

(ii) which, hereafter, through no act on the part of the Receiving Party or its Representatives becomes generally available to the public;

(iii) which corresponds in substance to a disclosure furnished to the Receiving Party by any third party having a bona fide right to do so and not having any confidential obligation, direct or indirect, to the Disclosing Party with respect to the same; or

(iv) which is required to be disclosed by Law; provided that the Receiving Party provides reasonable prior written notice of such required disclosure to the Disclosing Party following the Receiving Party’s knowledge of such requirement in order to provide the Disclosing Party with an opportunity to prevent or limit such disclosure by seeking a protective order or other appropriate remedy at the sole expense of the Disclosing Party.

5.23 Certain Material Contracts . (a) Parent has not, prior to the execution of this Agreement, made available to Acquiror copies or summaries of certain Galleria Material Contracts or Shared Business Contracts required to be listed or described in Section 3.08(a) or Section 3.08(b) of the Parent Disclosure Letter (the “ To-Be-Delivered Galleria Material Contracts ”). Notwithstanding any other provision of this Agreement, but subject to Parent’s compliance with the provisions of this Section 5.23 , Parent’s failure to identify or make the To-Be-Delivered Galleria Material Contracts available to Acquiror does not constitute a breach of Sections 3.08(a) , 3.08(b) or 3.08(d) . Nothing in this Section 5.23 will be deemed to limit or otherwise alter Parent’s obligations, to the extent of Parent’s Knowledge, to list all of the Galleria Material Contracts on Section 3.08 of the Parent Disclosure Letter on the date hereof pursuant to the terms of this Agreement.

(b) Parent will use reasonable best efforts to furnish a true, complete and correct copy (or summary of the material terms) of each To-Be-Delivered Galleria Material Contract (other than any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential) existing as of the date of this Agreement to Acquiror as promptly as reasonably practicable after the date hereof and, in any event, within 60 days following the date hereof.

(c) If any To-Be-Delivered Galleria Material Contract constitutes a Galleria Material Contract of the type referred to in subparagraphs (i), (ii), (iii), (vi), (xi), (xii) or (xiii) of Section 3.08(a) (other than (1) distribution agreements that were identified or described on Section 3.08 of the Parent Disclosure Letter that meet such description solely because they contain an exclusivity provision in respect of a material service and therefore fall within clause (i) or (ii) of Section 3.08(a) and (2) any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential), then Acquiror will have the right to notify Parent within 30 days after the delivery of each such Contract (or description of the material terms of such Contract) that it elects not to assume such To-Be-Delivered Galleria Material Contract. With respect to any To-Be-Delivered Galleria Material Contract a copy (or description of material terms) of which is not delivered to Acquiror within the 60-day period referenced in sub-paragraph (b), this 30-day election period will commence at the end of such 60-day period.

(d) Any To-Be-Delivered Galleria Material Contracts that Acquiror elects not to assume as provided above, together with, unless otherwise agreed by Acquiror, any To-Be-Delivered Galleria Material Contracts (other than any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential) that are not delivered to Acquiror in accordance with Section 5.23(b) will not constitute Galleria Contracts hereunder and will not be Conveyed to Acquiror or any of its Affiliates pursuant hereto. Subject to the other provisions of this Agreement, all other To-Be-Delivered Galleria Material Contracts (including any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential) will constitute Galleria Contracts hereunder and will be Conveyed to Acquiror or its Affiliates in accordance with the terms of this Agreement; provided , however , that Acquiror will not decline to assume any such To-Be-Delivered Galleria Material Contract if Parent determines, in its sole discretion, that doing so would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby.

5.24 Mercury Business Perfume Oils . (a) With respect to the Exclusive Third-Party Perfume Oils, in addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive (which waiver will be effective at the Business Transfer Time) any exclusivity provision in Parent’s supply agreements with the relevant Existing Perfume Oil Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Perfume Oil Supplier who can, subject to SplitCo reaching a mutually agreeable arrangement with such Existing Perfume Oil Suppliers, supply the Exclusive Third-Party Perfume Oils directly to SplitCo on an exclusive basis.

(b) At the Business Transfer Time, Parent will provide SplitCo with the formula cards relating to the Exclusive Parent Perfume Oils and SplitCo will be entitled to use such formula cards without further compensation. In addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive (which waiver will be effective at the Business Transfer Time) any exclusivity provision in Parent’s supply agreements with any applicable supplier that supplies the ingredients required to produce the Exclusive Parent Perfume Oils to the extent necessary to allow SplitCo to attempt to negotiate its own independent relationship with such suppliers.

(c) Following the Business Transfer Time, the Parent Group shall not (i) use the Exclusive Parent Perfume Oils or the Exclusive Third-Party Perfume Oils or (ii) until the fifth anniversary of the Closing, and without limitation to any Intellectual Property rights of the Galleria Group, intentionally replicate the scent thereof (excluding in each case, for the avoidance of doubt, any such Perfume Oils that are used in a Retained Business).

(d) Notwithstanding anything to the contrary in this Agreement, SplitCo will not receive access to any Perfume Oils that are exclusively related to any Retained Business.

5.25 Ancillary Fragrances . (a) With respect to the Exclusive Third-Party Ancillary Fragrances, in addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive (which waiver will be effective as of the Business Transfer Date) any exclusivity provision in the Parent Group’s supply agreements with the relevant Existing Ancillary Fragrance Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Ancillary Fragrance Suppliers that can, subject to SplitCo reaching a mutually agreeable arrangement with such Existing Ancillary Fragrance Suppliers, supply the Exclusive Third-Party Ancillary Fragrances directly to SplitCo on an exclusive basis for use by SplitCo in products marketed under the same primary brand name as the Non-Mercury Products or Non-Hydroalcoholic Products that use the applicable Exclusive Third-Party Ancillary Fragrances as of the date of this Agreement.

(b) With respect to the Non-Exclusive Third-Party Ancillary Fragrances, in addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive (which waiver will be effective as of the Business Transfer Date) any exclusivity provision in the Parent Group’s supply agreements with the relevant Existing Ancillary Fragrance Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Ancillary Fragrance Supplier that can, subject to SplitCo reaching a mutually agreeable arrangement with such Existing Ancillary Fragrance Supplier, supply the Non-Exclusive Third-Party Ancillary Fragrances directly to SplitCo on a non-exclusive basis for use by SplitCo in products marketed under the same primary brand name as the applicable Non-Mercury Products or Non-Hydroalcoholic Products that use the Non-Exclusive Third-Party Ancillary Fragrances as of the date of this Agreement.

(c) At the Business Transfer Time, Parent will provide SplitCo with the formula cards relating to the Exclusive Parent Ancillary Fragrances and SplitCo will be entitled to use such formula cards without further compensation, and Parent will destroy any copies in its possession of such formula cards. At the Business Transfer Time, Parent will provide SplitCo with the formula cards relating to the Non-Exclusive Parent Ancillary Fragrances and SplitCo will be entitled to use such formula cards without further compensation, and Parent and SplitCo will each maintain the confidentiality of such formula cards.

(d) Acquiror acknowledges and agrees that (i) SplitCo’s right to use the Non-Exclusive Third-Party Ancillary Fragrances is non-exclusive, (ii) after the Business Transfer Time, Parent and Parent’s Affiliates may use the Non-Exclusive Third-Party Ancillary Fragrances and Non-Exclusive Parent Ancillary Fragrances in their current or future products under other brand names in their other businesses or sell, assign, transfer, deliver, license or otherwise permit the use of the Non-Exclusive Third-Party Ancillary Fragrances or the Non-Exclusive Parent Ancillary Fragrances by Third Parties in other products, and (iii) after the Business Transfer Time, Parent and Parent’s Affiliates may develop new fragrances with characteristics similar to the Non-Hydroalcoholic Fragrances in their other businesses.

(e) Following the Business Transfer Time, the Parent Group shall not use the Exclusive Parent Ancillary Fragrances or Exclusive Third-Party Ancillary Fragrances (excluding, for the avoidance of doubt, any such Ancillary Fragrances that are used in a Retained Business).

(f) Notwithstanding anything to the contrary in this Agreement, SplitCo will not receive access to any Non-Hydroalcoholic Fragrances that are exclusively related to any Retained Business.

5.26 Continuing Employee Restrictions . Without the prior written consent of Parent, and to the extent permitted by applicable Law, during the 12-month period following the Closing Date, the Acquiror Group will not permit any Continuing Employee to, and will cause each Continuing Employee not to, directly or indirectly, engage in any activity with, or provide any services to, including as a director, manager, supervisor, employee, advisor, consultant or otherwise, any member of the Acquiror Group in connection with the manufacture, development, advertising, promotion or sale of any product which is the same as or similar to or competitive with any product of Parent and its Affiliates (including any existing product as well as any product known to the Continuing Employee, as a consequence of the Continuing Employee’s employment with Parent or its Affiliates, to be in development) that is manufactured, marketed or sold in the Retail Channel during such 12-month period, other than products manufactured, marketed or sold by the Galleria Business outside of the Retail Channel and otherwise to the extent not restricted by the terms of this Agreement or any other Transaction Document.

5.27 Facilities Split Plan . Following the date hereof, Parent and Acquiror will develop a plan in accordance with the terms and conditions set forth in the Split Plan Agreement to separate the Split Facilities from their existing combined sites so that the Split Facilities can be transferred as herein contemplated. Parent and Acquiror will bear the costs of implementation of the Split Plan equally; provided , however , that (a) prior to the Closing, Parent may, in good faith, update any estimates of the costs and expenses reasonably expected to be incurred by each of the Parties to separate the Split Facilities as contemplated by this Section 5.27 (such amounts, the “ Split Plan Costs ”), (b) prior to the Closing, the Recapitalization Amount will be increased or decreased, as applicable, by the net amount of any adjustments necessary to achieve a 50%/50% sharing of the Split Plan Costs (taking into account any updated estimates as contemplated by the preceding clause (a)), and (c) no reimbursement payments will be made by one Party to the other in respect of Split Plan Costs after the Closing.

5.28 Wind-down of Max Factor Gold Business . Between the date hereof and the Closing Date, the Parent Group will wind-down its Max Factor Gold business and will cease production of any new Max Factor Gold business products under the Trademark contained in the Galleria IP Assets and used in connection with the Kosmos Business by the Closing Date.

5.29 Diamond Technology . From the date hereof until the Business Transfer Time, Parent will dedicate the equivalent of three full-time employees to attempt to develop a replacement or substitute Technology for the Diamond Technology, for purposes of securing a replacement or substitute that is substantially similar or superior to the Diamond Technology for use in Care Products (the “ Substitute Diamond Technology ”).

5.30 Non-Compete Restrictions . (a) Parent Group General Restrictions . For the period beginning on the Closing Date and ending on the third anniversary of the Closing Date (the “ Restricted Period ”), Parent will not, and will cause its Affiliates not to, without the prior consent of Acquiror, directly or indirectly (it being understood that in respect of Covered Salon Products, indirect sales will be prohibited only insofar as they take place at the direction of a member of the Parent Group through an agent of any member of the Parent Group) engage in, anywhere in the world, the sourcing, manufacturing, development, advertising, promotion, sale, distribution or marketing of: (a) Color Products; (b) Covered Salon Products; (c) Covered Fine Fragrance Products; or (d) Covered Color Cosmetics Products (collectively, the “ Restricted Business ”); provided , however , that the foregoing will not restrict Parent or its Affiliates from: (i) owning, directly or indirectly, solely as an investment, securities of any Person engaged in a Restricted Business if neither Parent, nor any of its controlled Affiliates, beneficially own (as defined in Rule 13d-3 under the Exchange Act) more than 10% of any class of securities of such Person; (ii) making any acquisition of any business or Person that engages in a Restricted Business (the “ Target ”), if the annual net sales attributable to the Restricted Business for the Target’s most recent fiscal year constitute less than 30% of the total net sales of the Target for such year, provided , however , that if such net sales of the Restricted Business for the Target’s most recent fiscal year exceed $200 million and the closing of the acquisition of the Target occurs more than 12 months prior to the end of the Restricted Period, then Parent will (x) provide Acquiror the right to make a proposal to purchase such Retained Business within 60 days following Parent providing notice to Acquiror of such closing, and, if Acquiror makes such a proposal, to negotiate the terms of such a purchase in good faith for the remainder of such 60 day period and (y) in the event Acquiror declines to make such a proposal (or if Parent and Acquiror do not enter into an agreement with respect to the sale of such Retained Business within such 60 day period or agree to extend such period), use Commercially Reasonable Efforts to sell or otherwise dispose of the portion of the Target’s business that engages in the Restricted Business and Parent will be required to either sell or cease to operate the portion of the Target’s business that engages in the Restricted Business as promptly as practicable, but in any event within 18 months of the closing of the acquisition of the Target; (iii) licensing any Patents or Trade Secrets that are applicable to the other businesses owned by the Parent Group to any Person (even if such Person owns a Restricted Business) so long as, subject to the limitations set forth in Schedule 5.30(a) of the Parent Disclosure Letter, any license of such Patents or Trade Secrets to such Person does not permit such Person to use or sublicense such Patents or Trade Secrets in such Restricted Business and Parent will (and will cause its Affiliates to) use Commercially Reasonable Efforts to enforce such restrictions; or (iv) providing any transitional services or supply to any Person arising from the divestiture of one or more of Parent’s businesses. The parties agree that the covenants included in this Section 5.30(a) are, taken as a whole, reasonable in their geographic and temporal coverage and no party will raise any issue of geographic or temporal reasonableness in any proceeding to enforce such covenant. Parent acknowledges and agrees that in the event of a breach by Parent of the provisions of this Section 5.30(a) , monetary damages will not constitute a sufficient remedy. Consequently, in the event of any such breach, Acquiror may, in addition to any other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief or other relief in order to enforce or prevent any violation of the provisions hereof.

(b) Exceptions . Notwithstanding any other provision hereof, Section 5.30(a) will not prohibit, restrict or prevent any of the following:

(i) the operation of the Existing Parent Business;

(ii) the operation of the Restricted Business by Parent to the extent such Restricted Business is permitted to be retained by Parent pursuant to Section 5.30(a)(ii) or Section 5.30(a)(iii) , as applicable;

(iii) the sourcing, manufacturing, development, advertising, promotion, sale, distribution or marketing of any products that are included in the categories specified on Section 5.30(b)(iii) of the Parent Disclosure Letter (such products, collectively, the “ Parent Out-of-Scope Products ”); or

(iv) subject to Section 1.09 , the continuation, operation, development, transfer or transition of the Retained Business.

VI. EMPLOYEE MATTERS

6.01 Identification of Employees . (j) Parent will update the lists of In-Scope Employees set forth on Section 6.01 of the Parent Disclosure Letter (i) within 20 days following the date of this Agreement, (ii) from time to time thereafter in Parent’s sole discretion and (iii) no later than ten days prior to the Closing Date, in each case, in order to reflect terminations, allocation of Parent Group employees at the Split Facilities, transfers, new hires, changes in active status, changes to Choice Employee status, accidental or inadvertent errors or omissions and changes resulting from the implementation of the Restructuring and the implementation of the Transition Plan and the other transactions contemplated by this Agreement, highlighting such changes. Subject to applicable Laws, including following Parent’s receipt of a valid waiver or consent from the applicable employee where applicable Law requires, Parent will also include the names of In-Scope Employees who hold a position with a seniority level of “Band 3” or higher (as such employment bands are commonly referred to within Parent’s organization as of the date of this Agreement) in its updates to the lists of In-Scope Employees set forth on Section 6.01 of the Parent Disclosure Letter. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, and to the extent permitted by applicable Law, Parent may, in its sole discretion, cause the employment of any In-Scope Employee to be transferred to any member of the Galleria Group at any time prior to the Closing. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, and to the extent permitted by applicable Law, Parent shall cause the employment of any employee of any member of the Galleria Group (other than any In-Scope Employee) to be transferred to any member of the Parent Group (other than any member of the Galleria Group) at any time prior to the Closing.

(k) Within 45 days following the date of this Agreement, Parent will provide to Acquiror a true and complete list, on an In-Scope Employee by In-Scope Employee basis, of all equity and equity based awards of Parent (collectively, the “ Parent Awards ”) held by each In-Scope Employee with an employment level of “Band 4” or higher (as such employment bands are commonly referred to within Parent’s organization) as of the date of this Agreement, and such list will also provide the dates of grant, expiration date, the number of shares underlying such Parent Awards, and the applicable exercise or base price per share.

(l) Within 45 days following the date of this Agreement, Parent will provide to Acquiror a list indicating the visa or similar work authorization status of each Expatriate Employee working pursuant to such a local visa or similar authorization as of the date of this Agreement.

(m) Within 60 days following the date of this Agreement, Parent will provide to Acquiror a true and complete list of each material Compensation and Benefit Plan. Within 60 days following the date of this Agreement, Parent will make available to Acquiror a true and complete copy of Parent’s expatriate policy and with respect to each Galleria Business Acquired Plan, Parent will make available to Acquiror copies of (i) the plan document, including any amendments thereto, (ii) if applicable, the most recent annual report on Form 5500 required to be filed with the IRS or any comparable report required to be filed with a Governmental Authority, (iii) the most recent actuarial valuation report, if applicable, for the applicable plan and (iv) if applicable, the most recent IRS determination letter or any comparable letter from a Governmental Authority regarding the tax-qualified status of any such plan with a tax-qualified trust if assets will be transferred from such trust to a trust of a Galleria Group Plan pursuant to Schedule 1.05(a)(xiii) .

6.02 Continuity of Employment . (g) Parent and Acquiror hereby acknowledge that it is in their mutual best interest for there to be continuity of employment by the Galleria Group following the Closing with respect to (i) each In-Scope Employee (other than any Choice Employee) and (ii) each Choice Employee who agrees to continue employment with the Galleria Group as of the Closing (in each case, other than any employee whose employment with Parent and its Subsidiaries terminated prior to the Closing) (collectively, “ Galleria Business Employees ”).

(h) As soon as reasonably practicable, but in any event prior to the Closing Date (or such time as is required by applicable Law or as is required in connection with notifications to, or consultations with, unions or works councils), (i) SplitCo will, or will cause one of its Subsidiaries to, make an offer of employment to each In-Scope Employee unless such In-Scope Employee is employed by a Galleria Entity or such In-Scope Employee’s employment will otherwise transfer to the Galleria Group pursuant to the transactions contemplated by this Agreement or applicable Law and (ii) SplitCo will, or will cause one of its Subsidiaries to, present its terms and conditions of employment (including base salary, target bonus opportunity and other terms and conditions in respect of post-Closing compensation and benefits) to all In-Scope Employees (regardless of whether described in clause (i) of this sentence), which employee offers and terms and conditions will be consistent with the provisions of Section 6.04 . Prior to making such offers and presenting such terms and conditions, SplitCo will provide Parent and Acquiror with a reasonable opportunity to review and comment on its proposed terms and conditions. Subject to applicable Law, Parent, SplitCo and Acquiror will reasonably cooperate in connection with the presentation of such employment offers and terms and conditions of employment to the In-Scope Employees, including with respect to the timing thereof. The Parties acknowledge that any In-Scope Employee (including any Choice Employee) may elect not to continue employment with the Galleria Group. Each Galleria Business Employee who continues employment or accepts employment with a member of the Galleria Group (the applicable entity, the “ Employing Entity ”) immediately following the Closing is referred to herein as a “ Continuing Employee ”. Each Continuing Employee whose home country is in the United States is referred to as a “ US Continuing Employee ,” and each Continuing Employee whose home country is outside of the United States is referred to as a “ Non-US Continuing Employee .”

(i) Nothing herein will be construed as a representation or guarantee by Parent or any of its Subsidiaries that (i) some or all of the In-Scope Employees will accept employment with the Galleria Group or (ii) some or all of the In-Scope Employees will become employed by or continue in employment with the Galleria Group for any period of time; provided , however , that, unless prohibited by applicable Law, if an In-Scope Employee (other than any Choice Employee) refuses employment with the Galleria Group (the terms and conditions of which employment are consistent with the provisions of Section 6.04 ), Parent will or will cause its Subsidiaries to terminate the employment of such employee with Parent and its Subsidiaries at or prior to the Closing Date and, notwithstanding Section 5.15 , but subject to applicable Law, Parent will not hire any such employee for 24 months following such termination.

(j) With respect to any Galleria Business Employee who is working in any country pursuant to a local visa or similar authorization as of the Closing, Acquiror, the Galleria Group and Parent will use their Commercially Reasonable Efforts to allow such Galleria Business Employee to transfer to a member of the Galleria Group in such country at or prior to the Closing. Notwithstanding anything to the contrary, to the extent permitted under applicable Law, if such transfer measures are not completed as of the Closing Date, such Galleria Business Employee will remain an employee of Parent or its Subsidiaries, and will not transfer employment to Acquiror or any of its Affiliates until such transfer measures are completed (each, a “ Delayed Transfer Employee ”). Each Delayed Transfer Employee will not be considered a Continuing Employee unless and until such transfer measures are completed prior to the second anniversary of the Closing, and Parent may determine not to transfer such Person if Parent determines, in its sole discretion, that doing so would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby. Acquiror and SplitCo will cause the Galleria Group to provide each Continuing Employee who is working in any host country listed on Section 6.01 of the Parent Disclosure Letter (as updated pursuant to Section 6.01 ) pursuant to a local visa or similar authorization with not less than 90 days advance notice of any termination by the Galleria Group of the employee’s employment occurring while the employee is working pursuant to such local visa or similar authorization.

(k) Within 60 days prior to the Closing Date, Parent will, and will cause its Subsidiaries to, and Acquiror will, and will cause its Subsidiaries to, cooperate to identify and effect the transfer to a member of the Galleria Group of any individual retained as an independent contractor whose services are required to transfer to a member of the Galleria Group as of the Closing pursuant to applicable Law.

6.03 Establishing Galleria Group Plans . (n) Establishing Plans . Prior to the Closing, Parent and Acquiror will mutually cooperate pursuant to the Transition Plan process as set forth in Section 5.21 of this Agreement in order to establish any compensation and benefit plans for the Galleria Group (the “ Galleria Group Plans ”). The Galleria Group Plans will be sponsored and maintained by the Galleria Group. The Galleria Group Plans will have terms and conditions that meet the requirements of Section 6.04 , provided , however , that the requirements of Section 6.04 will be applied as if those requirements were applied prior to the Closing and as if they were applied by reference to any terms and conditions in effect immediately before the Galleria Business Employees are employed by the Galleria Group. The Galleria Group will be responsible for all Liabilities and obligations under COBRA and applicable state or similar Laws with respect to any “qualifying event” (within the meaning of Section 4980B of the Code) of any Galleria Business Employees or their eligible dependents occurring on or after the date such individuals commence participation in a group health plan sponsored by a member of the Galleria Group or, if earlier, the Closing Date.

(o) Galleria Business Acquired Plans . Acquiror and SplitCo will cause one or more Galleria Group Plans to assume the liabilities associated with the Galleria Business Acquired Plans as provided on Section 1.05(a)(xiii) of the Parent Disclosure Letter. Parent will cause the transfer of assets in respect of such liabilities as provided on Section 1.05(a)(xiii) of the Parent Disclosure Letter.

6.04 Terms of Employment . (i) Place of Employment . During the two-year period that begins as of the Closing or such shorter period as such Continuing Employee remains an employee of an Employing Entity following the Closing (the “ Continuation Period ”), Acquiror and SplitCo will cause the Galleria Group to provide to each Continuing Employee employment in a position with a primary place of employment that is not greater than 50 miles (or such lesser number of miles in a relevant jurisdiction as may be established pursuant to applicable Law) from such Continuing Employee’s primary place of employment immediately prior to the Closing; provided , however , that if a Continuing Employee is a party to a written agreement with a member of the Parent Group as of the date of this Agreement that includes a “mobility” provision pursuant to which such Continuing Employee may be relocated by his or her employer at any time, then, to the extent such “mobility” provision remains in effect with respect to such Continuing Employee, the 50 mile (or less) restriction set forth in this Section 6.04(a) will not apply to such Continuing Employee to the extent such restriction is inconsistent with such “mobility” provision in such agreement.

(j) Compensation and Benefits .

(i) Parent and Acquiror will implement the provisions set forth on Schedule 6.04(b)(i) .

(ii) If Acquiror and SplitCo fail to comply with their obligations under Section 6.04 in any material respect with respect to any Continuing Employee during the Continuation Period, such Continuing Employee will be eligible to resign and receive severance benefits pursuant to Section 6.04(c) .

(iii) Notwithstanding anything to the contrary set forth herein, all issuances of equity-based compensation by Acquiror or any Affiliate thereof will be subject to compliance with all applicable requirements of the Tax Matters Agreement.

(k) Severance . Without limiting the generality of Section 6.04(b) but subject to Section 6.04(i)(iii) and Section 1.06(b)(i) , with respect to each Continuing Employee who incurs a Qualifying Termination during the Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide such employee with the severance payments and benefits set forth on Section 6.04(c) of the Parent Disclosure Letter, and under the applicable formula set forth on the attachment to Section 6.04(c) of the Parent Disclosure Letter. As a condition to the payment of any such severance to any Continuing Employee, such Continuing Employee must provide a general waiver and release of claims in a form substantially similar to the form used for similarly situated Galleria Group employees (except that such release must also include a provision for general waiver and release of claims for the benefit of Parent and its Affiliates) and such release must be effective. Except as otherwise required by applicable Law, the payment of any severance pursuant to this Section 6.04(c) will be made on the 60th day following the date of termination of employment (or, if applicable, at such times as permitted under Section 409A of the Code so as to avoid such payment from being subject to any penalties under Section 409A of the Code).

(l) Compensation Consultant Process . The determination of whether Acquiror and SplitCo are in compliance with Section 6.04(b)(i) will be made by Parent and Acquiror based on proposed terms and conditions provided by SplitCo at least 60 days prior to the date on which it is expected that offers and terms and conditions of employment will be presented to employees pursuant to Section 6.02(b) . If Parent and Acquiror are unable to agree within 20 Business Days following Acquiror’s receipt of the applicable information, the determination will be made within ten additional Business Days by an internationally recognized compensation consultant designated by Parent (at Parent’s cost), subject to the approval of a compensation consultant designated by Acquiror (at Acquiror’s cost), which approval may only be withheld if Acquiror’s compensation consultant reasonably believes that Parent’s compensation consultant has used unreasonable assumptions or otherwise made an error. In the event such approval is not provided within ten Business Days following the receipt of the applicable information by Acquiror’s compensation consultant, the compensation consultants designated by Acquiror and Parent will discuss such comparison in good faith for ten Business Days and seek to reach an agreement. If such compensation consultants are unable to do so, they will jointly select a third compensation consultant, which third compensation consultant will make such comparability determination within ten Business Days after the expiration of such ten-Business Day discussion period, which comparability determination will be binding (the process described in this sentence and the three preceding sentences, the “ Compensation Consultant Process ”). Parent and Acquiror will share equally the cost of any such third compensation consultant. If the Compensation Consultant Process finally determines that Acquiror and SplitCo have not complied with Section 6.04(b)(i) (such difference, the “ Compensation Gap ”), then Acquiror and SplitCo will cause the Galleria Group to either adjust the compensation or benefits of each applicable Continuing Employee so that they are in compliance with Section 6.04(b)(i) or provide each applicable Continuing Employee for the duration of the Continuation Period (including any prior portion of the Continuation Period during which Acquiror and SplitCo have not been in compliance with Section 6.04(b)(i) ) a cash payment amount (on a net after-Tax basis) determined by the Compensation Consultant Process to be equal to the Compensation Gap (such cash payment amount, the “ Compensation Gap Payment ”). Each Compensation Gap Payment will be paid on the same schedule as the applicable Continuing Employee’s regular base pay (with the first Compensation Gap Payment including amounts in respect of any prior portion of the Continuation Period during which Acquiror and SplitCo have not been in compliance with Section 6.04(b)(i) ).

(m) Welfare Plans . To the extent permitted by applicable Law, Acquiror and SplitCo will cause each benefit plan of the Galleria Group in which any Continuing Employee participates that is a health or welfare benefit plan (collectively, “ Acquiror Welfare Plans ”) to (i) waive all limitations as to preexisting conditions, exclusions and service conditions with respect to participation and coverage requirements applicable to Continuing Employees, other than limitations that were in effect with respect to such Continuing Employees as of the Closing Date under the corresponding Compensation and Benefit Plan or Galleria Group Plan, (ii) honor any payments, charges and expenses of such Continuing Employees (and their eligible dependents) that were applied toward the deductible and out-of-pocket maximums under the corresponding Compensation and Benefit Plan or Galleria Group Plan in satisfying any applicable deductibles, out-of-pocket maximums or co-payments under a corresponding Acquiror Welfare Plan during the same plan year in which such payments, charges and expenses were made, and (iii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to a Continuing Employee following the Closing Date to the extent such employee had satisfied any similar limitation under the corresponding Compensation and Benefit Plan or Galleria Group Plan.

(n) Earned Vacation . Unless otherwise required by applicable Law, Acquiror and SplitCo will cause the Galleria Group to credit each Continuing Employee the amount of accrued and unpaid hours of vacation, personal hours or days earned and sick leave (together, the “ Transferred Leave ”) applicable to such Continuing Employee as of the Closing and Parent or SplitCo will provide to Acquiror as of the Closing Date a schedule indicating for each Continuing Employee the type and number of days of Transferred Leave; provided , however , subject to applicable Law, Acquiror will credit such Transferred Leave only to the extent reflected as part of the Cut-Off Date Adjustment Statement. Acquiror and SplitCo will cause the Galleria Group to ensure that such Transferred Leave (i) is not subject to forfeiture, to the same extent not subject to forfeiture under the policies of Parent and its Subsidiaries governing such Transferred Leave prior to the Closing and (ii) does not count toward any maximum accrual amount under any plan, program or policy maintained by the Galleria Group after the Closing for the purpose of providing vacation, personal days or hours or sick leave (collectively, the “ Galleria Leave Plan ”); provided , however , if a Continuing Employee has Transferred Leave in excess of the applicable maximum under the Galleria Leave Plan, once the Continuing Employee uses the type and number of days of Transferred Leave equal to the applicable maximum accrual under the Galleria Leave Plan, then such Continuing Employee’s remaining Transferred Leave will be subject to the applicable maximum accrual under the Galleria Leave Plan. Subject to applicable Law, Acquiror will have the option either to pay cash to a Continuing Employee following the Closing in cancellation of all or a portion of the Transferred Leave that is in excess of the applicable maximum accrual under the Galleria Leave Plan or to permit such Continuing Employee to use such excess Transferred Leave. If applicable Law does not allow for Transferred Leave with respect to any Continuing Employee, Acquiror and SplitCo will cause the Galleria Group to allow such Continuing Employee to use any leave time following the Closing that was scheduled with Parent or its Subsidiaries prior to the Closing (on an unpaid basis in the event that such Continuing Employee has not accrued enough paid leave time at the time of such post-Closing absence).

(o) Expatriate Employees . Without limiting the generality of Section 6.04(b) , with respect to Continuing Employees who, as of the Closing, receive specific expatriate payments or benefits from Parent or its Subsidiaries (an “ Expatriate Package ,” and each such employee, an “ Expatriate Employee ”), Acquiror and SplitCo will cause the Galleria Group during the Continuation Period to (i) maintain a comparable Expatriate Package for each such Expatriate Employee until such Expatriate Employee (A) returns to his or her home country (excluding any temporary return) or (B) ceases to be employed with Acquiror or one of its Subsidiaries provided that such Expatriate Employee is returned to his or her home country and (ii) pay the costs of repatriation for each Expatriate Employee to the same extent and on the same terms as provided for in Parent’s or its applicable Subsidiary’s policies and practices, as applicable, immediately prior to the Closing; provided , however , Acquiror will maintain and pay for such repatriation only to the extent such Expatriate Employee and such Expatriate Package are listed on Section 6.04(g)(i) of the Parent Disclosure Letter. Parent may update Section 6.04(g)(i) of the Parent Disclosure Letter from time to time prior to the Closing Date in order to reflect transfers and new hires in accordance with Section 5.01(b)(xii)-(xiv) . Following the Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide expatriate payments and benefits to such Continuing Employees in accordance with the policies of the Galleria Group as in effect from time to time, but in any event Acquiror or SplitCo will provide at least the minimum repatriation benefits as set forth on Section 6.04(g)(ii) of the Parent Disclosure Letter.

(p) Localized Employees . Without limiting the generality of Section 6.04(b) , with respect to Continuing Employees who, prior to the Closing, have been localized other than in their original home country and receive specific benefits from Parent or its Subsidiaries relating to their localized status (a “ Localization Package ,” and each such employee, a “ Localized Employee ”), Acquiror and SplitCo will cause the Galleria Group during the Continuation Period to maintain a comparable Localization Package (excluding, except as otherwise required by applicable Law, the International Retirement Arrangement and the International Pension Protection Program) for each such Localized Employee until his or her employment terminates only to the extent such Localized Employees are listed on Section 6.04(h) of the Parent Disclosure Letter. Parent may update Section 6.04(h) of the Parent Disclosure Letter from time to time prior to the Closing Date in order to reflect transfers and new hires in accordance with Section 5.01(b)(xii)-(xiv) . Following the Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide a Localization Package to such Continuing Employees in accordance with the policies of the Galleria Group as in effect from time to time.

(q) Special Rules for Non-US Employees . Notwithstanding anything to the contrary contained in this Agreement, any In-Scope Employee who is employed by a member of the Parent Group in a non-US jurisdiction immediately prior to the Closing, and who is required by applicable Law to transfer to a member of the Galleria Group in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, will transfer automatically on the Closing Date to SplitCo or a member of the Galleria Group in accordance with such applicable Law and will be deemed to be a Continuing Employee and a Non-US Continuing Employee. Notwithstanding anything to the contrary herein, the following terms will apply to all Non-US Continuing Employees:

(iii) To the extent that (A) the applicable Law of any jurisdiction, (B) any applicable collective bargaining agreement or other applicable agreement with a works council or economic committee, or (C) any applicable employment agreement, would require Acquiror or its Affiliates (including a member of the Galleria Group) to provide any more favorable terms of employment to any Non-US Continuing Employee than those otherwise provided for by this Section 6.04 (or extend the period of time for which such standards are met), in connection with the Conveyance of the Galleria Business to SplitCo, then Acquiror and SplitCo will cause the Galleria Group to provide such Non-US Continuing Employee with such more favorable term, and otherwise provide terms of employment in accordance with this Section 6.04 .

(iv) Acquiror and Parent agree that to the extent provided under the applicable Laws of certain foreign jurisdictions, (A) any employment agreements between Parent and its Affiliates, on the one hand, and any Non-US Continuing Employee, on the other hand, and (B) any collective bargaining agreements applicable to the Non-US Continuing Employees in such jurisdictions, will in each case have effect after the Closing as if originally made between Acquiror and the other parties to such employment agreement or collective bargaining agreement.

(v) Any Liabilities for severance pay or benefits (whether statutory, contractual or otherwise) to an In-Scope Employee arising from (A) the termination of such In-Scope Employee (other than a Choice Employee) from employment with any member of the Parent Group or the Galleria Group as a result of the transactions contemplated by this Agreement or (B) the termination of any Continuing Employee from employment with any member of the Acquiror Group on or after the Closing Date will be Galleria Liabilities and will be the sole responsibility of Acquiror; provided , however , subject to applicable Law, to the extent Parent, SplitCo, Acquiror or any of its Affiliates are required to pay any such severance pay or benefits, such severance pay and benefits shall offset any severance pay and benefits that would otherwise be required to be paid to such Continuing Employee following the Closing.

6.05 Bonuses and Incentives . (h) Except as otherwise set forth in Section 6.05(b) , Parent will retain all obligations to the Galleria Business Employees, including Continuing Employees, with respect to the bonuses and incentives under Parent’s Short Term Achievement Reward (STAR) bonus program, Long-Term Incentive (LTI) program, Key Manager Stock Option Program and any other cash, annual, long-term, equity or similar incentive program of Parent in which the Continuing Employees participate for the plan year in which the Closing Date occurs that are attributable to the period of such participation prior to the Closing; provided , however , that, if requested by Parent, Acquiror and SplitCo will cause the Galleria Group to make all cash payments in respect of any such program so long as Parent transfers to the Galleria Group, as of the Closing, all amounts payable in respect of such cash obligations that are attributable to the period prior to the Closing during which the Continuing Employees participated in such program and any associated Taxes payable by the Galleria Group in connection with such cash payments (but Parent will not be liable for any Tax withholding except to the extent it is required to remit any such Tax withheld from any such bonuses and incentives to the appropriate Governmental Authority).

(i) Notwithstanding Section 6.05(a) , Acquiror and SplitCo will cause the Galleria Group to pay to each Continuing Employee any 13th month, 14th month, jubilee or similar payment, as applicable, that would next be payable following the Closing at such time as Parent or its Subsidiary would have made such payments (for example, if the Closing takes place on September 30, 2015, and a 13th month payment would have been paid on December 31, 2015, then the Galleria Group will make such payment on December 31, 2015) in an amount not less than the applicable amount included in respect thereof as part of the Cut-Off Date Adjustment Statement (to the extent such amount included in respect thereof as part of the Cut-Off Date Adjustment Statement remains unpaid as of the Closing Date), in each instance regardless of the applicable Continuing Employee’s employment status on the relevant payment date and irrespective of whether applicable Law requires such payment(s).

6.06 Credit for Service with Parent . Where applicable, Acquiror and its Affiliates (including the Galleria Group) will provide credit for each Continuing Employee’s length of service with Parent and its Affiliates (including, prior to Closing, the Galleria Group) for all purposes (including eligibility, vesting and level of benefits) under (a) each plan, program, policy or arrangement of Acquiror and its Affiliates to the same extent such service was recognized under a similar plan, program, policy or arrangement of Parent or any of its Affiliates, and (b) applicable Law (including the Family and Medical Leave Act of 1993) in each case, except that such prior service credit will not be required to the extent that it results in a duplication of benefits provided by Parent (including any duplication of benefits under a defined benefit pension plan); provided , however , that Acquiror and its Affiliates (including the Galleria Group) will (i) not be required to provide prior service credit pursuant to this Section 6.06 for purposes of determining benefit accruals under any defined benefit pension plan for any time period prior to the Closing except with respect to the Galleria Business Acquired Plans and (ii) to the extent that, in Acquiror’s sole discretion, any Continuing Employee becomes eligible to participate in a defined benefit pension plan following the Closing, provide prior service credit for all purposes other than as set forth in clause (i) above, including the calculation of benefit accruals for any time that elapses after the Closing or, if later, the date on which such Continuing Employee becomes eligible to participate in such a defined benefit pension plan.

6.07 Workers’ Compensation . Parent will retain the obligation for any workers’ compensation benefits payable to or on behalf of the US Continuing Employees (and the Non-US Continuing Employees to the extent workers’ compensation benefits are applicable under the Laws of the relevant jurisdiction) with respect to any events, illnesses, injuries or conditions arising on or prior to the Closing Date. Acquiror and its Subsidiaries will assume and be responsible for all workers’ compensation benefits payable to or on behalf of the US Continuing Employees (and the Non-US Continuing Employees to the extent workers’ compensation benefits are applicable under the Laws of the relevant jurisdiction) with respect to any events, illnesses, injuries or conditions arising after the Closing Date, including any illnesses, injuries or conditions arising after the Closing Date that are aggravations or reinjuries of illnesses, injuries or conditions arising on or prior to the Closing Date.

6.08 WARN Act . Acquiror and SplitCo will cause the Galleria Group to (a) provide any required notice under the Worker Adjustment and Retraining Notification Act or any other similar Law (the “ WARN Act ”) and (b) otherwise comply with the WARN Act with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group termination or similar event affecting Continuing Employees (including as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements) and occurring from and after the Closing. Acquiror will not, and will not permit any of its Affiliates (including the Galleria Group) to, take any action on or after the Closing Date that would cause any termination of employment by Parent or its Affiliates of any employees of the Galleria Business or any Galleria Entity occurring prior to the Closing to constitute a “plant closing,” “mass layoff” or group termination or similar event under the WARN Act, or to create any Liability or penalty to Parent or any of its Affiliates for any employment terminations under applicable Law. Parent or its Affiliates will notify Acquiror of any involuntary terminations of any U.S. employees of the Galleria Business or any member of the Galleria Group that occur during the 90-day period prior to the Closing.

6.09 Miscellaneous . (h) Following the date of this Agreement, Parent (and its Subsidiaries) and Acquiror (and its Subsidiaries) will reasonably cooperate and use Commercially Reasonable Efforts in all matters reasonably necessary to effect the transactions contemplated by this Article VI , including (i) exchanging information and data, including (A) reports prepared in connection with bonus plan participation and related data of Continuing Employees and all other information reasonably necessary for the Parent Group or the Acquiror Group to comply with the covenants contained in this Article VI and (B) information relating to workers’ compensation, employee benefits and employee benefit plan coverages, including information and data that is necessary to support or perform the Compensation Consultant Process or that is otherwise reasonably requested in connection with the Compensation Consultant Process (in each case, except to the extent prohibited by applicable Law or to the extent that such information and data relates to performance ratings or assessments of employees of Parent and its Subsidiaries), (ii) making any and all required filings and notices, (iii) making any and all required communications with Galleria Business Employees and (iv) obtaining any Governmental Approvals required hereunder.

(i) Parent shall coordinate with Acquiror to arrange for one or more town hall meetings to allow Acquiror the opportunity to communicate with available In-Scope Employees and Choice Employees as soon as practicable following the execution of this Agreement. Between the date hereof and the Closing Date, any communications between Acquiror and any employees of Parent and its Affiliates regarding terms of employment, employee benefits or otherwise regarding employment with the Galleria Group will be conducted at the times and through processes approved by Parent, such approval not to be unreasonably withheld. Such processes will provide adequate access to the Galleria Business Employees and allow all reasonable means of communication with such employees by Acquiror and its Subsidiaries; provided , however , that any communications with Galleria Business Employees or any other employees of Parent or its Affiliates will be limited to employee benefit matters relating to Galleria Business Employees, future organization design and staffing.

(j) Without limiting the obligations of Acquiror and SplitCo under this Article VI with respect to the Continuing Employees, this Article VI will not (i) constitute or be treated as an amendment of, or undertaking to amend any employee benefit plan in which Parent’s or any of its Affiliates’, or Acquiror’s or any of its Subsidiaries’, employees participate or (ii) prohibit Acquiror or any of its Subsidiaries (including the Galleria Group) from amending any employee benefit plan in which Acquiror’s or such Subsidiary’s employees participate.

(k) Acquiror will comply with its obligations, if any, to provide notice to or consult with any union or works council representing its employees or the employees of its Subsidiaries.

VII. CONDITIONS

7.01 Joint Conditions . The obligations of Parent and SplitCo to effect the Galleria Transfer, the Recapitalization, the Distribution and the Merger and the obligations of Acquiror and Merger Sub to effect the Merger are subject to the satisfaction or waiver of the following conditions:

(l) no preliminary or permanent injunction or other Order shall have been issued that would make unlawful the consummation of the transactions contemplated hereby and no Governmental Authority shall have instituted any Action (which remains pending at what would otherwise be the Closing Date) before any Governmental Authority of competent jurisdiction seeking to restrain, enjoin or otherwise prohibit consummation of the Merger and the other transactions contemplated hereby;

(m) (i) all waiting periods under the HSR Act applicable to the transactions contemplated by this Agreement shall have terminated or expired and (ii) all other applicable pre-closing Governmental Approvals in the Identified Jurisdictions shall have been obtained;

(n) the notifications, information and consultations, and co-determinations, to and with the works councils, economic committees, unions and any other representative bodies identified on Section 7.01(c) of the Parent Disclosure Letter shall have been made and all required consultations shall have been conducted and completed;

(o) the Acquiror Stockholder Approval shall have been obtained;

(p) the Acquiror New Common Stock to be issued in the Merger shall have been authorized for listing on the NYSE, subject to notice of official issuance;

(q) each of the Acquiror Form S-4 and the SplitCo Form 10/S-4 (or the SplitCo Form 10, if Parent elects to effect the Distribution solely as a One-Step Spin-Off) shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and (i) if the Distribution is effected in whole or in part as an Exchange Offer, the applicable offer period and any extensions thereof in the Exchange Offer required by applicable securities Law shall have expired or (ii) if the Distribution is effected in whole or in part as a One-Step Spin-Off, the applicable notice periods required by applicable stock exchange rules or securities Laws shall have expired; and

(r) the Information Statement shall have been mailed to the Acquiror’s stockholders in accordance with Section 5.08 at least 20 days prior to the Closing Date and the Acquiror Stock Issuance and amendment to the Acquiror’s certificate of incorporation shall be permitted by Regulation 14C of the Exchange Act (including Rule 14c-2 promulgated under the Exchange Act) and the requirements of the NYSE.

7.02 Conditions to the Obligation of Acquiror . The obligation of Acquiror and Merger Sub to effect the Merger is subject to the satisfaction of each of the following conditions (each of which is for the exclusive benefit of Acquiror and may be waived by Acquiror unless otherwise provided in this Agreement):

(p) all covenants of Parent under this Agreement and the Ancillary Agreements to be performed on or before the Closing shall have been duly performed by Parent in all material respects;

(q) (i) the representations and warranties of Parent in this Agreement (other than the representations and warranties in Section 3.04 and Section 3.10(g) ), which for purposes of this clause (i) will be read as though none of them contained any materiality or “Galleria Business MAE” qualifications (but not disregarding limitations of representations to Galleria Material Contracts or qualifications to the extent they qualify as an affirmative requirement to list specified items on a section of the Parent Disclosure Letter as set forth in Sections 3.05(b) , 3.08 , 3.09(g) and 3.15 ), shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing (except that any representation and warranty in any Section that is made as of a date other than the date of this Agreement shall be true and correct in all respects as of the specified date), except where the failure of the representations and warranties to be true and correct in all respects would not in the aggregate have a Galleria Business MAE, (ii) the representations and warranties of Parent in Section 3.10(g) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing, and (iii) the representations and warranties of Parent in Section 3.04 shall be true and correct in all but de minimis respects;

(r) Acquiror shall have received a written opinion, dated as of the Closing Date, from McDermott Will & Emery LLP, tax counsel to Acquiror, to the effect that the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering the foregoing opinion, counsel will be permitted to rely upon and assume the accuracy of customary representations provided by (i) Acquiror and Merger Sub and (ii) Parent, substantially in the form of the representation letters attached hereto on Exhibit J and Exhibit K , respectively; and

(s) Acquiror shall have received a certificate of Parent addressed to Acquiror and dated the Closing Date, signed on behalf of Parent by an officer of Parent (on Parent’s behalf and without personal liability), confirming the matters set forth in Section 7.02(a) and Section 7.02(b) .

7.03 Conditions to the Obligation of Parent . The obligation of Parent and SplitCo to effect the Galleria Transfer, the Recapitalization, the Distribution and the Merger is subject to the satisfaction of each of the following conditions (each of which is for the exclusive benefit of Parent and may be waived by Parent unless otherwise provided in this Agreement):

(r) all covenants of Acquiror under this Agreement and the Ancillary Agreements to be performed on or before the Closing Date shall have been duly performed by Acquiror in all material respects;

(s) (i) the representations and warranties of Acquiror in Section 4.05 of this Agreement shall be true and correct in all material respects, (ii) the representations and warranties of Acquiror in Section 4.11(c) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing and (iii) all other representations and warranties of Acquiror in this Agreement (which for purposes of this paragraph will be read as though none of them contained any materiality or Acquiror MAE qualifications) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing (except that any representation and warranty in any Section that is made as of a date other than the date of this Agreement shall be true and correct in all respects as of the specified date), except where the failure of the representations and warranties to be true and correct in all respects would not have in the aggregate an Acquiror MAE;

(t) Parent shall have received a written opinion, dated as of the Closing Date, from Cadwalader, Wickersham & Taft LLP, counsel to Parent, to the effect that the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering the foregoing opinion, counsel will be permitted to rely upon and assume the accuracy of customary representations provided by (i) Acquiror and Merger Sub and (ii) Parent, substantially in the form of the representation letters attached hereto on Exhibit J and Exhibit K , respectively;

(u) Parent shall have received a written opinion, dated as of the Closing Date, from Cadwalader, Wickersham & Taft LLP, counsel to Parent, to the effect that (i) the Galleria Transfer, taken together with the Distribution, should qualify as a tax-free reorganization pursuant to Section 368(a)(1)(D) of the Code, (ii) the Distribution, as such, should qualify as a distribution of SplitCo stock to Parent stockholders pursuant to Section 355 of the Code and (iii) the Merger should not cause Section 355(e) of the Code to apply to the Distribution. In rendering the foregoing opinion, counsel will be permitted to rely upon and assume the accuracy of customary representations provided by (i) Acquiror and Merger Sub and (ii) Parent;

(v) subject to the obligation to extend the expiration date of the Exchange Offer pursuant to the proviso in the first sentence of Section 2.01(c) , if Parent elects to effect the Distribution by way of an Exchange Offer, shareholders of Parent shall have validly tendered and not properly withdrawn before the expiration of the Exchange Offer enough shares of Parent Common Stock such that Parent will distribute to its shareholders in the Exchange Offer a percentage of the shares of SplitCo Common Stock issued to Parent in the Galleria Stock Issuance that exceeds the percentage derived from the formula set forth on Exhibit E (the “ Minimum Condition ”); provided , however , that, at any time prior to the Closing Date, Parent, in its reasonable judgment and after consultation with Acquiror, may reapply the formula set forth on Exhibit E using updated information reflecting the then current data or otherwise increase the Minimum Condition by the minimum amount necessary, in each case, to ensure that the equation set forth in such Exhibit is satisfied;

(w) Acquiror shall have irrevocably confirmed to Parent in writing that each condition to Acquiror’s obligation to effect the Closing of the transactions contemplated by this Agreement, as provided in Section 7.01 and Section 7.02 of this Agreement, shall have been satisfied or waived (other than those conditions that, by their nature, are to be satisfied contemporaneously with the Closing);

(x) an Acquiror SEC Event shall not have occurred;

(y) Parent shall have received a certificate of Acquiror addressed to Parent and dated the Closing Date, signed on behalf of Acquiror by an officer of Acquiror (on Acquiror’s behalf and without personal liability), confirming the matters set forth in Section 7.03(a) and Section 7.03(b) ; and

(z) there shall be no shares of Acquiror Capital Stock (including Acquiror Common Stock) outstanding other than shares of Class A Common Stock (including restricted stock units convertible into Class A Common Stock, Acquiror Options and Phantom Units) and Series A Preferred Stock.

7.04 Additional Conditions to Each Party’s Obligation To Effect the Merger . The obligations of Parent, SplitCo, Acquiror and Merger Sub to effect the Merger are subject to the satisfaction or waiver of the following conditions:

(j) the Galleria Transfer and the Recapitalization shall have been consummated in accordance with and subject to the terms of this Agreement; and

(k) the Distribution shall have been consummated in accordance with and subject to the terms of this Agreement.

7.05 Frustration of Conditions . Neither Parent nor Acquiror may rely on the failure of any condition set forth in Section 7.01 , Section 7.02 , Section 7.03 or Section 7.04 as the case may be, to be satisfied to excuse it from its obligation to effect the transactions contemplated hereby if such failure was caused by such Party’s breach of its obligations under this Agreement.

VIII. TERMINATION AND ABANDONMENT

8.01 Basis for Termination . This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing Date:

(t) by mutual written consent of Parent and Acquiror;

(u) by either Parent or Acquiror:

(v) if the Closing does not occur on or prior to January 31, 2017 (the “ End Date ”), unless the failure of the Closing to occur by such date is due to the failure of the Party seeking to terminate this Agreement to perform or observe in all material respects the covenants of such Party set forth herein; or

(vi) if (A) there is any Law that makes consummation of the transactions hereunder illegal or otherwise prohibited (other than those having only an immaterial effect and that do not impose criminal liability or penalties) or (B) any Governmental Authority having competent jurisdiction has issued an Order or taken any other action (which the terminating Party must have complied with its obligations hereunder to resist, resolve or lift) permanently restraining, enjoining or otherwise prohibiting any material component of the transactions contemplated hereunder, and such Order or other action becomes final and non-appealable;

(v) by Parent:

(iv) if Acquiror or Merger Sub breaches any of its representations and warranties or covenants contained in this Agreement, which breach (A) would give rise to the failure of a condition set forth in Section 7.01 or Section 7.03 and (B) cannot be or has not been cured within 60 days after the giving of written notice to Acquiror of such breach (or, if earlier, the End Date);

(v) if any of the conditions set forth in Section 7.01 or Section 7.03 becomes incapable of fulfillment, and has not been waived by Parent to the extent waivable;

(vi) if Parent has commenced an Exchange Offer in accordance with Section 2.01(c) and, following all extensions required under this Agreement, such Exchange Offer is not consummated as a result of the failure of the Minimum Condition to be satisfied on the applicable scheduled expiration date of such Exchange Offer;

(vii) if the Stockholder Consent contemplated by Section 5.08 , duly executed by the Persons set forth on Section 8.01 of the Acquiror Disclosure Letter and representing at least 50.1% of the voting power represented by all outstanding shares of Acquiror Common Stock, shall not have been delivered to Parent and Acquiror within 24 hours following the time of execution of this Agreement; or

(w) by Acquiror:

(i) if Parent or SplitCo breaches any of its representations and warranties or covenants contained in this Agreement, which breach (A) would give rise to the failure of a condition set forth in Section 7.01 or Section 7.02 and (B) cannot be or has not been cured within 60 days after the giving of written notice to Parent of such breach (or, if earlier, the End Date); or

(ii) if any of the conditions set forth in Section 7.01 or Section 7.02 becomes incapable of fulfillment, and has not been waived by Acquiror to the extent waivable;

provided , however , that the Party seeking termination pursuant to clause (c)(i), (c)(ii), (d)(i) or (d)(ii) is not in material breach of any of its representations, warranties or covenants contained in this Agreement.

8.02 Notice of Termination; Return of Documents; Continuing Confidentiality Obligation . In the event of a termination of this Agreement by Parent or Acquiror pursuant to this Article VIII , written notice thereof will be given to the other Party and the transactions contemplated by this Agreement and the Ancillary Agreements will terminate, without further action by any Party. If the transactions contemplated by this Agreement and the Ancillary Agreements are terminated as provided herein, (a) Acquiror and Merger Sub will return to Parent or destroy all documents and copies and other material received from Parent and its Subsidiaries and its and their Representatives relating to the transactions contemplated hereby and by the Ancillary Agreements, whether so obtained before or after the execution hereof, (b) Parent and SplitCo will return to Acquiror or destroy all documents and copies and other material received from Acquiror and its Subsidiaries and its and their Representatives relating to the transactions contemplated hereby and by the Ancillary Agreements, whether so obtained before or after the execution hereof, and (c) notwithstanding anything herein to the contrary, the Confidentiality Agreement will be deemed to be reinstated and will be deemed to apply as if it had not originally been terminated pursuant to Section 10.03 .

8.03 Effect of Termination . (l) If this Agreement is duly terminated and the transactions contemplated hereby are abandoned as described in this Article VIII , this Agreement will become void and of no further force and effect, except for the provisions of Section 5.03 relating to publicity, Section 8.02 , this Section 8.03 , Articles X and XI containing general provisions and definitions, respectively, except that nothing in this Article VIII will be deemed to release any Party from any Liability for any Deliberate Breach by such Party of the terms and provisions of this Agreement or to impair the right of any Party to compel specific performance by another Party of its obligations under this Agreement that specifically survive such termination as set forth in the immediately preceding sentence.

For the avoidance of doubt, receipt by Parent of a payment or reimbursement pursuant to Section 8.03(b) will not limit the ability of Parent to sue for any breach of Section 5.09 or collect damages arising from any such breach (except, in the case of calculation of damages, to the extent a court would otherwise take such payment or reimbursement into account in assessing damages for such breach).

(m) Acquiror will pay to Parent a fee of $400 million if Parent terminates this Agreement pursuant to Section 8.01(c)(iv) .

Any fee due under this Section 8.03(b) will be paid by wire transfer of immediately available funds (to an account specified by Parent) and will be paid by Acquiror promptly following termination of this Agreement. Upon payment of the termination fee in accordance with this Section 8.03(b) , Acquiror will have no further Liability to Parent at Law or in equity under this Agreement except as specifically set forth in Section 8.03(a) .

IX. MUTUAL RELEASES; INDEMNIFICATION

9.01 Release of Pre-Business Transfer Time Claims . (aa) SplitCo Release . Except as provided in Section 9.01(c) , effective as of the Business Transfer Time, SplitCo does hereby, for itself and each other member of the Galleria Group, and their respective successors and assigns, remise, release and forever discharge the Parent Indemnitees from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur at or before the Business Transfer Time or any conditions existing or alleged to have existed at or before the Business Transfer Time, including in connection with the transactions and all other activities to implement the Galleria Transfer.

(bb) Parent Release . Except as provided in Section 9.01(c) , effective as of the Business Transfer Time, Parent does hereby, for itself and each other member of the Parent Group, and their respective successors and assigns, remise, release and forever discharge the Acquiror Indemnitees from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur at or before the Business Transfer Time or any conditions existing or alleged to have existed at or before the Business Transfer Time, including in connection with the transactions and all other activities to implement any of the Galleria Transfer.

(cc) No Impairment . Nothing contained in Section 9.01(a) or Section 9.01(b) will limit or otherwise affect any Party’s rights or obligations pursuant to or contemplated by this Agreement or any Ancillary Agreements, in each case in accordance with its terms.

(dd) No Actions as to Released Claims . Neither SplitCo nor Acquiror will, and each will cause each of their respective Affiliates not to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Parent or any member of the Parent Group, or any other Person released pursuant to Section 9.01(a) , with respect to any Liabilities released pursuant to Section 9.01(a) . Parent will not, and will cause each other member of the Parent Group not to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against SplitCo, Acquiror or any of their respective Affiliates, or any other Person released pursuant to Section 9.01(b) , with respect to any Liabilities released pursuant to Section 9.01(b) .

9.02 Indemnification by Acquiror and the Galleria Group . Without limiting or otherwise affecting the indemnity provisions of any Ancillary Agreement, but subject to the limitations set forth in this Article IX , from and after the Closing Date, Acquiror, SplitCo and each of the Galleria Entities will, on a joint and several basis, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the Parent Indemnitees from and against any and all Losses that result from or arise out of, whether prior to or following the Closing, any of the following items (without duplication):

(n) any Galleria Liability and any Liability of the Galleria Entities, including the failure of SplitCo or any other member of the Galleria Group or any other Person to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities;

(o) any breach by Acquiror, SplitCo or any other member of the Galleria Group of any covenant to be performed by such Persons pursuant to this Agreement or any Ancillary Agreement subsequent to the Effective Time; and

(p) any breach by Acquiror or any of its Affiliates of their obligations in respect of the Surviving Transaction Agreement Items.

9.03 Indemnification by Parent . Without limiting or otherwise affecting the indemnity provisions of any Ancillary Agreement but subject to the limitations set forth in this Article IX , from and after the Closing, Parent will, and will cause each other member of the Parent Group to, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the Acquiror Indemnitees from and against any and all Losses that result from, relate to or arise out of, whether prior to or following the Closing, any of the following items (without duplication):

(r) any Excluded Liability, including the failure of Parent or any other member of the Parent Group or any other Person to pay, perform, fulfill, discharge, and, to the extent applicable, comply with, in due course and in full, such Excluded Liabilities;

(s) any breach by Parent or any other member of the Parent Group of any covenant to be performed by such Persons pursuant to this Agreement or any Ancillary Agreement subsequent to the Effective Time; and

(t) any breach by Parent or any of its Affiliates of their obligations in respect of the Surviving Transaction Agreement Items.

9.04 Calculation and Other Provisions Relating to Indemnity Payments . (u) Insurance . The amount of any Loss for which indemnification is provided under this Article IX will be net of any amounts actually recovered by the Indemnitee or its Affiliates under third-party, non-captive insurance policies with respect to such Loss (less the cost to collect the proceeds of such insurance). If any Loss resulting in indemnification under Sections 9.02 or 9.03 relates to a claim by an Indemnitee or its Affiliates that is covered by one or more third-party, non-captive insurance policies held by the Indemnitee or its Affiliates, the Indemnitee will use and will cause its Affiliates to use Commercially Reasonable Efforts to pursue claims against the applicable insurers for coverage of such Loss under such policies. Any indemnity payment hereunder will initially be made without regard to this Section 9.04(a) , and if the Indemnitee or its Affiliates actually receive a full or partial recovery under such insurance policies following payment of indemnification by the Indemnifying Party in respect of such Loss, then the Indemnitee will refund amounts received from the Indemnifying Party up to the amount of indemnification actually received from the Indemnifying Party with respect to such Loss (less the cost to collect the proceeds of such insurance).

(v) Taxes . In the absence of a Final Determination to the contrary and except for any post-Distribution interest, any amount payable by SplitCo to Parent under this Agreement will be treated as occurring immediately prior to the transactions contemplated hereby, as an inter-company distribution, and any amount payable by Parent to SplitCo under this Agreement will be treated as occurring immediately prior to the transactions contemplated hereby, as a contribution to capital. Notwithstanding the foregoing, the amount that any Indemnifying Party is or may be required to provide indemnification to or on behalf of any Indemnitee pursuant to this Agreement will be (i) decreased to offset any Tax benefit realized by the Indemnitee (or an Affiliate thereof) arising from the incurrence or payment of the relevant indemnified item and (ii) increased to offset any Tax cost incurred by the Indemnitee (or an Affiliate thereof) arising from the receipt of any indemnification payments hereunder, unless in the case of clause (ii) such amount is already included in the applicable calculation of Losses. Any indemnity payment hereunder will initially be made without regard to this Section 9.04(b) and will be reduced or increased, as the case may be, to reflect any applicable Tax benefit or Tax cost within 30 days after the Indemnitee (or an Affiliate thereof) realizes such Tax benefit or incurs such Tax cost, respectively. In the event of a Final Determination relating to the Indemnitee’s (or an Affiliate’s) incurrence or payment of an indemnified item or receipt of an indemnity payment pursuant to this Section 9.04(b) , the Indemnitee will, within 30 days of such Final Determination, provide the other Party with notice thereof and supporting documentation addressing, in reasonable detail, the amount of any reduction or increase in Taxes of the Indemnitee (or its Affiliate) resulting from such Final Determination, and the Parties will promptly make any payments necessary to reflect the relevant reduction or increase in Tax liability.

(w) Items Included in Cut-Off Date Adjustment Statement . Notwithstanding any other provision hereof, the Acquiror Parties will have no right to make any claims against Parent for indemnification hereunder in respect of any Liability (i) to the extent that the Liability was specifically reflected on the Cut-Off Date Adjustment Statement or (ii) to the extent it would result in a duplicative payment or benefit to the Acquiror Parties of amounts recovered pursuant to Section 2.15 .

(x) Claims Relating To Restructuring or Transition Plan . In the event that Acquiror waives the closing condition in Section 7.02(a) in respect of Parent’s performance of its covenants relating to specific components or steps in the development or implementation of the Restructuring or Transition Plan, then no Acquiror Indemnitee will be entitled to seek indemnity under, and Parent will have no obligation to indemnify any Acquiror Indemnitee with respect to, Section 9.03(b) insofar as it relates to the performance by Parent of such covenants in respect of which such condition was waived.

9.05 Procedures for Defense, Settlement and Indemnification of Claims . (r) Direct Claims. All claims made hereunder by (i) any member of the Parent Group, on the one hand, against Acquiror or any member of the Galleria Group, on the other hand, or (ii) by any Acquiror or any member of the Galleria Group, on the one hand, against Parent or any member of the Parent Group, on the other hand (collectively, “ Direct Claims ”), will be subject to the limitations and dispute resolution procedures set forth in Section 10.15 . If an Indemnitee receives notice or otherwise learns of any matter that may be the subject of a Direct Claim, such Indemnitee will give the Indemnifying Party prompt written notice thereof but in any event within 15 days after receiving such notice or otherwise learning of such matter. Any such notice will describe the matter in reasonable detail, stating the nature, basis for indemnification and the amount thereof, to the extent known, along with copies of any relevant documents evidencing such matter. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to give notice as provided in this Section 9.05(a) will not relieve the Indemnifying Party of its obligations under this Article IX , except to the extent that such Indemnifying Party is prejudiced by such delay or failure to give notice.

(s) Third-Party Claims . (t) Notice of Claims . If an Indemnitee receives notice or otherwise learns of the assertion by a Person (including any Governmental Authority) which is not a member of the Parent Group or the Acquiror Group (including after the Closing, the Galleria Group) of any claim or of the commencement by any such Person of any Action with respect to which an Indemnifying Party may be obligated to provide indemnification (collectively, a “ Third-Party Claim ”), such Indemnitee will give such Indemnifying Party prompt written notice (a “ Claims Notice ”) thereof but in any event within 15 days after becoming aware of such Third-Party Claim. Any such notice will describe the Third-Party Claim in reasonable detail, stating the nature, basis for indemnification and the amount thereof, to the extent known, along with copies of any relevant documents evidencing such Third-Party Claim. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to give notice as provided in this Section 9.05(b) will not relieve the Indemnifying Party of its obligations under this Article IX , except to the extent that such Indemnifying Party is prejudiced by such delay or failure to give notice.

(i) Opportunity to Defend . The Indemnifying Party has the right, exercisable by written notice to the Indemnitee within 90 days after receipt of a Claims Notice from the Indemnitee of the commencement or assertion of any Third-Party Claim in respect of which indemnity may be sought under this Article IX , to assume and conduct the defense of such Third-Party Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnitee; provided , however , that (A) the Third-Party Claim does not relate to or arise in connection with any criminal proceeding, action, indictment, allegation or investigation, (B) the Third-Party Claim solely seeks (and continues to seek) monetary damages or equitable or corrective relief (with or without monetary damages, fines or penalties) which equitable relief would not reasonably be expected to adversely affect in any material respect the operations of (1) Parent or its Affiliates, if Acquiror is the Indemnifying Party or (2) Acquiror or its Affiliates (including after the Closing, any member of the Galleria Group), if Parent is the Indemnifying Party, and (C) the Indemnifying Party expressly agrees with the Indemnitee in writing to be fully responsible for all of the Losses that arise from the Third-Party Claim, subject to the limitations thereon set forth in this Article IX (the conditions set forth in clauses (A) through (C) are, collectively, the “ Litigation Conditions ”). For purposes of clause (C) of the preceding sentence, if a Third-Party Claim consists of multiple claims by a plaintiff or group of plaintiffs, and it is reasonably practicable for an Indemnifying Party to control the defense of a subset of such claims, the Indemnifying Party may elect to agree to be fully responsible subject to the limitations thereon set forth in this Article IX , for only all of the Losses that arise from such subset of claims, and may elect to control the defense of only such subset of claims; provided , that the other Litigation Conditions set forth in clauses (A), (B) and (C) of the preceding sentence are satisfied. If the Indemnifying Party does not assume the defense of a Third-Party Claim in accordance with this Section 9.05(b) , the Indemnitee may continue to defend the Third-Party Claim. If the Indemnifying Party has assumed the defense of a Third-Party Claim as provided in this Section 9.05(b) , the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defense of the Third-Party Claim; provided , however , that if (x) any of the Litigation Conditions ceases to be met, (y) the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim, or (z) in the reasonable judgment of the Indemnitee based on the advice of counsel, there exists an actual or potential conflict of interest between the Indemnifying Party and the Indemnitee with respect to such Third-Party Claim, the Indemnitee may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses thereafter incurred in connection with such defense. The Indemnifying Party or the Indemnitee, as the case may be, has the right to participate in (but, subject to the prior sentence, not control), at its own expense, the defense of any Third-Party Claim that the other is defending as provided in this Agreement. The Indemnifying Party, if it has assumed the defense of any Third-Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnitee, consent to a settlement of, or the entry of any judgment arising from, any such Third-Party Claim unless such settlement or judgment includes as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnitee of a complete release from all liability in respect of such Third-Party Claim and unless such settlement or judgment does not impose injunctive or other non-monetary equitable relief against the Indemnitee or its Affiliates, or their respective businesses. The Indemnitee has the right to settle any Third-Party Claim, the defense of which has not been assumed by the Indemnifying Party, with the prior written consent of the Indemnifying Party, not to be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, in connection with the defense of any Third-Party Claim, Parent will have the right to assert, prosecute, settle and receive the proceeds of any counter-claims or affirmative defenses of the Parent Group that are otherwise an Galleria Asset.

(u) Without limiting any provision of this Section 9.05 , each of the Parties will reasonably cooperate, and will cause each of its respective Affiliates to reasonably cooperate, with each other in the defense of any claim that the Galleria Business infringes Intellectual Property of any third Person, and no Party will knowingly acknowledge, or permit any member of its respective Group to acknowledge, the validity or infringing use of any Intellectual Property of a third Person in a manner as to which such Party has actual knowledge that so doing will be materially inconsistent with the defense of such infringement, validity or similar claim or challenge except as required by Law. For the avoidance of doubt, nothing herein will preclude truthful testimony by Parent or any of its representatives or employees, and such truthful testimony will not be deemed a breach hereof.

(v) In the event Acquiror promptly notifies Parent in writing that Parent or one of its Affiliates has challenged the validity of any Intellectual Property of the Galleria Business, Parent will withdraw or cause such challenge to be withdrawn within five Business Days following receipt of such written notice from Acquiror.

9.06 Additional Matters . (l) Cooperation in Defense and Settlement . With respect to any Third-Party Claim for which Acquiror or SplitCo, on the one hand, and Parent, on the other hand, may have Liability under this Agreement or any of the Ancillary Agreements, the Parties agree to cooperate fully and maintain a joint defense (in a manner that will preserve the attorney-client privilege, joint defense or other privilege with respect thereto) so as to minimize such Liabilities and defense costs associated therewith. The Party that is not responsible for managing the defense of such Third-Party Claims will, upon reasonable request, be consulted with respect to significant matters relating thereto and may retain counsel to monitor or assist in the defense of such claims at its own cost.

(m) Certain Actions . Notwithstanding anything to the contrary set forth in this Article IX , Parent may elect to have exclusive authority and control over the investigation, prosecution, defense and appeal of any and all Actions pending at the Business Transfer Time which relate to or arise out of the Galleria Business, the Galleria Assets or the Galleria Liabilities and as to which a member of the Parent Group is also a plaintiff or named as a target or defendant thereunder (but excluding any such Actions which solely relate to or solely arise in connection with the Galleria Business, the Galleria Assets or the Galleria Liabilities); provided , however , that, (i) Parent will defend or prosecute, as applicable, such Actions in good faith, (ii) Parent will reasonably consult with SplitCo on a regular basis with respect to strategy and developments with respect to any such Action, (iii) SplitCo will have the right to participate in (but not control) the defense or prosecution, as applicable, of such Action, and (iv) Parent must obtain the written consent of SplitCo, such consent not to be unreasonably withheld, conditioned or delayed, to settle or compromise or consent to the entry of judgment with respect to such Action if Parent is a defendant and such settlement, consent or judgment would require SplitCo to abandon its rights, change its business practices or incur any Liabilities with respect thereto or if Parent is a plaintiff and the resolution involves a judgment that is less than was being sought in respect of the Galleria Business. After any such compromise, settlement, consent to entry of judgment or entry of judgment, Parent and SplitCo will agree upon a reasonable allocation to SplitCo and SplitCo will be responsible for or receive, as the case may be, SplitCo’s proportionate share of any such compromise, settlement, consent or judgment attributable to the Galleria Business, the Galleria Assets or the Galleria Liabilities, including its proportionate share of the reasonable costs and expenses associated with defending same.

(n) Reasonable Minimization of Losses . To the extent any remedial, corrective or other ameliorative action is required to be taken by an Indemnitee in respect of a matter that is the subject of an indemnification claim hereunder, the Indemnitee will only be entitled for indemnification in respect of those actions that would be necessary to perform the minimum necessary remediation, correction or amelioration to remedy the breach or Liability, as the case may be, at the lowest reasonable cost.

(o) Substitution . In the event of an Action that involves solely matters that are indemnifiable and in which the Indemnifying Party is not a named defendant, if either the Indemnitee or the Indemnifying Party so requests, the Parties will endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the rights and obligations of the Parties regarding indemnification and the management of the defense of claims as set forth in this Article IX will not be affected.

(p) Subrogation . In the event of payment by or on behalf of any Indemnifying Party to or on behalf of any Indemnitee in connection with any Third-Party Claim, such Indemnifying Party will be subrogated to and will stand in the place of such Indemnitee, in whole or in part based upon whether the Indemnifying Party has paid all or only part of the Indemnitee’s Liability, as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee will cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(q) Not Applicable To Taxes . Except for Section 9.04(b) and as otherwise specifically provided herein, this Agreement, including Section 1.06(a) and Section 1.06(b) , will not apply to Taxes (which are covered by the Tax Matters Agreement).

9.07 Exclusive Remedy . (a) From and after the Closing, the sole and exclusive remedy of a Party with respect to any and all claims relating to this Agreement, the Galleria Business, the Galleria Assets, the Galleria Liabilities, the Excluded Liabilities, the Galleria Entities or the transactions contemplated by this Agreement (other than claims of, or causes of action arising from, Fraud and except for seeking specific performance or other equitable relief to require a Party to perform its obligations under this Agreement to the extent permitted hereunder and thereunder and except as otherwise provided herein or in any Ancillary Agreement) will be pursuant to the indemnification provisions set forth in this Article IX or, in the case of indemnification claims for Taxes addressed in the Tax Matters Agreement, the Tax Matters Agreement. In furtherance of the foregoing, each Party hereby waives, from and after the Closing, any and all rights, claims and causes of action (other than pursuant to the indemnification provisions set forth in this Article IX and the Tax Matters Agreement and other than claims of, or causes of action arising from, Fraud and except for seeking specific performance or other equitable relief to require a Party to perform its obligations under this Agreement to the extent permitted hereunder and except as otherwise provided in any Ancillary Agreement) that such Party or its Affiliates may have against the other Party or any of its Affiliates, or their respective directors, officers and employees, arising under or based upon any applicable Laws and arising out of the transactions contemplated by this Agreement.

(b) Notwithstanding any other provision hereof, from and after the Closing, the sole and exclusive remedy of the Parent Group and Acquiror Group with respect to any and all indemnification claims for Taxes addressed in the Tax Matters Agreement will be as set forth in the Tax Matters Agreement.

X. MISCELLANEOUS

10.01 Non-Survival of Representations and Warranties . Except as provided in the next sentence, none of the representations, warranties and agreements in this Agreement will survive the Closing. Notwithstanding the preceding sentence, for purposes of the indemnification obligations set forth in Section 9.02 and Section 9.03 , (a) the agreements contained in this Agreement in Article II and Article X that by their terms are to be performed in whole or in part after the Closing will survive the Closing until they have been performed in accordance with their terms, (b) the representations and warranties set forth in Section 3.15 and Section 4.14 will survive until the one year anniversary of the Closing (the items in clauses (a) and (b), collectively, the “ Surviving Transaction Agreement Items ”) and (c) the representations and warranties set forth in Section 3.11 and Section 4.12 will survive as provided in the Tax Matters Agreement.

10.02 Expenses . (u) General Rule . Except as otherwise provided in this Agreement, including in Sections 1.09 , 2.15 , 5.02 and this 10.02 , or any of the Ancillary Agreements, all fees and expenses incurred in connection with the transactions contemplated hereby and thereby will be paid by the Party incurring such fees or expenses.

(v) Antitrust Filing Fees . Acquiror will be responsible for and pay any requisite filing fee in respect of any notification submitted pursuant any Antitrust Laws, including the HSR Act.

(w) Printing Expenses . Acquiror and Parent will share equally the fees and expenses of printers utilized by the Parties in connection with the preparation of the filings with the Commission contemplated by Section 5.08 .

(x) Galleria Indebtedness Expenses . Acquiror will reimburse Parent for all costs and expenses incurred by Parent or any of its Subsidiaries in connection with the Galleria Financing, including any rating agency evaluation or maintenance fees, commitment fees, ticking fees, upfront fees, closing fees and administrative agent fees, interest payments made prior to the Closing Date (in respect of any monies borrowed under the Galleria Credit Facility prior to the Closing and placed into an escrow or similar account as contemplated by the Galleria Commitment Letter), professional fees and expenses, and other fees paid pursuant to fee letters and arrangements entered into in connection with the Galleria Credit Facility (the “ Galleria Debt Expenses ”).

(y) Expenses Associated With Transition Arrangements And Other Certain Matters Related To Preparation For Closing . This Section 10.02(e) governs the allocation of responsibility for costs and expenses undertaken by the Parent Group in connection with the activities contemplated by Section 5.18 (Removal of Tangible Assets), 5.21(d) (Execution of Transition Plan), 5.21(f) (Set-Up of UPC/EAN Codes, etc.), 5.21(g) (Control of Galleria Entity Structuring) and Section 5.27 (Facilities Split Plan) (the “ Covered Expenses ”).

(v) General Principles . Except as otherwise expressly provided in this Agreement, responsibility for the Covered Expenses will be apportioned between Parent and Acquiror as follows:

(A) costs and expenses that are incurred by Parent Group for the purpose of optimizing the Parent Group’s retained operations as a result of the divestiture of the Galleria Business for the post-closing benefit of the Parent Group, such as for example the elimination of stranded overhead resources at facilities other than the Galleria Facilities, the optimization of facilities to be retained by the Parent Group and the removal of Excluded Assets from Galleria Facilities, will be 100% the responsibility of Parent;

(B) costs and expenses that are incurred by Parent Group, at the direction of or in consultation with the Acquiror Group, for the purpose of benefitting the future operations of the Galleria Group or the Acquiror Group (beyond assets that constitute Galleria Assets or employees who are In-Scope Employees, in each case, as of the date hereof), such as for example by adding ongoing capability or functionality to the Galleria Business that does not exist as of the date of this Agreement, acquiring new facilities, hiring individuals for newly created positions or non-transferring functions such as sales force employees, moving employees to new locations or shipping and installing Galleria Assets in new locations, will be 100% the responsibility of Acquiror; and

(C) costs and expenses that are incurred by Parent Group for the purpose of facilitating the transaction, such as for example the removal of the tangible Galleria Assets contemplated by Section 5.18 , the implementation of the Split Plan Agreement contemplated by Section 5.27 , and the expense contemplated in connection with preparing to deliver the anticipated business services under the Transition Services Agreement and/or the migration of the services to the systems of Acquiror, will be shared 50%/50% between Parent and Acquiror.

(vi) Attached as Schedule 10.02 is a preliminary listing of activities contemplated for the transition process and the currently contemplated division of responsibility for the costs and expenses associated therewith. Each of the Parties acknowledges that the ultimate activities to be undertaken, and allocation of responsibilities, may be subject to change based on the results of the transition planning discussions contemplated by Section 5.21(a) , but that Schedule 10.02 is meant to be a good faith indication of their intent.

(z) Mechanics of Reimbursement Payments . Any reimbursement amount that may be payable in respect of Section 10.02(d) or Section 10.02(e) will be effected in the following manner: (i) to the extent Covered Expenses or Galleria Debt Expenses that would be the responsibility of Acquiror are incurred by any member of the Galleria Group, were outstanding as of the Cut-Off Date and remain outstanding as of the Business Transfer Time (such as accounts payable or accrued expenses), such Covered Expenses and Galleria Debt Expenses will remain as outstanding Liabilities of the Galleria Group and will not be taken into account in the calculation of Cut-Off Date Working Capital, as contemplated by the definition of Cut-Off Date Working Capital, and (ii) in respect of any other Covered Expenses or Galleria Debt Expenses that would be the responsibility of Acquiror, the Recapitalization Amount will be increased by such amount of Covered Expenses or Galleria Debt Expenses (and, in respect of any such Covered Expenses or Galleria Debt Expenses that have not been determined as of the 10 ^th Business Day prior to the Closing Date (including in respect of costs that have been incurred but not invoiced), the Recapitalization Amount will be an adjusted by an amount equal to Parent’s good faith estimate of such undetermined costs). Parent will not be required to incur any costs after the Closing that constitute Covered Expenses for which the Acquiror has any responsibility hereunder except to the extent that the Parties agree on such costs prior to the Closing (in which case, the Recapitalization Amount will be increased by an amount equal to such agreed-upon future costs).

(aa) Effect of Termination . In the event that this Agreement is terminated, the reimbursement contemplated by Section 10.02(f) will be paid by Acquiror to Parent no later than five Business Days following such termination; provided , however , that Acquiror will have no obligation to reimburse Parent for such fees and expenses if this Agreement is terminated by Acquiror pursuant to Section 8.01(d)(i) .

(bb) No Post-Closing Payments . In no case will any reimbursement payments contemplated by this Section 10.02 take place after the Closing. Each of the Parties will settle all such payments at or prior to the Closing (whether effected through the calculation of the Recapitalization Amount or otherwise) as provided in this Section 10.02 .

(cc) Taxes . Notwithstanding anything to the contrary in this Section 10.02 , responsibility for Taxes will be allocated as set forth in the Tax Matters Agreement.

(dd) Efforts to Minimize Shared Costs . Each of the Parties will cooperate in good faith with the other Parties to minimize any costs and expenses that, by operation of this Agreement would not be borne solely by such Party (it being understood that this provision will not be deemed to require the Parties to proceed more slowly towards consummating the transactions contemplated hereby if doing so would reduce costs and expenses).

10.03 Entire Agreement . This Agreement and the Ancillary Agreements, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to herein and therein, will together constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter, including the Confidentiality Agreement, which is hereby terminated and of no further force or effect, subject to Section 8.03 . If there is a conflict between any provision of this Agreement and a provision of any Ancillary Agreement, the provision of this Agreement will control unless specifically provided otherwise in this Agreement.

10.04 Governing Law; Jurisdiction; Waiver of Jury Trial . (w) The validity, interpretation and enforcement of this Agreement will be governed by the Laws of the State of Delaware, without regard to the conflict of Laws provisions thereof that would cause the Laws of another state to apply. Notwithstanding anything herein to the contrary, and without limiting anything set forth in Section 10.17 , each of the parties hereto agrees that it will not bring or support any suit, action or other proceeding (whether at law, in equity, in contract, in tort or otherwise) against any Debt Financing Source in any way relating to this Agreement or any of the transactions contemplated by this Agreement (including any related financing), including any dispute arising out of or relating in any way to the Galleria Financing or Acquiror Financing or the performance thereof, in any forum other than any New York State court or federal court sitting in the County of New York and the Borough Manhattan (and appellate courts thereof). The parties hereto further agree that all of the provisions of this Section 10.04 relating to waiver of jury trial shall apply to any suit, action or other proceeding referenced in the preceding sentence.

(x) By execution and delivery of this Agreement, each Party irrevocably (i) submits and consents to the personal jurisdiction of the state and federal courts of the State of Delaware for itself and in respect of its property in the event that any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any other court. Subject to compliance with the provisions of Section 10.15 , if applicable, each of the Parties irrevocably and unconditionally waives (and agrees not to plead or claim) any objection to the laying of venue of any dispute arising out of this Agreement or any of the transactions contemplated hereby in the state and federal courts of the State of Delaware, or that any such dispute brought in any such court has been brought in an inconvenient or improper forum. The Parties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court will constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of court.

(y) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING AGAINST ANY DEBT FINANCING SOURCE). EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.04(c) .

10.05 Notices . All notices, requests, permissions, waivers and other communications hereunder will be in writing and will be deemed to have been duly given (a) when sent, if sent by facsimile, (b) when delivered, if delivered personally to the intended recipient and (c) one Business Day following sending by overnight delivery via an international courier service and, in each case, addressed to a Party at the following address for such Party:

(iii) if to Parent:

The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45202
Attention:    Corporate Secretary
Attention:    Jason Muncy
        Associate General Counsel – Global Transactions
Facsimile:    (513) 386-1927

with a copy to (which will not constitute notice):

Jones Day
222 East 41st Street
New York, NY 10017
Attention:    Robert A. Profusek
        Peter E. Izanec
Facsimile:     (212) 755-7306

(iv) If to Acquiror:

Coty Inc.
350 Fifth Avenue
New York, NY 10018
Attention: Chief Financial Officer
Facsimile: (212) 389-7538

with copies to (which will not constitute notice):

Coty Inc.
350 Fifth Avenue
New York, NY 10018
Attention: General Counsel
Facsimile: (212) 479-4328

and

Skadden Arps Slate Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention:     Paul T. Schnell
        Sean C. Doyle
Facsimile:     (212) 735-2000

or to such other address(es) as may be furnished in writing by any such Party to the other Party in accordance with the provisions of this Section 10.05 . Any notice to Parent will be deemed notice to all members of the Parent Group, and any notice to Acquiror will be deemed notice to all members of the Galleria Group.

10.06 Amendments and Waivers . (c) This Agreement may be amended and any provision of this Agreement may be waived; provided , however , that any such amendment or waiver will become and remain binding upon a Party only if such amendment or waiver is set forth in a writing executed by such Party. No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Party under or by reason of this Agreement. Notwithstanding anything to the contrary contained herein, Sections 10.04 , 10.07 , 10.08 , 10.17 and this Section 10.06 (and any provision of this Agreement to the extent an amendment, modification, waiver or termination of such provision would modify the substance of any of the foregoing provisions) may not be amended, modified, waived or terminated in a manner that impacts or is adverse in any respect to any Debt Financing Source without the prior written consent of such Debt Financing Source.

(d) No delay or failure in exercising any right, power or remedy hereunder will affect or operate as a waiver thereof; nor will any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy. Except and solely to the extent set forth in Section 9.07 , the rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that any Party would otherwise have.

10.07 No Third-Party Beneficiaries . This Agreement is solely for the benefit of the Parties (and with respect to Sections 10.04 , 10.06 , 10.08 , 10.17 and this Section 10.07 , the Debt Financing Sources) and does not confer on third parties (including any employees of any member of the Parent Group or the Acquiror Group) any remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this Agreement; provided , however , that this Section 10.07 does not limit any rights of Parent to enforce specifically the performance of the terms and provisions of Article VI .

10.08 Assignability . No Party may assign its rights or delegate its duties under this Agreement without the written consent of the other Party, except that a Party may assign its rights or delegate its duties under this Agreement to a member of its Group, provided that (a) such Person agrees in writing to be bound by the terms and conditions contained in this Agreement and (b) such assignment or delegation will not relieve any Party of its indemnification obligations or other obligations under this Agreement and (c) after the Closing, the Acquiror may assign its rights or delegate its duties under this Agreement to any lender party to the Acquiror Commitment Letter as collateral security, unless, in each case, Parent determines, in its sole discretion, that such assignment or delegation would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby. Any attempted assignment or delegation in contravention of the foregoing will be void.

10.09 Construction . The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement. Whenever required by the context, any pronoun used in this Agreement or the Parent Disclosure Letter or Acquiror Disclosure Letter will include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns, pronouns, and verbs will include the plural and vice versa. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. References in this Agreement to any document, instrument or agreement (including this Agreement) includes and incorporates all exhibits, disclosure letters, schedules and other attachments thereto. Unless the context otherwise requires, any references to an “Exhibit,” “Section” or “Article” will be to an Exhibit, Section or Article to or of this Agreement, and will be deemed to include any provisions or matters set forth in any corresponding schedule or section of the Acquiror Disclosure Letter or Parent Disclosure Letter. The use of the words “include” or “including” in this Agreement or the Parent Disclosure Letter or the Acquiror Disclosure Letter will be deemed to be followed by the words “without limitation.” The use of the word “covenant” or “agreement,” when referring to a covenant or agreement contained herein, will mean “covenant and agreement.” The use of the words “or,” “either” or “any” will not be exclusive. “Days” means “calendar days” unless specified as “Business Days.” References to statutes will include all regulations promulgated thereunder, and references to statutes or regulations will be construed to include all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation as of the date hereof. The Parties have participated jointly in the negotiation and drafting of this Agreement and the Ancillary Agreements. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Except as otherwise expressly provided elsewhere in this Agreement or any Ancillary Agreement, any provision herein which contemplates the agreement, approval or consent of, or exercise of any right of, a Party, such Party may give or withhold such agreement, approval or consent, or exercise such right, in its sole and absolute discretion, the Parties hereby expressly disclaiming any implied duty of good faith and fair dealing or similar concept.

10.10 Severability . The Parties agree that (a) the provisions of this Agreement will be severable in the event that for any reason whatsoever any of the provisions hereof are invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise unenforceable provisions will be replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable and (c) the remaining provisions will remain valid and enforceable to the fullest extent permitted by applicable Law.

10.11 Counterparts . This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party will re-execute original forms thereof and deliver them to the requesting Party.

10.12 Specific Performance . The Parties agree that irreparable damage would occur if any provision of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the Parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the performance of the terms and provisions of this Agreement (including the performance by Acquiror and its Affiliates of the employment-related obligations set forth in Article VI ) without proof of actual damages, this being in addition to any other remedy to which any Party is entitled at Law or in equity. Each Party further agrees that no other Party or any other Person will be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 10.12 , and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

10.13 Disclosure Letters . There may be included in the Parent Disclosure Letter or the Acquiror Disclosure Letter items and information that are not “material,” and such inclusion will not be deemed to be an acknowledgment or agreement that any such item or information (or any non-disclosed item or information of comparable or greater significance) is “material,” or to affect the interpretation of such term for purposes of this Agreement. Matters reflected in the Parent Disclosure Letter and the Acquiror Disclosure Letter are not necessarily limited to matters required by this Agreement to be disclosed therein. The Parent Disclosure Letter and the Acquiror Disclosure Letter set forth items of disclosure with specific reference to the particular Section or subsection of this Agreement to which the information in the Parent Disclosure Letter or the Acquiror Disclosure Letter, as applicable, relates; provided , however , that any information set forth in one section of such disclosure letter will be deemed to apply to each other section or subsection thereof to which its relevance is reasonably apparent on its face.

10.14 Waiver . Acquiror acknowledges, on behalf of itself and its Affiliates, that Jones Day has represented, is representing and will continue to represent Parent in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, and that Jones Day will only represent the interests of Parent in connection with such transactions. Acquiror waives, on behalf of itself and its Affiliates, any conflict of interest that it or they may assert against Jones Day in connection with such representation and agrees not to challenge Jones Day’s representation of Parent with respect to such transactions or to assert that a conflict of interest exists with respect to such representation. Without limiting the generality of the foregoing, Acquiror agrees, on behalf of itself and its Affiliates, that Jones Day may represent Parent in any litigation, arbitration, mediation or other Action against or involving Acquiror or any of its Affiliates, arising out of or in connection with such transactions.

10.15 Dispute Resolution . Except as otherwise specifically provided in this Agreement or in any Ancillary Agreement and subject to Section 10.12 , the procedures set forth in this Section 10.15 will govern dispute resolution of any Direct Claim under Section 9.05 (a “ Dispute ”). Acquiror, on the one hand, and Parent, on the other hand, will first refer any such Dispute for resolution to either the Chairman of the Board of Directors of Acquiror or the Chief Financial Officer of Parent (or their designees) by delivering to the other Party a written notice of the referral (a “ Dispute Escalation Notice ”). Following receipt of a Dispute Escalation Notice, each of the Parties will cause their respective officer or designee to negotiate in good faith to resolve the Dispute. If such officers or designees are unable to resolve the Dispute within 40 Business Days after the date of the Dispute Escalation Notice, either Party will have the right to commence litigation in accordance with Section 10.04 . The Parties agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings will be without prejudice to the legal position of a Party in any subsequent Action and kept confidential and protected against disclosure.

10.16 Obligations of Affiliates . Each of Parent and Acquiror will cause all of the members of its Group to comply with their respective obligations or representations or warranties under this Agreement and the Ancillary Agreements (whether or not any such members of its Group are parties to this Agreement or Ancillary Agreements). Parent hereby guarantees to Acquiror the performance of the other members of the Parent Group of their respective obligations under this Agreement and the other Ancillary Agreements, and Acquiror hereby guarantees to Parent the performance of the other members of the Acquiror Group of their respective obligations under this Agreement and Ancillary Agreements.

10.17 No Recourse Against Debt Financing Sources . Without limiting any other provision in this Agreement, this Agreement may only be enforced against any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiations, execution or performance of this Agreement, may only be made against the parties hereto, and no Debt Financing Source shall have any liability for any obligations or liabilities of the parties hereto or for any claim (whether in tort, contract or otherwise) based on, in respect of or by reason of the transactions contemplated hereby or in respect of any oral representations made or alleged to be made in connection herewith. Parent, SplitCo and Acquiror agree not to, and to cause their respective Affiliates not to, seek to enforce this Agreement against, make any claims for breach of this Agreement against or seek to recover monetary damages in connection with any such asserted breach of this Agreement from any Debt Financing Source. Parent and SplitCo agree not to, and to cause their respective Affiliates not to, seek to enforce the Acquiror Commitment Letter against, make any claims for breach of the Acquiror Commitment Letter against or seek to recover monetary damages in connection with any such asserted breach of the Acquiror Commitment Letter from, or otherwise sue in connection with the Acquiror Commitment Letter, the Debt Financing Sources. Nothing in this Section 10.17 shall in any way limit or qualify the obligations and liabilities of the parties to the Galleria Commitment Letter, respectively, and the Acquiror Commitment Letter to each other or in connection therewith.

XI. DEFINITIONS

For purposes of this Agreement, the following terms, when utilized in a capitalized form, will have the following meanings:

“ Accounting Firm ” has the meaning set forth in Section 2.15(c) .

“ Accounting Principles ” has the meaning set forth in the definition of “ Working Capital .”

“ Acquiror ” has the meaning set forth in the preamble to this Agreement.

“ Acquiror Average Price ” means, as of any date of determination, the average (measured as an arithmetic mean) of the daily volume weighted averages of the trading prices of the Acquiror Common Stock, as such prices are reported on the NYSE Composite Tape, for (x) in the case of any determinations of the Acquiror Average Price for purposes of the definition of “Acquiror SEC Event”, the fifteen consecutive Trading Days ending on such date of determination (other than (1) if the date of determination is the Commencement Date and the related Disclosure Date is less than 15 consecutive Trading Days before such Commencement Date, in which case the measurement period will begin on the Trading Day following the Disclosure Date and end on the Commencement Date, and (2) if the date of determination is the 10 ^th trading day after the date on which the Acquiror makes a GAAP Compliant Confirmation, in which case the measurement period will be the 10 consecutive Trading Days ending on such date of determination), and (y) in all other cases, the five consecutive Trading Days ending on such date of determination; provided , however , that if an ex-dividend date is set for the Acquiror Common Stock during such period, then the trading price for a share of Acquiror Common Stock for each day during the portion of such period that precedes such ex-dividend date will be reduced by the amount of the dividend payable on a share of Acquiror Common Stock.

“ Acquiror Base Stock Price ” means $24.56 per share.

“ Acquiror Capital Stock ” means any shares of common stock (including Acquiror Common Stock), preferred stock (including the Series A Preferred Stock), restricted stock, restricted stock units, stock appreciation rights, stock-based performance units, phantom units (including the Phantom Units), capital stock equivalents or similar synthetic instruments or other capital stock or nominal interests in Acquiror, including any stock, other securities or interests that could be designated as equity for purposes of Section 355 of the Code.

“ Acquiror Certificate ” has the meaning set forth in Section 2.05 .

“ Acquiror Collar Stock Price ” has the meaning set forth in the definition of “ Recapitalization Amount .”

“ Acquiror Commitment Letter ” has the meaning set forth in Section 5.12(e) .

“ Acquiror Common Stock ” means the Class A Common Stock and the Class B Common Stock.

“ Acquiror Compensation and Benefit Plans ” means all written (a) salary, bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift, savings, overtime, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, equity-based, incentive, retention, severance or change-in-control plans or other similar plans, policies, arrangements or agreements, (b) employment agreements, (c) medical, dental, disability, health and life insurance plans, sickness benefit plans and (d) other employee benefit and fringe benefit plans, policies, arrangements or agreements and each “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), in the case of each of clauses (a) through (d), sponsored, maintained or contributed to by Acquiror or any of its ERISA Affiliates (i) for the benefit of any of the Acquiror Group employees or any of their beneficiaries or (ii) pursuant to which Parent or any of its Subsidiaries would have any Liability subsequent to the Closing in respect of periods on or prior to the Closing, excluding in the case of clauses (i) and (ii) any plans, policies, arrangements or agreements not sponsored by Acquiror or any of its Subsidiaries to which contributions by an employer are mandated by a Governmental Authority or by law, rules, regulations, orders or decrees.

“ Acquiror Disclosure Letter ” means the disclosure letter delivered by Acquiror to Parent immediately prior to the execution of this Agreement.

“ Acquiror Equity Interests ” has the meaning set forth in Section 4.05(c) .

“ Acquiror Filings ” means, collectively, the SplitCo Form 10/S-4, the Schedule TO, the Information Statement and the Acquiror Form S-4.

“ Acquiror Financing ” means the debt financing to refinance any of Acquiror’s currently outstanding Indebtedness, including the receipt of funds as contemplated by the Acquiror Commitment Letter.

“ Acquiror Form S-4 ” has the meaning set forth in Section 5.08(b) .

“ Acquiror Group ” means Acquiror and each of its Affiliates, including, after the Closing, the Galleria Group.

“ Acquiror Indemnitees ” means Acquiror, each member of the Acquiror Group and each of their respective successors and assigns, and all Persons who are or have been stockholders, directors, partners, managers, managing members, officers, agents, representatives or employees of any member of the Acquiror Group (in each case, in their respective capacities as such).

“ Acquiror Leased Real Property ” has the meaning set forth in Section 4.17(a) .

“ Acquiror MAE ” means (i) any circumstance, change, development, condition or event that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of Acquiror and its Subsidiaries taken as a whole; or (ii) a change described on Section 11.01(c) of the Acquiror Disclosure Letter; provided , however , that any such effect resulting or arising from or relating to any of the following matters will not be considered when determining whether there has been, or would reasonably be expected to be, an Acquiror MAE: (a) general conditions in the industry in which Acquiror competes, (b) any conditions in the United States general economy or the general economy in other geographic areas in which Acquiror operates or proposes to operate, (c) political conditions, including acts of war (whether or not declared), armed hostilities, acts of terrorism or developments or changes therein, (d) any conditions resulting from natural disasters, (e) compliance by Acquiror and Merger Sub with its covenants or obligations in this Agreement, (f) the failure of the financial or operating performance of Acquiror to meet internal forecasts or budgets for any period prior to, on or after the date of this Agreement (but the underlying reason for the failure to meet such forecasts or budgets may be considered provided that they do not fall under another clause of this proviso), (g) any action taken or omitted to be taken at the request or with the consent of Parent, (h) effects or conditions resulting from the announcement of this Agreement or the transactions contemplated thereby, including any employee departures and any actions taken by customers, suppliers, distributors or licensors of Acquiror to terminate, discontinue or not renew their Contracts with Acquiror or its Subsidiaries or otherwise withhold any Consent necessary in respect of such Contracts, (i) any deterioration in the business, financial condition or results of operations of the Acquiror’s business that occurs subsequent to the date of this Agreement and prior to the Closing Date, except that such deterioration will be considered to the extent it arises out of any (1) breach by Acquiror of its covenants under this Agreement, (2) extraordinary event of a nature described in clauses (c) or (d) (but only to the extent that such extraordinary event disproportionately affects the Acquiror’s business as compared to similarly situated businesses operating in the markets in the United States and other geographic areas in which the Acquiror’s business operates), or (3) a product recall required under applicable Law (but only to the extent such product recall disproportionately affects the Acquiror’s business as compared to similarly situated businesses operating in the United States and other geographic areas in which the Acquiror’s business operates), or (j) changes in applicable Laws or GAAP; provided , further , that with respect to clauses (a), (b), (c), (d) or (j), such matters will be considered to the extent that they disproportionately affect Acquiror as compared to similarly situated businesses generally operating in the same industry in the United States and other geographic areas in which Acquiror operates.

“ Acquiror Material Contract ” has the meaning set forth in Section 4.09(a) .

“ Acquiror New Common Stock ” has the meaning set forth in the recitals to this Agreement.

“ Acquiror Objection ” has the meaning set forth in Section 2.15(b) .

“ Acquiror Options ” has the meaning set forth in Section 4.05(a) .

“ Acquiror Owned Real Property ” has the meaning set forth in Section 4.17(a) .

“ Acquiror Preferred Stock ” has the meaning set forth in Section 4.05(a) .

“ Acquiror Real Property Leases ” has the meaning set forth in Section 4.17(a) .

“ Acquiror Restructuring Goals ” has the meaning set forth in Section 5.21(g) .

“ Acquiror SEC Event ” means the occurrence of one or more of the following events:

(i) Acquiror shall have published or become obligated to publish a press release or file or become obligated to file a report with the Commission to the effect that Acquiror’s prior financial statements or reports filed with the Commission may no longer be relied upon;

(ii) Acquiror shall have failed to timely file (after giving effect to the extension provided pursuant to Rule 12b-25 under the Exchange Act if a Form 12b-25 is timely filed by the Acquiror) with the Commission any of its Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q that are required to be filed after the date hereof and prior to the Closing;

(iii) Acquiror shall have made a filing that discloses (or the Acquiror shall have become required to disclose) the existence of any material weaknesses in the effectiveness of Acquiror’s internal control over financial reporting (as such concept is defined in Rule 1-02(a) of Regulation S-X, as of the requisite date;

(iv) Acquiror shall have publicly announced or disclosed that the audit committee of Acquiror’s Board of Directors (or other similarly empowered committee of the board or the board itself) is conducting an investigation with respect to the material reliability or accuracy of Acquiror’s financial statements;

(v) Acquiror or any Governmental Authority shall have publicly announced or disclosed that a Governmental Authority is conducting an investigation with respect to the material reliability or accuracy of Acquiror’s financial statements; or

(vi) Acquiror or any of its directors or executive officers shall have been named as a party to any criminal proceeding with respect to alleged criminal conduct where such conduct relates to the business of Acquiror;

provided , that (A) no event resulting from, relating to or arising out of matters disclosed in the Acquiror SEC Filings publicly filed or furnished with the Commission at least two Business Days prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section relating to forward looking-statements and any other similar disclosures included therein to the extent that they are primarily cautionary in nature or in the general description of accounting principles in the footnotes to the audited or unaudited financial statements included in any Acquiror SEC Filings) or Section 11.01 of the Acquiror Disclosure Letter shall be an Acquiror SEC Event and (B):

(x) in the case of clause (i) above, at least one of the following must also be true:

(A) Acquiror shall have failed to remedy the underlying issues and publicly confirmed that the financial statements filed or published with the Commission prior thereto fairly present, in all material respects, the Acquiror’s consolidated financial condition and results of operations of the Acquiror Group (such confirmation, the “ GAAP Compliant Confirmation ”) within 120 days of the date on which it published or became obligated to publish or filed or become obligated to file the press release or report referenced in clause (i); or

(B) if both (x) the Acquiror Average Price is less than or equal to 80% of the Acquiror Average Price on the trading day immediately preceding such Disclosure Date (and such decline in the trading prices of the Acquiror Common Stock underlying such calculated decline in the Acquiror Average Price is disproportionate in a non-de minimis respect to a decline in the performance of the Standard & Poor’s 500 Index calculated in the same manner) and (y) the Acquiror Average Price is less than $20.00, on any one of the following days: any of the 40 ^th through 50 ^th trading days following the Disclosure Date, the 10 ^th trading day after the date on which the Acquiror makes the GAAP Compliant Confirmation and, if the Disclosure Date is less than 40 trading days prior to the Commencement Date, the Commencement Date (this clause (B), the “ Minimum Price Decline Requirement ”);

(y) in the case of clause (ii) above, at least one of the following must also be true:

(A) Acquiror shall have failed to cure the relevant problem within 120 days of the date on which the event referenced in clause (ii) takes place by, as applicable, filing the late Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the Commission; or

(B) the Minimum Price Decline Requirement shall have occurred; and

(z) in the case of clauses (iii), (iv), (v) and (vi), the Minimum Price Decline Requirement shall have occurred ( provided , that for purposes of this clause (z), the only measurement dates for the Minimum Price Decline Requirement will be (1) the 45 ^th trading day after the Disclosure Date and (2) if the Disclosure Date is less than 45 Trading Days prior to the Commencement Date, the Commencement Date).

“ Acquiror SEC Filings ” has the meaning set forth in Section 4.11(a) .

“ Acquiror Stockholder Approval ” has the meaning set forth in Section 4.15(a) .

“ Acquiror Stockholders ” means the holders of Acquiror Common Stock.

“ Acquiror Stock Issuance ” has the meaning set forth in Section 2.07(b) .

“ Acquiror Superior Proposal ” has the meaning set forth in Section 5.09(f)(iii) .

“ Acquiror Takeover Proposal ” has the meaning set forth in Section 5.09(f)(i) .

“ Acquiror Welfare Plans ” has the meaning set forth in Section 6.04(e) .

“ Action ” means any demand, charge, claim, action, suit, counter suit, arbitration, mediation, hearing, inquiry, proceeding, audit, review, complaint, litigation or investigation, sanction, summons, demand, subpoena, examination, citation, audit, review or proceeding of any nature whether administrative, civil, criminal, regulatory or otherwise, by or before any Governmental Authority.

“ Adjusted Galleria Business ” means the Galleria Business less the Retained Licenses, any Retained Business and any Assets or Liabilities that are Excluded Assets or Excluded Liabilities pursuant to Section 1.09 .

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such other Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise. For the avoidance of doubt, (a) Affiliates of Parent will include SplitCo and the Galleria Entities prior to the Closing, and (b) Affiliates of Acquiror will include SplitCo and the Galleria Entities after the Closing.

“ Agreement ” has the meaning set forth in the preamble to this Agreement.

“ Alternative Financing ” has the meaning set forth in Section 5.12(b)(ii) .

“ Ancillary Agreements ” means (a) the Tax Matters Agreement, the Transition Services Agreement, the Split Plan Agreement, the Parent Shared Technology License Agreement, the SplitCo Shared Technology License Agreement, the Parent Trademark License Agreement, the SplitCo Trademark License Agreement and the Coexistence Agreement, and (b) to the extent required pursuant to Schedule 1.09 , the SplitCo Retained Business Technology License, the Reverse Transitional Supply Agreement and the Reverse Transitional Distribution Services Agreement.

“ Antitrust Approvals ” has the meaning set forth in Section 5.02(c)(i) .

“ Antitrust Laws ” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act and all other Laws relating to merger control or competition law or are otherwise designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

“ Assets ” means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third-parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

“ Audited Kosmos Financial Statements ” has the meaning set forth in Section 3.10(b) .

“ Audited Mercury Financial Statements ” has the meaning set forth in Section 3.10(a) .

“ Audited Salon Professional Financial Statements ” has the meaning set forth in Section 3.10(c) .

“ Bank Letter ” means a letter from a financial institution stating its view, subject to reasonable and customary assumptions, that SplitCo could be expected to borrow the principal amount of the Galleria Credit Facility or the Refinanced Facility, as the case may be, without a guarantee or other form of credit support from Acquiror, provided that such financing may be on terms less favorable than those contained in the Galleria Credit Facility or the Refinanced Facility, as the case may be.

“ Beauty Store ” means a Physical Location that either (a) requires a Regulated Professional to provide proof that the individual is a Regulated Professional in order to receive a discounted price on Products or (b) a cash and carry store in Europe that exclusively sells beauty products (e.g., cosmetics, fragrances, Products) and primarily serves Professionals of the type which Parent currently sells Products (e.g., Bleue Libellule).

“ Business Day ” means any day that is not a Saturday, a Sunday or other day that is a statutory holiday under the federal Laws of the United States.

“ Business Transfer Date ” has the meaning set forth in Section 1.01(c) .

“ Business Transfer Time ” has the meaning set forth in Section 1.01(c) .

“ Caldera Business ” means (a) Parent’s business of sourcing, manufacturing, marketing, selling, distributing and developing (i) Products for sale in the Salon Professional Channel anywhere in the world (the “ Salon Professional Business ”), and (ii) Color Products for sale in the Retail Channel anywhere in the world (the “ Retail Color Business ”), and (b) the Retail Styling Business.

“ Care Products ” means products that either (a) have the primary purpose of cleaning human hair through the application of a composition with anionic, non-ionic or zwitterionic surfactants or (b) have the primary purpose of providing lubricity and protection to human hair cuticles through the application of either a rinse-off or leave-on composition containing cationic surfactants, waxes, long-chain fatty alcohols or silicones or oils.

“ Cause ” means (a) a material violation of the Galleria Group’s generally applicable written employment rules or policies (including a violation of applicable Law in the course of employment and insubordination as described in such rules and policies), (b) a material breach of a fiduciary duty, (c) a conviction of, or a plea of guilty or nolo contendere to, a crime for which a custodial sentence may be applied or (d) a material failure to perform his or her duties (other than any such failure resulting from the Continuing Employee’s good faith effort to perform his or her duties); provided , however , that Cause specifically excludes redundancy, surplus enrollment, restructuring of the Galleria Group or its operations or any other economic related reasons. Parent agrees that any termination of employment by Acquiror, SplitCo or any of their Subsidiaries of a Continuing Employee for Cause will be final and not subject to challenge by Parent.

“ Certificate of Merger ” has the meaning set forth in Section 2.04(b) .

“ Choice Employee ” means an In-Scope Employee who is identified as a Choice Employee on Section 6.01 of the Parent Disclosure Letter, as it may be updated from time to time, or who is designated as a Choice Employee pursuant to Section 5.01(b)(xiv)(B) .

“ Claims Notice ” has the meaning set forth in Section 9.05(b)(i) .

“ Class A Common Stock ” means the Class A Common Stock, par value $0.01 per share, of Acquiror.

“ Class B Common Stock ” means the Class B Common Stock, par value $0.01 per share, of Acquiror.

“ Clean-Up Spin-Off ” has the meaning set forth in the recitals.

“ Closing ” has the meaning set forth in Section 2.06 .

“ Closing Date ” has the meaning set forth in Section 2.06 .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Coexistence Agreement ” means a Coexistence Agreement in substantially the form attached hereto as Exhibit P . From and after the Business Transfer Time, the Coexistence Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Color Products ” means products that either (a) utilize oxidative dye chemistry along with dyes for the purpose of changing the color of human hair or (b) contain one or more direct dye materials for the purpose of changing the natural color of human hair, excluding in the case of clause (b), Care Products and Styling Products.

“ Commencement Date ” means the time that (1) the Commission has indicated (which indication may be oral) that it is prepared to declare the SplitCo Form 10/S-4 effective and (2) if an Exchange Offer is being undertaken, (A) the Commission has indicated (which indication may be oral) that it is prepared to declare the Acquiror Form S-4 effective and (B) the Parent is prepared to commence the Exchange Offer in compliance with the terms of this Agreement.

“ Commercially Reasonable Efforts ” means, with respect to the efforts to be expended by a Party with respect to any objective under this Agreement, reasonable, diligent good faith efforts to accomplish such objective as such Party would normally use to accomplish a similar objective as expeditiously as reasonably possible under similar circumstances exercising reasonable business judgment, it being understood and agreed that such efforts will include the exertion of efforts and utilization of resources that would be used by such Party in support of one of its own wholly owned businesses; provided , however , that “Commercially Reasonable Efforts” will not require a Party (a) to make non-de minimis payments to unaffiliated third parties (except as set forth in this Agreement), to incur non-de minimis Liabilities to unaffiliated third parties or to grant any non-de minimis concessions or accommodations unless the other Party agrees to reimburse and make whole such Party to its reasonable satisfaction for such Liabilities, concessions or accommodations requested to be made by the other Party (such reimbursement and make whole to be made promptly after the determination thereof following the Closing or, with respect to items incurred after the Closing, promptly thereafter), (b) to violate any Law or (c) except with respect to the consummation of the Galleria Financing or the Acquiror Financing, to initiate any litigation or arbitration.

“ Commission ” means the Securities and Exchange Commission.

“ Compensation and Benefit Plans ” means all written (a) salary, bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift, savings, overtime, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, equity-based, incentive, retention, severance or change-in-control plans or other similar plans, policies, arrangements or agreements, (b) employment agreements, (c) medical, dental, disability, health and life insurance plans, sickness benefit plans and (d) other employee benefit and fringe benefit plans, policies, arrangements or agreements and each “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), in the case of each of clauses (a) through (d), sponsored, maintained or contributed to by Parent or its ERISA Affiliates (i) for the benefit of any Galleria Business Employees or any of their beneficiaries or (ii) pursuant to which Acquiror or any of its Subsidiaries would have any Liability subsequent to the Closing in respect of periods on or prior to the Closing, excluding in the case of clauses (i) and (ii) any plans, policies, arrangements or agreements not sponsored by Parent or any of its Subsidiaries to which contributions by an employer are mandated by a Governmental Authority or by law, rules, regulations, orders or decrees.

“ Compensation Consultant Process ” has the meaning set forth in Section 6.04(d) .

“ Compensation Gap ” has the meaning set forth in Section 6.04(d) .

“ Compensation Gap Payment ” has the meaning set forth in Section 6.04(d) .

“ Confidential Information ” has the meaning set forth in Section 5.22(a) .

“ Confidentiality Agreement ” means the Non-Disclosure Agreement, dated November 14, 2014, between Parent and an Affiliate of Acquiror.

“ Consents ” means any consents, waivers or approvals from, or notification requirements to, or authorizations by, any third parties.

“ Consolidated Tax Return ” means any Tax Returns with respect to any federal, state, provincial, local or foreign income Taxes that are paid on an affiliated, consolidated, combined, unitary or similar basis and that include one or more Galleria Entities, on the one hand, and Parent or any of its Affiliates (other than any of the Galleria Entities), on the other hand.

“ Continuation Period ” has the meaning set forth in Section 6.04(a) .

“ Continuing Employee ” has the meaning set forth in Section 6.02(b) .

“ Contracts ” means any contract, agreement, lease, sublease, license, sales order, purchase order, loan, credit agreement, bond, debenture, note, mortgage, indenture, guarantee, undertaking, instrument, arrangement, understanding or other commitment, whether written or oral, that is binding on any Person or any part of its property under applicable Law.

“ Convey ” has the meaning set forth in Section 1.02 . Variants of this term such as “ Conveyance ” will have correlative meanings.

“ Copyrights ” has the meaning set forth in the definition of “ Intellectual Property .”

“ Covered Color Cosmetics Products ” means lip color, lipstick (excluding lip balm), lip liner, lip gloss, lip stain, nail polish, mascara, eye liner, eye shadow, eye pencil, brow pencil products which are intended to be applied to the human face or nails primarily for the purpose of temporarily altering the visual appearance of the skin or nails by adding color until such products are removed and without the primary purpose of affecting the body’s structure or functions.

“ Covered Expenses ” has the meaning set forth in Section 10.02(e) .

“ Covered Fine Fragrance Products ” means concentrated, volatile, hydroalcoholic liquids that are (a) solely intended for use on the human body to impart an agreeable, attractive and/or pleasant smell, (b) are sold in an individual non-pressurized container and (c) are sold and labeled as a perfume, eau de parfum, eau de toilette, eau de cologne or cologne. Notwithstanding the foregoing, the definition of “Covered Fine Fragrance Products” does not include (1) colognes sold under any of the Parent Group’s brands under which colognes are sold as of the date hereof and (2) body sprays sold under any of the Parent Group’s brands as of the date hereof.

“ Covered Salon Products ” means Care Products or Styling Products sold directly (or indirectly at the direction of a member of the Parent Group through an agent of any member of the Parent Group) to Salons.

“ Cut-Off Date ” means the date that is the last Business Day of the month that is the month prior to the month in which the anticipated Closing Date occurs (for example, if the Closing Date is expected to be June 30, 2016, then the Cut-Off Date would be May 31, 2016).

“ Cut-Off Date Adjustment Statement ” has the meaning set forth in Section 2.15(a) .

“ Cut-Off Date Adjustment Statement Format ” means the document attached hereto as Exhibit G .

“ Cut-Off Date Working Capital ” means the amount of Working Capital as of the Cut-Off Date, calculated in accordance with Section 2.15 . For purposes of calculating the Cut-Off Date Working Capital, the Liabilities in respect of items that would otherwise be included in Working Capital but that are the responsibility of the Acquiror under the cost-sharing provisions of this Agreement (including Section 10.02 ) will not be included in the calculation.

“ Debt Financing Sources ” means the Persons that have committed to provide of have otherwise entered into agreements (including the Galleria Commitment Letter or the Acquiror Commitment Letter, as applicable), in each case, in connection with the Galleria Financing or the Acquiror Financing (as applicable) or any other financing in connection with the transactions contemplated hereby, and any joinder agreements, indentures or credit agreements entered into pursuant thereto, including the lenders party to the Galleria Commitment Letter or the Acquiror Commitment Letter, as applicable, together with their Affiliates and any of their respective former, current or future general or limited partners, direct or indirect stockholders, managers, members, Affiliates, officers, directors, employees, agents, representatives, successors and assigns.

“ Delayed Transfer Employee ” has the meaning set forth in Section 6.02(d) .

“ Deliberate Breach ” means (a) a material breach of a representation or warranty that the Party making the representation or warranty had Knowledge was false at the time such representation or warranty was made or (b) a material breach of a covenant by a Party where such Party had Knowledge at the time that the action so taken or omitted to be taken by such Party constituted a breach of such covenant.

“ Designs ” has the meaning set forth in the definition of “Intellectual Property.”

“ DGCL ” means the General Corporation Law of the State of Delaware.

“ Diamond Technology ” means all Technology that is owned by a member of the Parent Group and that covers the proprietary blend of materials referred to internally by the Parent Group as the “Diamond 3-ingredient cocktail,” including the formulation for such blend.

“ Direct Claims ” has the meaning set forth in Section 9.05(a) .

“ Disclosing Party ” has the meaning set forth in Section 5.22(b)(iii)(A) .

“ Disclosure Date ” means, in respect of the relevant Acquiror SEC Event, the earlier of (1) the date on which such event is publicly disclosed, (2) the date on which there are widely publicized rumors or other similar market speculation of the occurrence of the event or (3) in respect of the events referenced in clause (ii) of the definition of Acquiror SEC Event, the date on which the relevant filing was required to be filed with the Commission (after giving effect to any extension provided pursuant to Rule 12b-25 under the Exchange Act).

“ Discount Customers ” means TJ Maxx, Big Lots, Marshalls and Burlington Coat Factory.

“ Disposition ” has the meaning set forth in Schedule 1.09 .

“ Disposition Event ” has the meaning set forth in Schedule 1.09 .

“ Dispute ” has the meaning set forth in Section 10.15 .

“ Dispute Escalation Notice ” has the meaning set forth in Section 10.15 .

“ Distribution ” has the meaning set forth in the recitals.

“ Distribution Date ” means, as applicable (i) in the event that Parent elects to effect the Distribution in the form of a One-Step Spin-Off, the date selected by the Board of Directors of Parent or its designee for the distribution of SplitCo Common Stock to Parent shareholders in connection with the One-Step Spin-Off and (ii) in the event that Parent elects to effect the Distribution in the form of an Exchange Offer, the date of the initial transfer of SplitCo Common Stock to Parent shareholders in connection with the Exchange Offer, in accordance with the terms and conditions of the Exchange Offer as determined by Parent in its sole discretion and disclosed in the SplitCo Form 10/S-4.

“ Effective Time ” has the meaning set forth in Section 2.04(b) .

“ Employing Entity ” has the meaning set forth in Section 6.02(b) .

“ End Date ” has the meaning set forth in Section 8.01(b)(i) .

“ Enforceability Exception ” has the meaning set forth in Section 3.02 .

“ Environmental Claim ” means any Action by any Person alleging or that may reasonably be expected to result in Liability (including Liability for investigatory costs, cleanup costs, governmental oversight or response costs, natural resource damages, fines or penalties) arising out of, based on, resulting from or relating to any Environmental Conditions or any noncompliance with any Environmental Laws.

“ Environmental Conditions ” means the presence in the environment, including the soil, groundwater, surface water or ambient air, of any Hazardous Materials at a level which exceeds the applicable standard or threshold under applicable Environmental Law or otherwise requires investigation or remediation (including investigation, study, health or risk assessment, monitoring, removal, treatment or transport) under any applicable Environmental Laws.

“ Environmental Laws ” means all Laws of any Governmental Authority that relate to pollution, the protection of the environment and natural resources (including ambient air, surface water, ground water, land surface or subsurface strata) or the effect of the environment on human health and safety, including Laws or any other binding legal obligation in effect now or in the future relating to the Release of Hazardous Materials, or otherwise relating to the treatment, storage, disposal, transport or handling of Hazardous Materials, or to the exposure of any individual to a release of Hazardous Materials.

“ Equivalent Equity Value ” means, with respect to a Continuing Employee, an amount equal to the grant date value of the most recent annual equity-based award provided by Parent and its Subsidiaries to such employee immediately prior to the Closing or in the case of a Continuing Employee at or above “Band 4” level immediately prior to the Closing who has not yet received an annual equity-based award from Parent and its Subsidiaries because he or she was newly hired into such Band or newly promoted into a new Band level, the median target grant date value applicable for the Continuing Employee’s Band level and geographical location under Parent’s compensation policies immediately prior to the Closing.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means, with respect to an entity, any trade or business (whether or not incorporated) (a) under common control (within the meaning of Section 4001(b)(1) of ERISA) with such entity or (b) which, together with such entity, is treated as a single employer under Section 414(t) of the Code.

“ Exchange Act ” means the Securities Exchange Act of 1934.

“ Exchange Agent ” has the meaning set forth in Section 2.08(b) .

“ Exchange Fund ” has the meaning set forth in Section 2.08(b) .

“ Exchange Offer ” has the meaning set forth in the recitals.

“ Exchange Ratio ” has the meaning set forth in Section 2.07(b) .

“ Excluded Assets ” has the meaning set forth in Section 1.05(b) .

“ Excluded Employee ” means any employee of Parent or one of its Affiliates listed or described on Section 11.01(d) of the Parent Disclosure Letter.

“ Excluded IP Assets ” means (a) all UPC, EAN codes, IP addresses and any other codes or numbers that contain Parent Names, Marks and identifiers, (b) any Intellectual Property utilized for the provision of any of the services under the Transition Services Agreement, (c) any Intellectual Property utilized for the provision of any of the services set forth on the annex attached to Section 3.14 of the Parent Disclosure Letter, (d) the Excluded Technologies and (e) the Trademarks “P&G” and “Procter & Gamble,” similar Trademarks and any other Trademark that includes the name of Parent or any of its Affiliates (excluding the Trademarks set forth on Section 1.05(a)(vii) of the Parent Disclosure Letter).

“ Excluded Liabilities ” has the meaning set forth in Section 1.06(b) .

“ Excluded Technologies ” means all Intellectual Property to the extent related to the Technologies set forth on Section 1.05(b)(ii) of the Parent Disclosure Letter.

“ Exclusive Parent Ancillary Fragrances ” has the meaning set forth in Section 3.19(b) .

“ Exclusive Parent Perfume Oils ” has the meaning set forth in Section 3.18(b) .

“ Exclusive Third-Party Ancillary Fragrances ” has the meaning set forth in Section 3.19(a) .

“ Exclusive Third-Party Perfume Oils ” has the meaning set forth in Section 3.18(a) .

“ Existing Ancillary Fragrance Supplier ” has the meaning set forth in 3.19(a) .

“ Existing Parent Business ” means the Parent Group’s business, as conducted as of the date hereof, of sourcing, manufacturing, development, advertising, promotion, sale, distribution or marketing of any products sold under any of the Parent Group’s brands that exist as of the date hereof (excluding the Galleria Business), including (a) the Vidal Sassoon-branded academies in China owned or leased by Parent, (b) products sold under Parent’s OLAY or SK-II brands (including foundation, primer, beauty or blemish balms, color correcting creams, daily defense creams and concealer products) and (c) Parent’s innovation project code-named “Project Dreamworks.”

“ Existing Perfume Oil Suppliers ” has the meaning set forth in Section 3.18(a) .

“ Expatriate Employee ” has the meaning set forth in Section 6.04(g) .

“ Expatriate Package ” has the meaning set forth in Section 6.04(g) .

“ Final Determination ” has the meaning set forth in the Tax Matters Agreement.

“ Final Retained Business Cut-Off Date ” means the date on which all of the Retained Businesses have been finally identified as provided in Schedule 1.09 , unless the Parties agree otherwise.

“ Financial Statements ” has the meaning set forth in Section 3.10(d) .

“ Fraud ” means a knowing, actual and deliberate fraud in the making of, and with respect to material facts in, the representations and warranties set forth in this Agreement, which in each case satisfies all of the elements of common law fraud under applicable Law.

“ Full Year Financial Statements ” has the meaning set forth in Section 3.10(d) .

“ Fully Diluted Basis ” means, in each case as of the date on which the Galleria Stock Amount is determined:

(a) the aggregate number of shares of Class A Common Stock and Series A Preferred Stock that are outstanding on such date, plus

(b) the aggregate number of Acquiror Equity Interests, other than Series A Preferred Stock, that are outstanding on such date (including restricted stock units, Phantom Units, Acquiror Options and any shares of Class B Common Stock that will be converted into Class A Common Stock as contemplated by the JAB Letter Agreement) of any nature whatsoever, whether contingent, vested or unvested, or otherwise (and without giving effect to any “cashless exercise” or similar features);

in each case other than, for the avoidance of doubt, the shares of the Acquiror New Common Stock issued or to be issued in the Merger. A sample calculation of Fully Diluted Basis is attached hereto as Exhibit Q .

“ FY 13-14 NOS ” means the net outside sales of the relevant business for Parent’s fiscal year ended June 30, 2014, calculated in a manner consistent, where applicable, with the practices utilized by Parent in connection with its preparation of its financial statements prepared in accordance with generally accepted accounting practices and filed with the Commission.

“ GAAP ” means United States generally accepted accounting principles, as consistently applied by Parent (when referring to the Galleria Business) or Acquiror (when referring to the Acquiror’s business).

“ GAAP Compliant Confirmation ” has the meaning set forth in the definition of “ Acquiror SEC Event .”

“ Galleria Assets ” has the meaning set forth in Section 1.05(a) .

“ Galleria Books and Records ” has the meaning set forth in Section 1.05(a)(viii) .

“ Galleria Business ” means, collectively, the Caldera Business, the Kosmos Business and the Mercury Business.

“ Galleria Business Acquired Plan Assets ” has the meaning set forth in Section 1.05(a)(xiii) .

“ Galleria Business Acquired Plans ” has the meaning set forth on Schedule 1.05(a)(xiii) .

“ Galleria Business Employees ” has the meaning set forth in Section 6.02(a) .

“ Galleria Business MAE ” means any circumstance, change, development, condition or event that, individually or in the aggregate, has or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Galleria Business taken as a whole; provided , however , that any such effect resulting or arising from or relating to any of the following matters will not be considered when determining whether there has been, or would reasonably be expected to be, a Galleria Business MAE: (a) general conditions in the industry in which the Galleria Business competes, (b) any conditions in the United States general economy or the general economy in other geographic areas in which the Galleria Business operates or proposes to operate, (c) political conditions, including acts of war (whether or not declared), armed hostilities, acts of terrorism or developments or changes therein, (d) any conditions resulting from natural disasters, (e) compliance by Parent with its covenants or obligations in this Agreement, (f) the failure of the financial or operating performance of the Galleria Business to meet internal forecasts or budgets for any period prior to, on or after the date of this Agreement (but the underlying reason for the failure to meet such forecasts or budgets may be considered provided that they do not fall under another clause of this proviso), (g) any action taken or omitted to be taken at the request or with the consent of Acquiror, (h) effects or conditions resulting from the announcement of this Agreement or the transactions contemplated thereby, including any employee departures and any actions taken by customers, suppliers, distributors, licensors or talent of the Galleria Business to terminate, discontinue or not renew their Contracts with the Galleria Business or otherwise withhold any Consent necessary in respect of such Contracts, (i) any deterioration in the business, financial condition or results of operations of the Galleria Business that occurs subsequent to the date of this Agreement and prior to the Closing Date, except that such deterioration will be considered to the extent it arises out of any (1) breach by Parent of its covenants under this Agreement, (2) extraordinary event of a nature described in clauses (c) or (d) (but only to the extent that such extraordinary event disproportionately affects the Galleria Business as compared to similarly situated businesses operating in the markets in the United States and other geographic areas in which the Galleria Business operates) or (3) a product recall required under applicable Law (but only to the extent such product recall disproportionately affects the Galleria Business as compared to similarly situated businesses operating in the United States and other geographic areas in which the Galleria Business operates), or (j) changes in applicable Laws or GAAP; provided , further , that with respect to clauses (a), (b), (c), (d) or (j), such matters will be considered to the extent that they disproportionately affect the Galleria Business as compared to similarly situated businesses generally operating in the United States and other geographic areas in which the Galleria Business operates. All references to the “ Galleria Business ” within this definition of “ Galleria Business MAE ” will be deemed to exclude any Retained Business.

“ Galleria Commitment Letter ” has the meaning set forth in Section 5.12(a) .

“ Galleria Contracts ” means the following Contracts to which Parent or any member of Parent Group is a Party or by which it or any of its Assets is bound, except for any such Contract that is explicitly retained by Parent or any member of the Parent Group pursuant to any provision of this Agreement or any Ancillary Agreement: (a) any Contract identified on Section 3.08(a) of the Parent Disclosure Letter and (b) any other Contract that primarily relates to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively relates to the Non-Color Caldera Business), other than those terminated pursuant to Section 1.07 .

“ Galleria Credit Documents ” means the credit agreement and related agreements and documents to be prepared and entered into as contemplated by the Galleria Commitment Letter.

“ Galleria Credit Facility ” has the meaning set forth in Section 1.13(b) .

“ Galleria Debt Expenses ” has the meaning set forth in Section 10.02(d) .

“ Galleria Entities ” has the meaning set forth in Section 1.05(a)(iv) .

“ Galleria Entity Interests ” has the meaning set forth in Section 1.05(a)(iv) .

“ Galleria Entity Structuring ” has the meaning set forth in Section 5.21(g) .

“ Galleria Entity Structuring Step Plan ” has the meaning set forth in Section 5.21(g) .

“ Galleria Equity Interests ” has the meaning set forth in Section 3.04(a) .

“ Galleria Facilities ” has the meaning set forth in Section 1.05(a)(iii) .

“ Galleria Financing ” means the receipt of funds under the Galleria Credit Facility as contemplated by Section 1.13(b) .

“ Galleria Group ” means SplitCo and each of its Subsidiaries. Each of the Galleria Entities will be deemed to be members of the Galleria Group as of the Business Transfer Time.

“ Galleria Group Plans ” has the meaning set forth in Section 6.03(a) .

“ Galleria Inventory ” has the meaning set forth in Section 1.05(a)(ii) .

“ Galleria IP Assets ” has the meaning set forth in Section 1.05(a)(vii) .

“ Galleria Leave Plan ” has the meaning set forth in Section 6.04(f) .

“ Galleria Liabilities ” has the meaning set forth in Section 1.06(a) .

“ Galleria Material Contracts ” has the meaning set forth in Section 3.08(a) .

“ Galleria Software ” has the meaning set forth in Section 1.05(a)(x) .

“ Galleria Stock Amount ” means a number of shares of Acquiror New Common Stock equal to the product of (i) thirteen twelfths (13/12) and (ii) the Fully Diluted Basis as of the latest practicable day prior to the Commencement Date. For illustrative purposes only, if the Fully Diluted Basis of Acquiror Common Stock on the latest practicable day prior to the Commencement Date was 397,124,277 shares, then the Galleria Stock Amount would be calculated as follows: (13 ÷ 12) * 397,124,277 = 430,217,967.

“ Galleria Stock Issuance ” has the meaning set forth in Section 1.13(a)(i) .

“ Galleria Transfer ” means the contribution of the Galleria Assets by Parent to SplitCo in partial consideration for the Galleria Stock Issuance, the distribution to Parent of the Recapitalization Amount and the assumption of the Galleria Liabilities, in each case, in accordance with the requirements of this Agreement.

“ Galleria Transfer Documents ” has the meaning set forth in Section 1.11 .

“ German Inventorship Laws ” means Germany’s Employee Inventions Act (Gesetz über Arbeitnehmererfindungen (ArbnErfG) ).

“ Goods in Transit ” means goods that have left a Parent site and were recorded by Parent as sales in its accounting systems, but that have not been received by customers (and, because the title and risk of loss of the goods only transfers to the customer when received for these specific orders, therefore cannot be reflected as sales in accordance with GAAP). For purposes of this Agreement, Goods in Transit will be calculated in the same manner as calculated in the Audited Financial Statements.

“ Governmental Approvals ” means any notices, reports or other filings to be made to, or any Consents, registrations, permits, orders, clearances, terminations or expirations of waiting periods or authorizations to be obtained from, any Governmental Authority, including the Antitrust Approvals.

“ Governmental Authority ” means any federal, state, local, provincial, foreign or international court, tribunal, judicial or arbitral body, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority or any national securities exchange.

“ Governmental Permits ” means any licenses, registrations, permits, orders, clearances, or other authorizations of any Governmental Authority.

“ Group ” means the Parent Group, the Acquiror Group or the Galleria Group, as the context requires.

“ Hazardous Materials ” means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, hazardous substances, asbestos and asbestos-containing materials, petroleum and petroleum products or any fraction thereof, including such substances referred to by such terms as defined in any Environmental Laws or any other substance or material that is regulated by, or may form the basis for liability under, any Environmental Laws.

“ HSR Act ” has the meaning set forth in Section 3.03 .

“ Identified Jurisdictions ” has the meaning set forth in Section 5.02(b) .

“ Indebtedness ” means and includes as to any Person (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (b) amounts owing as deferred purchase price for property or services, (c) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (d) obligations or commitments to repay deposits or other amounts advanced by and owing to third parties, (e) net payment obligations under any interest rate, currency or other hedging agreement, (f) obligations of such Person as lessee under leases that have been, or should be, in accordance with GAAP, recorded as capital leases or (g) guarantees or other contingent liabilities (including so called take-or-pay or keep-well agreements) with respect to any indebtedness, obligation, claim or liability of any other Person of a type described in clauses (a) through (f) above.

“ Indemnifying Party ” means any Party which may be obligated to provide indemnification to an Indemnitee pursuant to Article IX or any other section of this Agreement.

“ Indemnitee ” means any Person which may be entitled to indemnification from an Indemnifying Party pursuant to Article IX or any other section of this Agreement.

“ Information ” means information in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, Contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data, but in any case excluding back-up tapes.

“ Information Statement ” has the meaning set forth in Section 5.08 .

“ In-Scope Employees ” means (a) any employee of Parent or its Subsidiaries whose employment with the Parent Group is 50% or more dedicated to the Adjusted Galleria Business as of the date of this Agreement and as of immediately prior to the Closing, (b) any employee of Parent or its Subsidiaries hired or transferred into the Adjusted Galleria Business after the date of this Agreement in accordance with Section 5.01(b)(xii) or in connection with the implementation of the Restructuring, the Transition Plan, or the other transactions contemplated by this Agreement if such employee’s employment with the Parent Group is 50% or more dedicated to the Adjusted Galleria Business as of the date of such hire or transfer and as of immediately prior to the Closing, (c) any Plant/DC Employee or (d) any other employee of Parent or its Subsidiaries that shall be mutually agreed upon by Parent and Acquiror and, in the case of (a), (b) and (c) above, is (i) on active status as an employee or (ii) is on approved leave of absence, disability or long-term inactive status, but excluding, in the case of (a), (b), (c) or (d) above, any Excluded Employee.

“ Intellectual Property ” means, in any and all jurisdictions throughout the world, all (a) patents, patent applications, inventors’ certificates, utility models, statutory invention registrations, and other indicia of ownership of an invention, discovery or improvement issued by an Governmental Authority, including reissues, divisionals, continuations, continuations-in-part, extensions, reexaminations and other pre-grant and post-grant forms of the foregoing (collectively, “ Patents ”), (b) trademarks, service marks, trade dress, slogans, logos, symbols, trade names, brand names and other identifiers of source or goodwill recognized by any Governmental Authority, including registrations and applications for registration thereof and including the goodwill symbolized thereby or associated therewith (collectively, “ Trademarks ”), and Internet domain names and associated uniform resource locators and social media addresses and accounts, (c) copyrights, whether in published and unpublished works of authorship, registrations, applications, renewals and extensions therefor, mask works, and any and all similar rights recognized in a work of authorship by a Governmental Authority (collectively, “ Copyrights ”), (d) any trade secret rights in any inventions, discoveries, improvements, trade secrets and all other confidential or proprietary Information (including know-how, data, formulas, processes and procedures, research records, records of inventions, test information, and market surveys), and all rights to limit the use or disclosure thereof (collectively, “ Trade Secrets ”), (e) registered and unregistered design rights (collectively, “ Designs ”), (f) rights of privacy and publicity and (g) any and all other intellectual or industrial property rights recognized by any Governmental Authority under the Laws of any country throughout the world.

“ Intended Tax-Free Treatment ” means that (i) the Galleria Transfer, taken together with the Distribution, qualifies as a tax-free reorganization pursuant to Section 368(a)(1)(D) of the Code, (ii) the Distribution, as such, qualifies as a distribution of SplitCo Common Stock to Parent shareholders pursuant to Section 355 of the Code, pursuant to which no gain or loss should be recognized for U.S. federal income tax purposes and (iii) the Merger qualifies as a tax-free reorganization pursuant to Section 368(a) of the Code pursuant to which no gain or loss will be recognized by SplitCo shareholders for U.S. federal income tax purposes, except to the extent of cash received in lieu of fractional shares.

“ Intercompany Accounts ” has the meaning set forth in Section 1.07(b) .

“ IRS ” means the United States Internal Revenue Service.

“ JAB Letter Agreement ” has the meaning given to such term in the Recitals.

“ Knowledge ” means, in the case of Acquiror, the knowledge of each of the Persons listed on Section 11.01(a) of the Acquiror Disclosure Letter as of the date of the representation after inquiry deemed reasonable by each such Person, and, in the case of Parent, the knowledge of each of the Persons listed on Section 11.01(a) of the Parent Disclosure Letter as of the date of the representation after inquiry deemed reasonable by each such Person.

“ Kosmos Brands ” means the CoverGirl and Max Factor brands owned by Parent and its Subsidiaries (but excluding the Max Factor Gold brand).

“ Kosmos Business ” means Parent’s business of sourcing, manufacturing, marketing, selling, distributing and developing (a) products intended to be applied to the human body for altering the appearance without affecting the body’s structure or functions, including lip color, lipstick, lip liner, lip gloss, lip stain, foundations (including liquid, solid, semi-solid and powder foundations), powder make-up, blushes, concealer, primer, bronzer, mascaras, eye shadows, eye liners and eye pencils, brow pencils, nail polish and face contouring creams, sticks and lotions, (b) products intended to remove cosmetics and makeup products from the human body, including makeup removers for the eyes, face and lips, (c) products intended to apply cosmetics and makeup products to the human body, including eye shadow applicators, powder puffs, sponge puffs, blush brushes, powder brushes and other brushes and tools designed for the application of cosmetics and makeup products and (d) products intended to enhance the usefulness or longevity of cosmetics and makeup products (including eye and lip pencil sharpeners), in each case, marketed under the Kosmos Brands.

“ Law ” means any statute, law, ordinance, regulation, rule, code or other requirement of, or Order issued by, a Governmental Authority.

“ Leased Real Property ” has the meaning set forth in Section 3.16(a) .

“ Liabilities ” means all debts, liabilities, guarantees, assurances and commitments, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including whether arising out of any Contract or tort based on negligence, strict liability or relating to Taxes payable by a Person in connection with compensatory payments to employees or independent contractors) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.

“ Licensor ” has the meaning set forth in Schedule 1.09 .

“ LINC Facility ” means the Egham Innovation Center, located at Whitehall Lane in Egham (Surrey), United Kingdom (and sometimes referred to by Parent as the “ London Innovation Center ”).

“ Listed Customers ” means AAFES (Army and Air Force Exchange Services), NEXCOM (Navy Exchange Commissary) and physical stores operated by Sephora USA, Inc., or its Affiliates, in China.

“ Litigation Conditions ” has the meaning set forth in Section 9.05(b)(ii) .

“ Localization Package ” has the meaning set forth in Section 6.04(h) .

“ Localized Employee ” has the meaning set forth in Section 6.04(h) .

“ Losses ” means liabilities, damages, penalties, judgments, assessments, losses, costs and expenses in any case, whether arising under strict liability or otherwise (including reasonable attorneys’ fees and expenses); provided , however , that “ Losses ” will not include any punitive, exemplary, special or similar damages, indirect damages, consequential damages that are not reasonably foreseeable, damages based on diminution in value or damages computed on a multiple of earnings, cash flow or another financial measure, in each case, except to the extent awarded by a court of competent jurisdiction in connection with a Third-Party Claim.

“ Mercury Ancillary Products ” has the meaning set forth in the definition of “ Mercury Business .”

“ Mercury Brands ” means each of following brands (and derivations thereof) which are licensed in by Parent or one of its Subsidiaries from a third party licensor: Hugo Boss, Dolce & Gabbana, Gucci, Lacoste, Alexander McQueen, Stella McCartney, James Bond, Bruno Banani, Christina Aguilera, Gabriela Sabatini, Mexx and Escada.

“ Mercury Business ” means Parent’s business of sourcing, manufacturing, packaging, marketing, selling, distributing, merchandising and developing the following: (a) fine fragrance products, including parfum, eau de parfum, eau de toilette, after shave lotion and colognes in various presentations, in each case, marketed under a Mercury Brand (“ Mercury Fragrance Products ”); (b) to the extent applicable, aftershave balm, bath oil, body cream, body spray, body lotion, body butter, body scrub, body souffle, deodorant (aerosol, stick or vapor), hair mist, massage gel and shower gel that are sold separately or together with Mercury Fragrance Products under a Mercury Brand (“ Mercury Ancillary Products ”); (c) to the extent applicable, creams, gels, cleansers, toners, serums and moisturizers to be applied to the skin, especially the face or hands, marketed under either the Gucci or Dolce & Gabbana brand (“ Mercury Skin Care Products ”); and (d) to the extent applicable, products intended to be applied to the human body for cleansing, beautifying or promoting attractiveness, including cosmetics for the face (including primer, foundation and pressed powder), lips (including lipsticks, lip gloss and lip pencils), eyes (including mascara, eyeliner, eye shadow and eyebrow pencils) and nails (including nail polish), as well as relevant applicators and accessories (including brushes and spatulas), in each case, marketed under either the Gucci or Dolce & Gabbana brand (“ Mercury Cosmetic Products ”).

“ Mercury Consents ” has the meaning set forth in Schedule 1.09 .

“ Mercury Cosmetic Products ” has the meaning set forth in the definition of “Mercury Business.”

“ Mercury Financial Statements ” has the meaning set forth in Section 3.10(a) .

“ Mercury Fragrance Products ” has the meaning set forth in the definition of “ Mercury Business .”

“ Mercury License ” has the meaning set forth in Schedule 1.09 .

“ Mercury Skin Care Products ” has the meaning set forth in the definition of “ Mercury Business .”

“ Merger ” has the meaning set forth in Section 2.04(a) .

“ Merger Consideration ” has the meaning set forth in Section 2.07(b) .

“ Merger Sub ” has the meaning set forth in the preamble.

“ Merger Sub Common Stock ” has the meaning set forth in Section 4.05(d) .

“ Minimum Condition ” has the meaning set forth in Section 7.03(e) .

“ Minimum Price Decline Requirement ” has the meaning set forth in the definition of “ Acquiror SEC Event .”

“ Non-Color Caldera Business ” means the Caldera Business but excluding the (i) Retail Color Business and (ii) Parent’s business of sourcing, manufacturing, marketing, selling, distributing and developing Color Products sold in the Salon Professional Channel.

“ Non-Exclusive Parent Ancillary Fragrances ” has the meaning set forth in Section 3.19(b) .

“ Non-Exclusive Third-Party Ancillary Fragrances ” has the meaning set forth in Section 3.19(a) .

“ Non-Hydroalcoholic Fragrances ” has the meaning set forth in Section 3.19(b) .

“ Non-Hydroalcoholic Products ” means the Mercury Ancillary Products, Mercury Skin Care Products and Mercury Cosmetic Products.

“ Non-Mercury Products ” means products of the Kosmos Business and products of the Caldera Business.

“ Non-Replacement Hire ” has the meaning set forth in Section 5.01(b)(xii) .

“ Non-US Continuing Employee ” has the meaning set forth in Section 6.02(b) .

“ NYSE ” means the New York Stock Exchange.

“ NYSE Composite Tape ” means the “NYSE Composite Transactions Tape” as reported by Bloomberg Financial Markets (or such other source as the Parties may agree in writing).

“ One-Step Spin-Off ” has the meaning set forth in the recitals.

“ Order ” means any orders, judgments, injunctions, awards, decrees, writs or other legally enforceable requirement handed down, adopted or imposed by, including any consent decree, settlement agreement or similar written agreement with, any Governmental Authority.

“ Ordinary Course ” means, with respect to an action taken by any Person, an action that is materially (a) consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal operations of such Person or (b) similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal operations of other Persons that are in the same size and line of business as such Person.

“ Original Proposal ” has the meaning set forth in Section 5.21(b) .

“ Other Operational Real Property ” has the meaning set forth in Section 3.16(a) .

“ Owned Real Property ” has the meaning set forth in Section 3.16(a) .

“ Parent ” has the meaning set forth in the preamble to this Agreement.

“ Parent Ancillary Fragrances ” has the meaning set forth in Section 3.19(b) .

“ Parent Awards ” has the meaning set forth in Section 6.01(b) .

“ Parent Cash Distribution ” has the meaning set forth in Section 1.13(c) .

“ Parent Common Stock ” has the meaning set forth in the recitals.

“ Parent Disclosure Letter ” means the disclosure letter delivered by Parent to Acquiror immediately prior to the execution of this Agreement.

“ Parent Group ” means Parent and each of its Subsidiaries, but excluding any member of the Galleria Group.

“ Parent Indemnitees ” means Parent, each member of the Parent Group and all Persons who are or have been stockholders, directors, partners, managers, managing members, officers, agents, representatives or employees of any member of the Parent Group (in each case, in their respective capacities as such).

“ Parent Names and Marks ” has the meaning set forth in Section 5.17(a) .

“ Parent Out-of-Scope Products ” has the meaning set forth in Section 5.30(b)(iii) .

“ Parent Shared Technology License Agreement ” means a Parent Shared Technology License Agreement substantially in the form of Exhibit N-1 . From and after the Business Transfer Time, the Parent Shared Technology License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Parent Trademark License Agreement ” means a Parent Trademark License Agreement substantially in the form of Exhibit O-1 . From and after the Business Transfer Time, the Parent Trademark License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Parent Transfer Documents ” has the meaning set forth in Section 1.10 .

“ Partial Year Financial Statements ” has the meaning set forth in Section 3.10(d) .

“ Parties ” means Parent, SplitCo, Acquiror and Merger Sub.

“ Patent ” has the meaning set forth in the definition of “ Intellectual Property .”

“ PBGC ” has the meaning set forth in Section 3.09(h) .

“ Perfume Oils ” has the meaning set forth in Section 3.18(b) .

“ Permitted Encumbrances ” means (a) Security Interests consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially interfere with the use of the property in the Galleria Business, (b) Security Interests for current Taxes, assessments or similar governmental charges or levies not yet due or which are being contested in good faith and for which adequate accruals or reserves have been established on the Audited Financial Statements, (c) mechanic’s, workmen’s, materialmen’s, carrier’s, repairer’s, warehousemen’s and similar other Security Interests arising or incurred in the Ordinary Course, (d) with respect to Acquiror, Security Interests securing obligations pursuant to credit documents of Acquiror in connection with any financing or refinancing of Acquiror, (e) liens on the Leased Real Property in favor of the landlord of such Leased Real Property, whether contractual, statutory or otherwise and (f) any Security Interest against any landlord’s interest in the fee property that is subject to a Real Property Lease.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other entity or organization or a Governmental Authority.

“ Phantom Units ” has the meaning set forth in Section 4.05(b).

“ Physical Location ” means any structure that can be physically entered, including any structure or location that is separately located within a larger structure to the extent it is independently owned or operated and held out to consumers as independent (but does not include separate aisles or sections within a structure that are part of the larger facility and share common sales check-outs).

“ Plant/DC Employee ” means any employee of Parent or its Subsidiaries employed at Parent’s (i) manufacturing facilities located in (1) Cologne, Germany, (2) Seaton, United Kingdom, (3) Hunt Valley, Maryland, (4) Nenagh, Ireland, (5) Sarreguemines, France (including the warehouse space located at this facility), (6) Rothenkirchen, Germany, (7) Huenfeld, Germany, and (8) Dzerzhinsk, Russia, (ii) the distribution centers located in (1) Bournemouth, United Kingdom, and (2) Weiterstadt, Germany and (iii) the warehouse space located at the Wella Athens Headquarters in Athens, Greece.

“ Potential Identified Jurisdictions ” has the meaning set forth in Section 5.02(b) .

“ Pre-Closing Period ” has the meaning set forth in Section 5.01(a) .

“ Privileged Communications ” has the meaning set forth in Section 5.14(a) .

“ Product ” means any Care Product, Color Product or Styling Product.

“ Professional ” means any individual who is a qualified, or in the bona fide business of performing work as a, hairdresser, cosmetologist, barber stylist or esthetician.

“ Professional Store ” means (a) any Physical Location that requires a Regulated Professional to provide proof that the individual is a Regulated Professional or operates a Salon that employs or rents booths to Professionals in order to purchase products or (b) any Beauty Store.

“ Proposed Amendment ” has the meaning set forth in Section 5.11 .

“ Qualifying Acquiror Takeover Proposal ” has the meaning set forth in Section 5.09(f)(ii) .

“ Qualifying Termination ” means (a) a termination by a member of the Galleria Group of the Continuing Employee’s employment other than for Cause or (b) a termination by a Continuing Employee of his or her employment as determined in Section 6.04(b)(ii) ; provided , however , that with respect to any termination of employment pursuant to clause (b), the employee must: (i) within 90 days following its occurrence, deliver to the Galleria Group a written explanation specifying the basis for the employee’s termination of employment, (ii) give the Galleria Group an opportunity to cure its failure within 20 days following delivery of such explanation, and (iii) provided that the Galleria Group has failed to cure its failure within such 20-day cure period, terminate employment within 20 days following the expiration of such cure period.

“ Real Property ” has the meaning set forth in Section 3.17(a)(i) .

“ Real Property Interests ” means all interests in real property of whatever nature, including easements, whether as owner or holder of a Security Interest, lessor, sublessor, lessee, sublessee or otherwise.

“ Real Property Leases ” has the meaning set forth in Section 3.16(a) .

“ Recapitalization ” has the meaning set forth in Section 1.13(b) .

“ Recapitalization Amount ” means $2,900,000,000; provided , however , that (a) if the Acquiror Average Price on the Trading Day which is two clear Trading Days prior to either the date of the commencement of the Exchange Offer or the date of the distribution of the SplitCo Common Stock pursuant to a One-Step Spin-Off, as applicable (such price, the “ Acquiror Collar Stock Price ”) is greater than the Acquiror Base Stock Price, then the Recapitalization Amount will be reduced by an amount equal to (i) (A) the Acquiror Collar Stock Price (provided that if such number is more than $27.06 per share, $27.06 per share will be used for this value) minus (B) the Acquiror Base Stock Price, times (ii) the Galleria Stock Amount, and (b) if the Acquiror Collar Stock Price is less than the Acquiror Base Stock Price, then the Recapitalization Amount will be increased by an amount equal to (i)(A) the Acquiror Base Stock Price minus (B) the Acquiror Collar Stock Price (provided that if such number is less than $22.06 per share, $22.06 per share will be used for this value), times (ii) the Galleria Stock Amount. The Recapitalization Amount will be further subject to adjustment as contemplated by Section 1.09 (including Schedule 1.09 ), Section 2.15 and Section 10.02 .

“ Receiving Party ” has the meaning set forth in Section 5.22(b) .

“ Record Date ” means, with respect to a One-Step Spin-Off or a Clean-Up Spin-Off, the close of business on the date to be determined by Parent’s Board of Directors as the record date for determining shareholders of Parent entitled to receive shares of SplitCo Common Stock in such spin-off.

“ Record Holders ” means the holders of record of Parent Common Stock as of the close of business on the Record Date.

“ Refinanced Facility ” has the meaning set forth in Section 5.12(a) .

“ Registered Intellectual Property ” means any active Copyright registration or application for registration, Design registration or application for registration, Patent, Trademark registration or application for registration, Internet domain name registration or social media address or account.

“ Regulated Professionals ” means Professionals that work in a jurisdiction that requires such individual to be licensed.

“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into surface water, groundwater, land surface or subsurface strata or ambient air (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials).

“ Replacement Hire ” has the meaning set forth in Section 5.01(b)(xii) .

“ Representatives ” means with respect to any Person, such Person’s and any of its Subsidiaries’ officers, employees, agents, advisors, directors and other representatives.

“ Restricted Business ” has the meaning set forth in Section 5.30(a) .

“ Restricted Period ” has the meaning set forth in Section 5.30(a) .

“ Restructuring ” has the meaning set forth in Section 1.01(a) .

“ Restructuring Documents ” has the meaning set forth in Section 5.21(i) .

“ Restructuring Schedules ” has the meaning set forth in Section 5.21(g) .

“ Retail Channel ” means any source of sales (a) from any Physical Location that is not (i) a Salon (other than a Salon that is branded by reference to Frederic Fekkai or located in China and branded Vidal Sassoon) or (ii) a Professional Store (other than a Beauty Store, Discount Customer or Listed Customer), including grocery store, drug stores, department stores, warehouse clubs and all-purpose superstores, or (b) from any e-commerce, mail or catalogue that is not a Salon E-Commerce Site.

“ Retail Color Business ” has the meaning set forth in the definition of “ Caldera Business .”

“ Retail Styling Business ” means Parent’s business of sourcing, manufacturing, marketing, selling, distributing and developing Styling Products for sale in the Retail Channel that are branded under one of the Styling Marks.

“ Retail Styling Unaudited Financial Information ” has the meaning set forth in Section 3.10(f) .

“ Retained Business ” has the meaning set forth in Schedule 1.09 .

“ Retained Business Cut-Off Date ” means, in respect of any Retained Business, the date on which the related Mercury License becomes a Retained License as provided in Schedule 1.09 .

“ Retained Contracts ” has the meaning set forth in Schedule 1.09 .

“ Retained Employee ” means any person who is not an In-Scope Employee but who would be an In-Scope Employee but for the provisions of Section 1.09 (including Schedule 1.09 ).

“ Retained Inventory ” has the meaning set forth in Schedule 1.09

“ Retained License ” has the meaning set forth in Schedule 1.09 .

“ Reverse Transitional Distribution Services Agreement ” has the meaning set forth in Schedule 1.09 .

“ Reverse Transitional Supply Agreement ” has the meaning set forth in Schedule 1.09 .

“ Salon ” means (a) any hairdresser salon, spa, beauty salon, barber shop or other Physical Location operated by, in whole or in part, employing or renting, leasing or otherwise making available booths to one or more Professionals to provide services relating to hair care, coloring, cleansing, conditioning, cutting, perming, shampooing, styling or other related services and (b) any licensed hairdresser, beauty or barber school that trains Professionals on their premises.

“ Salon E-Commerce Site ” means an electronic commerce website that is either (a) operated by a Salon or Professional Store for resale of Products sold to such Salon or Professional Store or (b) operated for the sale of Products to a Salon or Professional Store.

“ Salon Professional Business ” has the meaning set forth in the definition of “ Caldera Business .”

“ Salon Professional Channel ” means (a) the sale of Products to Salons, whether for use by Professionals or purchase by customers of the Salons, (b) the sale of Products to Professional Stores, (c) the sale of Products via Salon E-Commerce Sites, (d) the sale to Listed Customers of the same Products sold to customers identified in clause (a) above and (e) the sale to Discount Customers of existing inventory of Products of the Salon Professional Business that have been previously announced to Salons and Professional Stores as discontinued.

“ Schedule TO ” has the meaning set forth in Section 5.08 .

“ SEC Filings ” has the meaning set forth in Section 5.08(b) .

“ Securities Act ” means the Securities Act of 1933.

“ Security Interest ” means, whether arising under any Contract or otherwise, any mortgage, security interest, pledge, lien, charge, claim, option, indenture, right to acquire, right of first refusal, deed of trust, licenses to third parties, leases to third parties, security agreements, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, title defect, restriction on transfer or other encumbrance and other restrictions, conditions or limitations on the ownership, possession or use of any real, personal, tangible or intangible property.

“ Series A Preferred Stock ” has the meaning set forth in Section 4.05(a) .

“ Shared Business Contracts ” means (a) the Contracts between Parent or its Affiliates, on the one hand, and unrelated third parties, on the other hand, that are not primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera Business) and pursuant to which either (i) the Galleria Business received (including as accounts receivable) or paid (including as accounts payable) an aggregate amount of at least $5,000,000 in the 12 month period ended June 30, 2014, or (ii) the Galleria Business received or would reasonably be expected to receive (including as accounts receivable) or pay (including as accounts payable) an aggregate amount of at least $5,000,000 in any future 12 month period ended June 30, (b) the Galleria Business receives material Intellectual Property rights which are not Excluded IP Assets and (c) the Contracts set forth on Section 3.08(b) of the Parent Disclosure Letter under “Shared Business Contracts”; provided , however , that from and after any Retained Business Cut-Off Date, all references to the Galleria Business in this definition of “Shared Business Contracts” shall be deemed to be references to the then-current Adjusted Galleria Business and any Shared Business Contract listed on Section 3.08(b) of the Parent Disclosure Letter that does not relate to the Adjusted Galleria Business will be deemed to be automatically removed from Section 3.08(b) of the Parent Disclosure Letter.

“ Shared Information ” means (a) all Information provided by any member of the Galleria Group to a member of the Parent Group prior to the Business Transfer Time, (b) any Information in the possession or under the control of such respective Group that relates to the operation of the Galleria Business prior to the Business Transfer Time and that the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities and Tax Laws) by a Governmental Authority having jurisdiction over the requesting Party, (ii) for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation or other similar requirements, in each case other than claims or allegations that one Party to this Agreement has against the other, (iii) subject to the foregoing clause (ii) above, to comply with its obligations under this Agreement or any Ancillary Agreement, or (iv) to the extent such Information and cooperation is necessary to comply with such reporting, filing and disclosure obligations, for the preparation of financial statements or completing an audit, and as reasonably necessary to conduct the ongoing businesses of Parent or the Galleria Business (after the removal of any Retained Business, as applicable), as the case may be, and (c) any Information that is reasonably necessary for the conduct of the Adjusted Galleria Business (except for any information relating to performance ratings or assessments of employees of the Parent Group and Continuing Employees (including performance history, reports prepared in connection with bonus plan participation and related data, other than individual bonus opportunities based on target bonus as a percentage of base salary)).

“ Split Facilities ” means the Galleria Business manufacturing facilities in Mariscala, Mexico, and Bangkok, Thailand.

“ Split Plan Agreement ” means the Split Plan Agreement, entered into as of the date of this Agreement, as amended or modified in accordance with its terms.

“ Split Plan Costs ” has the meaning set forth in Section 5.27 .

“ SplitCo ” has the meaning set forth in the preamble.

“ SplitCo Common Stock ” has the meaning set forth in the recitals.

“ SplitCo Form 10/S-4 ” has the meaning set forth in Section 5.08 .

“ SplitCo Retained Business Technology License ” has the meaning set forth in Schedule 1.09 .

“ SplitCo Shared Technology License Agreement ” means a SplitCo Shared Technology License Agreement substantially in the form of Exhibit N-1 . From and after the Business Transfer Time, the SplitCo Shared Technology License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ SplitCo Trademark License Agreement ” means a SplitCo Trademark License Agreement substantially in the form of Exhibit N-2 . From and after the Business Transfer Time, the SplitCo Trademark License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Stockholder Consent ” has the meaning set forth in Section 5.08(a) .

“ Store Room Inventory ” means the value of spare parts for machinery and equipment and items such as lubrication oils for machinery, cleaning materials and supply items which are (a) consumed in the production process and (b) either (i) acquired for less than $5,000 or (ii) have an intended design life of less than 12 months.

“ Styling Marks ” means Wella, or any derivative of the Wella name (e.g., WellaFlex or Wella Forte), Silvikrin, Shockwaves, Londa and New Wave.

“ Styling Products ” means products designed to provide or maintain manageability or structure to or of human hair through the application of compositions containing film forming polymers or solvents, applied to the hair using non-aerosol sprayable liquids, aerosol sprayable liquids, aerosol foams, gels, waxes or creams.

“ Subsidiary ” of any Person means another Person (other than a natural Person), of which such Person owns directly or indirectly (a) an aggregate amount of the voting securities, other voting ownership or voting partnership interests to elect 50% of the Board of Directors or other governing body or (b) if there are no such voting interests, 50% or more of the equity interests therein. For the avoidance of doubt, (i) Subsidiaries of Parent will include SplitCo and the Galleria Entities prior to the Closing and (ii) Subsidiaries of Acquiror will include SplitCo and the Galleria Entities after the Closing.

“ Substitute Diamond Technology ” has the meaning set forth in Section 5.29 .

“ Surviving Corporation ” has the meaning set forth in Section 2.04(a) .

“ Surviving Transaction Agreement Items ” has the meaning set forth in Section 10.01 .

“ Target ” has the meaning set forth in Section 5.30(a) .

“ Target Working Capital Statement ” means the document attached hereto as Exhibit F .

“ Tax ” has the meaning set forth in the “ Tax Matters Agreement .”

“ Tax Matters Agreement ” means the Tax Matters Agreement in substantially the form attached hereto as Exhibit H . From and after the Business Transfer Time, the Tax Matters Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Tax Return ” has the meaning set forth in the “ Tax Matters Agreement .”

“ Third Party ” means any Person (including any Governmental Authority) who is not a member of the Parent Group or Acquiror Group (including after the Closing, the Galleria Entities).

“ Third-Party Ancillary Fragrances ” has the meaning set forth in Section 3.19(a) .

“ Third-Party Claim ” has the meaning set forth in Section 9.05(b)(i) .

“ To-Be-Delivered Galleria Material Contracts ” has the meaning set forth in Section 5.23(a) .

“ Trade Secrets ” has the meaning set forth in the definition of “ Intellectual Property .”

“ Trademarks ” has the meaning set forth in the definition of “ Intellectual Property .”

“ Trading Day ” means any day on which there are sales of Acquiror Common Stock on the NYSE Composite Tape.

“ Transaction Announcement ” has the meaning set forth in Section 5.03 .

“ Transaction Documents ” means, collectively, this Agreement, the Ancillary Agreements and the Transfer Documents.

“ Transfer Documents ” has the meaning set forth in Section 1.11 .

“ Transferred Leave ” has the meaning set forth in Section 6.04(f) .

“ Transition Period ” has the meaning set forth in Section 5.17(a) .

“ Transition Plan ” has the meaning set forth in Section 5.21(a) .

“ Transition Services Agreement ” means a Transition Services Agreement in substantially the form attached hereto as Exhibit I . From and after the Business Transfer Time, the Transition Services Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.

“ Unaudited Kosmos Financial Statements ” has the meaning set forth in Section 3.10(b) .

“ Unaudited Mercury Financial Statements ” has the meaning set forth in Section 3.10(a) .

“ Unaudited Salon Professional Financial Statements ” has the meaning set forth in Section 3.10(c) .

“ US Continuing Employee ” has the meaning set forth in Section 6.02(b) .

“ WARN Act ” has the meaning set forth in Section 6.08 .

“ Working Capital ” means the sum of the line item amounts specified under the caption “Operating Assets” of the Galleria Business in the Target Working Capital Statement less the sum of the line item amounts specified as “Operating Liabilities” of the Galleria Business in the Target Working Capital Statement, calculated in the same manner in which such amount was calculated in the Target Working Capital Statement, utilizing the same account classifications and accounting principles, policies and practices used in the preparation of the Full Year Financial Statements, the Target Working Capital Statement and as set forth on Section 11.01(b) of the Parent Disclosure Letter (the “ Accounting Principles ”).

“ Working Capital Band Amount ” has the meaning set forth in Section 2.15(e) .

“ Working Capital Deficit ” has the meaning set forth in Section 2.15(a) .

“ Working Capital Excess ” has the meaning set forth in Section 2.15(a) .

“ Working Capital Target ” means the arithmetic average of the Working Capital of the Galleria Business as of the following dates: September 30, 2013, December 31, 2013, March 31, 2014, and June 30, 2014, as set forth in the Target Working Capital Statement (as so indicated on such statement, and prior to the adjustments described below, $791,237,000), subject only to the following two adjustments:

(1) In the event that there are Retained Businesses, such four working capital amounts will be reduced as follows: (a) the inventory amounts attributable to the Retained Businesses in the “Inventory” line of the quarter-end calculations in the Target Working Capital Statement will be removed and (b) other working capital line items in each of the quarter-end calculations the Target Working Capital Statement will be reduced by a percentage equal to the FY 13-14 NOS of the Retained Businesses divided by the total FY 13-14 NOS of the Galleria Business.

(2) After taking into the account the adjustments, if any, pursuant to clause (1) above, such four quarterly working capital amounts will be recalculated utilizing the foreign exchange rates that are in effect as of the Cut-Off Date.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.



			THE PROCTER & GAMBLE COMPANY
			By:	/s/Laura Becker
			Name:	Laura Becker
			Title:	Authorized Signatory

			GALLERIA CO.
			By:	/s/Laura Becker
			Name:	Laura Becker
			Title:	Authorized Signatory

			COTY INC.
			By:	/s/Patrice de Talhouët
			Name:	Patrice de Talhouët
			Title:	Chief Financial Officer

			GREEN ACQUISITION SUB INC.
			By:	/s/Jules P. Kaufman
			Name:	Jules P. Kaufman
			Title:	President

NAI-1500382700v20

Exhibit 2.3

Coty Inc.
350 Fifth Avenue
New York, NY 10018

August 13, 2015

The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, Ohio 45202
Attention: Corporate Secretary and Jason Muncy, Associate General Counsel – Global Transactions

Ladies and Gentlemen:

Reference is made to the Transaction Agreement, dated as of July 8, 2015 (the “ Transaction Agreement ”), by and among The Procter & Gamble Company, Galleria Co., Coty Inc. and Green Acquisition Sub Inc. Capitalized terms used but not defined in this letter agreement have the meanings ascribed to them in the Transaction Agreement.

Each of the Parties agrees as follows:

1. Share Repurchase Program .

(a) Section 5.06 of the Acquiror Disclosure Letter is hereby amended such that the following disclosure will be added as a new Paragraph 7:

7. Subject to compliance with all applicable Laws, Acquiror may repurchase shares of Class A Common Stock (any such shares repurchased, the “ Repurchased Shares ”) in open-market purchases pursuant to a valid trading plan adopted under Rule 10b5-1 promulgated under the Exchange Act, which plan will be adopted by August 21, 2015 (and such plan will not be subsequently amended without the consent of Parent, such consent not to be unreasonably withheld, conditioned or delayed) and which purchases may take place at any time or from time to time after such date of adoption and through the 30 ^th calendar day prior to the Commencement Date (and any Repurchased Shares may be retired or extinguished), provided that (a) the aggregate repurchase price therefor will not exceed $750.0 million and (b) all such purchases will be effected in a manner that satisfies all of the conditions set forth in clauses (1)-(4) of sub-paragraph (b) of Rule 10b-18 promulgated under the Exchange Act.

(b) Article XI is hereby amended such that the following definition is added to such Article:

“ Repurchased Shares ” has the meaning set forth in Section 5.06 of the Acquiror Disclosure Letter.

2. Other Transaction Agreement and Exhibit Amendments . The Transaction Agreement and exhibits thereto are hereby amended as follows:

NAI-1500479791v5

(a) The definition of “Fully Diluted Basis” is hereby amended so as to add in the text indicated below in bold underline:

“ Fully Diluted Basis ” means, in each case as of the date on which the Galleria Stock Amount is determined:

(a) the aggregate number of shares of Class A Common Stock and Series A Preferred Stock that are outstanding on such date (provided that, for purposes of this determination, any Repurchased Shares will be deemed to constitute outstanding shares of Class A Common Stock) , plus

(b) Section 4.05(f)(i) of the Transaction Agreement is hereby amended so as to add in the text indicated below in bold underline:

(f) As of the date on which the Galleria Stock Amount is calculated through the Closing Date, the Fully Diluted Basis will be equal to:

(i) 374,890,092, representing the aggregate number of shares of Acquiror Common Stock and Acquiror Options outstanding as of the date hereof (it being understood that any Repurchased Shares will be deemed to constitute outstanding shares of Class A Common Stock for purposes of the calculation of the Fully Diluted Basis) , plus

(c) Exhibit E (Minimum Tender Condition Formula) and Exhibit Q (Sample Calculation of Fully Diluted Basis) are each hereby amended such that the following sentence will be added to the bottom of each Exhibit:

In the event that there are any Repurchased Shares, all such Repurchased Shares will be deemed to constitute outstanding shares of Class A Common Stock, and therefore will be included in the calculation of “Fully Diluted Basis,” consistent with the definition thereof. For example, if there were originally 98,799,798 outstanding shares of Class A Common Stock, and 20,000,000 of those shares are repurchased by Acquiror in connection with the activities contemplated by Paragraph 7 of Section 5.06 of the Acquiror Disclosure Letter, those 20,000,000 shares of Class A Common Stock will continue to be deemed to be outstanding for the purpose of the calculations reflected on

NAI-1500479791v5

this Exhibit (and therefore there will continue to be 98,799,798 shares of Class A Common Stock that are deemed to be outstanding).

(d) Prior to execution of the Tax Matters Agreement, Section 4.01(d)(ii)(t) of the form of the Tax Matters Agreement attached as Exhibit H to the Transaction Agreement will be amended as follows: “(t) all repurchases by Acquiror or any Affiliate of Acquiror stock (other than any such repurchases permitted by the letter agreement, dated as of August 13, 2015, among the Parties) have been unrelated to the Transactions”.

3. Effect of Letter Agreement . This letter agreement constitutes a valid amendment of the Transaction Agreement (including Exhibit E, Exhibit Q and Section 5.06 of the Acquiror Disclosure Letter) as contemplated by Section 10.06 of the Transaction Agreement. Except as and to the extent expressly modified by this letter agreement, the Transaction Agreement, as so amended by this letter agreement, will remain in full force and effect in all respects. Each reference to “hereof,” “herein,” “hereby” and “this Agreement” in the Transaction Agreement will from and after the effective date hereof refer to the Transaction Agreement as amended by this letter agreement. Notwithstanding anything to the contrary in this letter agreement, the date of the Transaction Agreement, as amended hereby, will in all instances remain as July 8, 2015, and any references in the Transaction Agreement to “the date first above written,” “the date of this Agreement,” “the date hereof” and similar references will continue to refer to July 8, 2015, including, without limitation, for purposes of Article III and Article IV of the Transaction Agreement.

4. Entire Agreement . This letter agreement, together with the Transaction Agreement and the Ancillary Agreements, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to herein and therein, will together constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter.

5. Governing Law; Jurisdiction; Waiver of Jury Trial . Sections 10.04(a) , (b) and (c) (Governing Law; Jurisdiction; Waiver of Jury Trial), in each case, of the Transaction Agreement are incorporated into this letter agreement by reference as if fully set forth herein, mutatis mutandis .

6. Notices . All notices, requests, permissions, waivers and other communications hereunder will be in writing and sent pursuant to the requirements of Section 10.05 of the Transaction Agreement.

7. No Third-Party Beneficiaries . This letter agreement is solely for the benefit of the Parties and does not confer on third parties (including any employees of any member of the Parent Group or the Acquiror Group) any remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this letter agreement.

8. Construction . The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this letter agreement .

9. Counterparts . This letter agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This letter agreement, to the extent signed and delivered by means of a facsimile machine or other electronic

NAI-1500479791v5

transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party will re-execute original forms thereof and deliver them to the requesting Party.

[Signature Page Follows]

NAI-1500479791v5

Please confirm that the foregoing is in accordance with your understanding by signing and returning to us a countersigned copy of this letter, which shall thereupon constitute a binding agreement as of the date first written above.



		COTY INC.
		By:	/s/Patrice de Talhouët
		Name:	Patrice de Talhouët
		Title:	Chief Financial Officer

		GREEN ACQUISITION SUB INC.
		By:	/s/Jules P. Kaufman
		Name:	Jules P. Kaufman
		Title:	President

ACKNOWLEDGED AND AGREED :

THE PROCTER & GAMBLE COMPANY
By:	/s/Laura Becker
Name:	Laura Becker
Title:	Authorized Signatory

GALLERIA CO.
By:	/s/Laura Becker
Name:	Laura Becker
Title:	Authorized Signatory

NAI-1500479791v5

Exhibit 10.27

EMPLOYMENT AGREEMENT

This Employment Agreement (the “ Agreement ”) is entered into this 7 April 2015 between Coty Services UK Limited., a company incorporated in England and Wales with the company number 325646 (the “ Company ” and Camillo Pane (“ Executive ”). The Company is a direct or indirect subsidiary of Coty Inc., ("Coty Inc") which has its head offices at 350 Fifth Avenue, New York, NY 10118.

RECITALS


A	The parties desire that Executive will become employed by the Company on 30 June 2015, or such earlier date as agreed by the parties.


B	The parties desire to set forth in this Agreement the terms of Executive’s employment with the Company.

NOW, THEREFORE , the parties agree as follows:


1.	Employment


1.1	In General

The Company agrees to employ Executive on 30 June 2015, or such date as agreed by the parties (the “ Effective Date ”), and Executive accepts such employment, on the terms and conditions set forth in this Agreement. No period of employment with another employer shall count towards Executive’s period of continuous employment, which shall begin on the Effective Date.


2.	Duties


2.1	Chief Marketing Officer


2.1.1	Executive shall be the Company’s Chief Marketing Officer, reporting to the Chief Executive Officer, and shall serve on the Company’s Executive Committee. Executive shall perform all duties customarily associated with his office and shall perform such additional duties consistent with his position as may be assigned to him from time to time by the Chief Executive Officer.

2.1.2

Subject to Section 2.1.3, Executive shall devote his entire business time, attention, and energies to the business of the Company during Executive’s employment with the Company and shall use his best efforts to perform such responsibilities faithfully and efficiently. Executive shall comply with the Coty Code of Business Conduct, as in effect from time to time. Executive’s working hours are 9am to 5pm Monday to Friday, including an unpaid hour for lunch, plus such additional hours required for the proper performance of his duties under the Employment. Executive agrees, in accordance with Regulation 5 of the Working Time Regulations 1998, that the provisions of Regulation 4(1) do not apply to Executive, and that Executive shall give the Company three months’ notice in writing if he wishes Regulation 4(1) to apply to him.


2.1.3	Nothing herein shall prohibit Executive from pursuing charitable activities that are unrelated to the Company’s business as long as they do not violate Section 7, conflict with the interests of Coty, or interfere with the performance of his duties pursuant to this Agreement.


2.2	Location

Executive’s position will be based at the Company’s principal office in Wimbledon. Notwithstanding the foregoing, Executive will be required to travel extensively within the normal course of his duties. Executive may also be required to relocate in accordance with the Company's needs, such relocation being subject to the terms of the Company’s International Transfer Policy.


3.	Compensation and Benefits

Executive’s compensation and benefits during his employment under this Agreement shall be as follows:


3.1	Salary

The Company shall pay Executive base salary (“ Salary ”) at an annual rate of £400,000 payable in equal monthly instalments in arrears. Executive’s Salary shall be payable in accordance with the Company’s normal payroll practices as in effect from time to time.


3.2	Issue of Preferred Shares.

Coty Inc. shall have the option, to be exercised by delivery of written notice to the Executive within 60 days following the date hereof, to enter into a subscription agreement (the “ Subscription Agreement ”), substantially in the form set forth in Annex 2 and as may be amended from time to time, pursuant to which the Executive shall have the obligation to buy from Coty Inc. (or such other person or third party as nominated by the Company)(any such party, the “ Seller ”) 645,921 shares of a newly designated class of preferred stock of Coty Inc (the “ Preferred Shares ”) at a purchase price (the “ Purchase Price ”) to be determined at or about the date of such purchase by an independent qualified professional appraisal firm selected by the Company or Coty Inc (an “ Appraiser ”). Within three business days after Coty Inc.’s delivery of such written notice, Executive and Seller will execute the Subscription Agreement, which will contain the rights and features of the Preferred Shares substantially as reflected in Annex 2 , as may be amended by the Company and the Executive from time to time, and will provide that such shares are an integral inducement to the Executive’s employment.


3.3	Bonus

Executive shall be eligible to participate in the Coty Annual Performance Plan (the “ APP ”), with a Target Award of seventy percent (70%) of Executive’s Salary. The actual APP award (“ Bonus ”) will depend on the value of Coty financial metrics, and will be between 0 and 3.6 times the Target Award (i.e., a maximum potential award of 252% of Executive’s Salary).

Executive understands that the APP is a discretionary bonus plan and may be amended or terminated by Coty in its sole discretion at any time, and that a Bonus is not guaranteed by Coty. In order to be entitled to receive any Bonus, Executive must remain in employment on the date of payment.

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Executive will receive with the first payroll following the Effective Date a one-time cash payment amounting to £150,000 and subject to all appropriate tax and withholding to alleviate the lost bonus opportunity with his former employer. In the event that Executive’s employment with the Company ends by resignation or termination for cause within 12 months of the Effective Date, Executive shall repay to the company the entire gross amount.


3.4	Long-Term Incentive Plan

With respect to each calendar year during which Executive is employed by the Company and subject in each case to his continued employment through the date of grant, at or about the time that the Company makes annual grants generally to its senior officers Executive shall receive annual equity based incentive compensation awards pursuant to and in accordance with the Company’s then effective equity incentive plan and the Company’s generally applicable incentive compensation practices as in effect from time to time. Subject to the discretion of the Board (or the appropriate committee thereof) to modify the form and/or size of such award, it is currently expected that that annual grants to Executive shall be with respect to 100,000 restricted stock units, with each such unit representing the right to receive upon vesting one share of the Related Common Stock (the “ Annual RSUs ”), having terms and conditions established in accordance with the terms of such plan that the Board (or the appropriate committee thereof) determines to be appropriate. Executive will participate to the 2015 annual grant.


3.5	Sign-On Bonus

Executive shall be entitled within 5 days of the date of this Agreement to receive a sign-on bonus amounting £2,000,000 gross that shall enable Executive to acquire within 30 days of the payment of the bonus 69,875 shares of Class A Common Stock of Coty Inc. The Company agrees to make an additional payment which (following the deduction of such amounts as required by law) is equal to any further cost incurred by Executive to acquire the above mentioned shares, within 30 days of receipt of a calculation of such cost, supported by reasonable evidence.

In the event that Executive does not commence employment with the Company by 30 June 2015 (or such later date as agreed by the parties), Executive shall repay to the Company any amount paid by the Company in respect of the bonus provided for in this Section 3.5.


3.6	Benefits

Executive shall be eligible to participate in the Company’s employee benefit plans in effect from time to time for employees of the Company generally.


3.7	Pension

Executive may join the Coty Group Stakeholder Pension Plan (the “ Scheme ”) (or such other registered pension scheme as may be set up by the Company to replace the Scheme) subject to satisfying certain eligibility criteria and subject to the rules of the Scheme as amended from time to time. Full details of the Scheme are available from the HR Director.

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3.8	Automobile

Executive shall be given a car allowance of £13,200 per annum payable in monthly installments, or use of a Company car in accordance with Company policy.


3.9	Schooling and Tax Assistance

Schooling fees will be paid for, or reimbursed by, the company as defined in the Company International Transfer policy.

Executive will benefit from the tax assistance provided by Company Tax Consultant (currently PriceWaterhouseCoopers) to help him properly report his Coty income in required geographies. The assistance ends when the employment ends.


4.	Business Expenses

Executive will be required to apply for an American Express credit card to use for company expenses incurred during the operation of day to day duties. This card will be registered in Executive’s name and Executive will be responsible for making the monthly payments. Subject to production of valid receipts; the Company will reimburse Executive for these expenses subject to the terms of the Coty Travel & Expenses policy as in effect from time to time.


5.	Vacation

Executive shall accrue paid vacation at the rate of twenty-five (25) work days per year (in addition to the usual 8 public holidays in England), subject to the terms and conditions of the Company’s standard vacation policies for its employees as in effect from time to time (the “ Vacation Policy ”), including, without limitation, such overall limitations on accrued but unused vacation as the Vacation Policy may provide. In scheduling vacation Executive shall duly consider the business requirements of the Company.


6.	Sickness Absence

In case of illness the Company will continue to pay the base salary less such sums as Executive is entitled to receive by way of statutory sick pay and any other sickness or invalidity benefits from any local institution, public health insurance, or any other insurance or scheme which is wholly or partly funded by a Coty or Company scheme for the period of four weeks; after a period of employment of between one to five years, the duration of sick pay as outlined in the preceding sentence shall be 13 weeks; after a period of employment of at least 5 years the duration of sick pay as outlined in the preceding sentence shall be 26 weeks.

Without prejudice to Executive’s right to statutory sick pay ("SSP"), and provided that Executive complies with obligations regarding employer notification and medical certificate documentation, Executive will be entitled to full pay as stated above.

Any payment made hereunder in respect of a day of sickness will include the SSP entitlement and will be reduced by any other sickness benefit to which Executive may be entitled or any benefit to which Executive may be entitled under any long term disability scheme operated by the Company.


7.	Health & Safety

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The Company has a detailed health and safety policy, which includes a statement of intent, organisation responsibilities and arrangements, all of which are available from the HR Director.

It shall be the responsibility of every employee to take all reasonable care for the health and safety of himself/herself and that of fellow employees and to report any hazards, which cannot be controlled personally. Employees shall also co-operate with the company by observing safety rules and complying with any measures designed to ensure a safe and healthy working environment. Failure to comply with policy and procedures may result in disciplinary action and, in serious cases, dismissal.


8.	Data Protection

Executive consents to the holding and processing of personal data provided by him to the Employer for all purposes relating to this employment, but not limited to administering and maintaining personnel records, paying and reviewing salary and other remuneration and benefits, undertaking performance appraisals and reviews, maintaining sickness and other absence records and taking decisions as to fitness for work.

Executive further acknowledges and agrees that the Company may, in the course of its duties as an employer, be required to disclose personal data relating to him, after the end of his employment. This does not affect Executive’s rights under the Data Protection Act 1998.


9.	Equal Opportunities

The Company is an equal opportunities employer. No job applicant or employee will receive less favourable treatment on grounds of age, sex, sexual orientation, disability, marital status, creed, colour, race religion or ethnic origins, or be disadvantaged by conditions or requirements that cannot be shown to be justifiable. It is the duty of all employees to ensure that this policy is observed at all times. The Company will seek to ensure that individuals are selected and promoted on the basis of their aptitude, skills and ability.

If an employee believes that the Company or any of its employees has acted in breach of the policy, they should immediately raise the matter through the grievance procedure. In the event that such complaints are found to be well founded, disciplinary action will be taken against those responsible and in serious cases may result in dismissal. In particular the Company regards with severity any instances of age, sex, race or disability harassment, in accordance with the Coty Code of Business Conduct.


10.	Confidentiality

Commencing on the Effective Date and at all times thereafter, Executive shall not use for any purpose or disclose to any third party any Confidential Information (as defined below) other than (i) in the performance of Executive’s duties under this Agreement, (ii) as may otherwise be required by law, regulation or legal process, or (iii) as may be required by a governmental authority, agency or body. “ Confidential Information ” means any proprietary and/or confidential information relating to Coty, Coty’s customers, or other parties with which Coty has a business relationship or that may provide Coty with a competitive advantage, and includes, without limitation, trade secrets; inventions (whether or not patentable); technology and business processes; business, product, strategic, or marketing plans; negotiating strategies; sales and other forecasts; financial information; client lists or other intellectual property; information relating to compensation and benefits; compilations

5 [initials]

of public information that become proprietary as a result of Coty’s compilation of such public information for use in its business; and documents (including any electronic record, videotapes or audiotapes) and oral communications incorporating Confidential Information. Executive shall also comply with any confidentiality obligations of Coty to a third party that Executive knows or should know about, whether arising under a written agreement or otherwise. Information shall not be deemed Confidential Information if it is or becomes generally available to the public other than as a result of an unauthorized disclosure or action by Executive or at Executive’s direction or by any other person who directly or indirectly receives such information from Executive. Because Confidential Information is extremely valuable, the Company takes measures to maintain its confidentiality and guard its secrecy. Confidential Information may be copied, disclosed or used by Executive during his employment with the Company only as necessary to carry out Company business and, where applicable, only as required or authorized under the terms of any agreements between the Company and any third party. If Executive is ever asked to disclose any information or materials that are subject to these confidentiality restrictions, pursuant to legal process or otherwise, Executive must contact the Company to seek the Company's written consent prior to any disclosure.


11.	Non-Competition; Non-Solicitation

Executive will enter into the Company’s standard restrictive covenant agreement for senior executives contained in the Confidentiality and Non-Competition Agreement attached at Annex 1. Participation to LTIP and other company equity plans is subject to the execution of such agreement, a copy of which has been given to Executive.


12.	Company Property


12.1	In General

Executive agrees that all patents, patentable inventions, copyrights, trade secret rights, trademark rights and associated goodwill, rights in know-how, and all other intellectual property rights, as well as all their physical and intangible embodiments, that are conceived, discovered, developed, created or reduced to practice by Executive, solely or in collaboration with others, during the period of his employment with the Company and that relate in any manner to the business of Coty that Executive may be directed to undertake, investigate or experiment with or that Executive may become associated with in performing services for the Company or for Coty (collectively, “ Intellectual Property ”) are the sole property of the Company. At the Company's request or in the event any Intellectual Property is deemed for any reason to be owned by Executive, Executive shall hold them on trust for the Company and Executive also agrees at the request of the Company to assign (or cause to be assigned) fully to the Company all such Intellectual Property. Executive hereby irrevocably waives any and all moral rights which Executive has or may become entitled to under the Copyright Designs and Patents Act 1988 (or any equivalent laws anywhere in the world) in relation to any existing or future works, the Intellectual Property which are vested in the Company pursuant to this Section 8.1.


12.2	Further Assurances

Executive agrees to assist the Company or its designee, at the Company’s expense, in every lawful way to secure, document and record the Company’s rights in Intellectual Property, including the disclosure to the Company of all pertinent information and data with respect

6 [initials]

to all Intellectual Property, the execution of all documents, applications, specifications, oaths, assignments and all other instruments that the Company may deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to all Intellectual Property. Executive also agrees that Executive’s obligation to execute or cause to be executed any such instrument or papers shall continue after the termination of this Agreement. Executive further agrees not to assert or make a claim of ownership of any Intellectual Property, and that Executive shall not file any applications for patents or copyright or trademark registration relating to any Intellectual Property.


12.3	Pre-Existing Materials

Executive agrees that if in the course of performing services for the Company Executive incorporates into or in any way uses in creating Intellectual Property any pre-existing invention, improvement, development, concept, discovery, works, or other proprietary right or information owned by Executive or in which Executive has an interest, (i) Executive shall inform the Company, in writing before incorporating such invention, improvement, development, concept, discovery or other proprietary information into any Intellectual Property, and (ii) Executive hereby grants the Company a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, sell, copy and distribute, and to use or exploit in any way and in any medium, whether or not now known or existing, such item as part of or in connection with such Intellectual Property. Executive shall not incorporate any invention, improvement, development, concept, discovery, intellectual property or other proprietary information owned by any party other than Executive into any Intellectual Property without the Company’s prior written permission.


12.4	Power of Attorney

Executive irrevocably appoints the Company and its duly authorized officers and agents to be his attorney in his name and on his behalf to act for and on Executive’s behalf to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright, trademark and mask work registrations with the same legal force and effect as if executed by Executive, if the Company is unable, because of Executive’s unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure Executive’s signature for the purpose of applying for or pursuing any application for patents or mask work or copyright or trademark registrations covering the Intellectual Property owned by the Company pursuant to this Section 8. A certificate in writing, signed by any director or the secretary of the Company, that any document or act falls within the authority conferred by this Agreement shall be conclusive evidence that such is the case so far as any third party is concerned.


13.	Termination for Cause


13.1	Termination for Cause

The Company may terminate Executive’s employment and this Agreement with immediate effect for Cause. In such event the Company shall have no further obligations to Executive under this Agreement or otherwise except for any earned but unpaid Salary through the date of termination, any accrued but unused vacation, and any other vested benefits to which Executive is entitled in accordance with the terms of any plan of the Company (the “ Accrued Compensation ”).

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13.2	Cause Definition

“Cause” means:


(a)	Executive’s wilful and continued failure to substantially perform his duties for the Company or to carry out the business plan of the Company as determined by the Board;


(b)	Executive’s conviction for, or guilty plea to, an arrestable criminal offence (other than an offence under road traffic legislation for which a non-custodial penalty is imposed);


(c)	Any act of gross misconduct by Executive;


(d)	The wilful or continued negligent engaging by Executive in conduct which is materially injurious to the Company, financially or otherwise; or


(e)	Executive’s breach of any material term of this Agreement or the Company’s policies and procedures, as in effect from time to time.


14.	Termination Without Cause


14.1	Notice and Garden Leave

14.1.2

Either party may terminate Executive’s employment and this Agreement at any time by giving three months’ prior written notice to the other party. In the case of notice from the Executive, such notice shall disclose details of his new employer or affiliation, if any. The Company may in its absolute discretion (but is not obliged to) terminate Executive’s employment with immediate effect by making a payment in lieu of notice of an amount equal to the basic salary which Executive would have been entitled to receive under this Agreement during the notice period referred to in this Section 10.1 if notice had been given, or during the remainder of the notice period if notice has already been served by either party. Where the Company elects to terminating the employment of Executive by making a payment in lieu of notice, the Company may choose in its absolute discretion to pay to Executive this sum in equal monthly instalments in arrears, on the dates on which Executive’s salary would usually have been paid.

14.1.3

Where notice of termination has been served by either party the Company may in its absolute discretion require Executive to take “Garden Leave” for all or any part of the notice period. If the Executive is asked to take Garden Leave he may not attend at his place of work or any of the premises of Coty. Executive may be required not to carry out any duties during the remaining period of employment. Executive may be asked to resign immediately from any offices he holds with Coty. During Garden Leave Executive may not without prior written permission of the Company contact or attempt to contact any client, customer, supplier, agent, professional adviser, broker or banker of Coty or any employee (save for personal reasons) of Coty. During any period of Garden Leave Executive will continue to receive full salary and benefits and all of the obligations that Executive has to the Company under this Agreement and at common law remain in full force and effect.


14.2	Termination Benefits

If the Company terminates Executive’s employment without Cause, Executive shall receive, without duplication, the following:


14.2.1	Executive shall be entitled to his Accrued Compensation.

8 [initials]


14.2.2	Provided that Executive executes a settlement agreement containing a general release of claims in the form prescribed by the Company (a “ General Release ”), Executive shall be eligible for a continuation of his base Salary for the 6-month period immediately following the date his employment terminates (his “ Separation Date ”).

If Executive voluntarily terminates his employment in accordance with this Section, he shall receive, without duplication, his Accrued Compensation.


15.	Death and Disability

In the event of Executive’s death while employed by the Company, this Agreement shall automatically terminate. Thereafter, Executive’s designated beneficiary (or, if there is no such beneficiary, Executive’s estate) shall receive any Accrued Compensation as of the date of Executive’s death. In no event shall a payment pursuant to this Section 11 be made later than the 60th day after Executive’s death. For purposes of determining whether Executive’s employment has terminated due to his “Disability,” Disability shall be defined in accordance with the provisions of the long-term disability scheme operated by the Company in which Executive participates.


16.	Other Consequences of Termination of Employment


16.1	Termination of Benefits

Except as otherwise provided in this Agreement, Executive’s participation in all Company benefit plans and programs shall be governed by the terms of the applicable plan and program documents and award agreements. For the avoidance of doubt, Executive’s Accrued Compensation as of his termination of employment for any reason shall not include any APP amount except to the extent provided by the terms of the APP or this Agreement. Company reserves the right to alter the terms of any benefit plan, or to withdraw it.


16.2	Resignation from Positions

If Executive’s employment with the Company terminates for any reason, Executive shall resign at that time from all officer positions that Executive may have held with Coty. Executive hereby irrevocably appoints the Company and its duly authorized officers and agents to be his attorney in his name to execute such documents or instruments as the Company may deem reasonably necessary or desirable to effect such resignation or resignations.


16.3	Return of Company Property

Upon terminating his employment for any reason or whenever so directed by the Company, Executive shall return any documents, papers, drawings, plans, diskettes, tapes, data, manuals, forms, notes, tables, calculations, reports, or other items which Executive has received, or in or on which Executive has stored or recorded Coty data or information, in the course of his employment as well as all copies and any material into which any of the foregoing has been incorporated and any other Coty property which may be in his possession or control, to the Company or to such entity as Coty may direct, without right of retention.

9 [initials]


17.	Deductions and Taxation

17.1

Except as otherwise expressly provided in this Agreement or in any Company benefit plan applicable to Executive, all amounts payable under this Agreement shall be paid in accordance with the Company’s ordinary payroll practices less such deductions and income and payroll tax withholding as may be required under applicable law. Any property, benefits and perquisites provided to Executive under this Agreement shall be taxable to Executive as provided by law.

17.2

In the event of the termination of Executive’s employment for any reason, the Company reserves the right, to the extent permitted by law and in addition to any other remedy the Company may have, to deduct from any monies that are otherwise payable to Executive and that do not constitute deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (“ Section 409A ”), if applicable, all monies Executive may owe to the Company at the time of or subsequent to the termination of Executive’s employment with the Company (including, without limitation, any negative vacation balance) all monies Executive may owe to the Company at the time of or subsequent to the termination of Executive’s employment with the Company (including, without limitation, any negative vacation balance). To the extent any law requires an employee’s consent to the offset provided in this Section 13.2 and permits such consent to be obtained in advance, this Agreement shall be deemed to provide the required consent.

17.1

Executive shall make such agreements or elections for UK tax purposes in relation to the acquisition, holding or disposal of any shares (including without limitation the Preferred Shares and the Initial Number of Shares) that the Executive holds in Coty Inc and shall be required by the Company by notice in writing from time to time within such time limits as shall be specified by such notice and shall indemnify and hold harmless the Company and Coty Inc against any failure by Executive to comply with its obligations under this clause 17.3.


18.	Survival; Remedies


18.1	Survival

The respective rights and obligations of the parties under this Agreement shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.


18.2	Dispute Resolution


18.2.1	Any dispute or controversy arising under or in connection with this Agreement that cannot be mutually resolved by the parties to this Agreement and their respective advisors and representatives shall be resolved exclusively in the courts of England and Wales. Each party hereto hereby irrevocably accepts and submits to the exclusive jurisdiction of such courts for purposes of this Agreement.


18.2.2	The parties shall maintain strict confidentiality with respect to any proceeding commenced or maintained under the provisions of this Agreement, except as may be required by law.


18.3	Injunctive Relief

10 [initials]

The Company has entered into this Agreement in order to obtain the benefit of Executive’s unique skills, talent, and experience. It is understood by both parties to this Agreement that the protections to Coty provided herein are meant for the reasonable protection of the business of Coty and not to impair the ability of Executive to earn a living. Executive acknowledges and agrees that any violation of Section 6, 7, or 8 shall result in irreparable damage to the Company, and accordingly the Company may obtain injunctive and other equitable relief for any breach or threatened breach of such sections, in addition to any other remedies available to the Company.


19.	Severability

If a court determines that any portion of this Agreement is invalid or unenforceable, the remainder of this Agreement shall not thereby be affected and shall be given full effect without regard to the invalid provisions. If the final judgment of a court of competent jurisdiction or other authority (including an arbitrator) declares that any term or provision is invalid or unenforceable, the parties agree that the court or other authority making such determination shall have the power to reduce the scope, duration, area, or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void, or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intent of the invalid or unenforceable term or provision.


20.	No Duplication

The payments and benefits provided in this Agreement in respect of a termination of employment are in lieu of any other salary, bonus or benefits payable by the Company, including, without limitation, any severance or income continuation or protection under any Company plan that may now or hereafter exist. All such payments and benefits shall constitute liquidated damages, paid in full and final settlement of all obligations of the Company to Executive under this Agreement.


21.	Notices

Any notice to be given under this Agreement to Executive may be served by being handed to him personally or by being sent by recorded delivery first class post to him at his usual or last known address; and any notice to be given to the Company may be served by being left at or by being sent by recorded delivery first class post to its registered office for the time being. Any notice served by post shall be deemed to have been served on the day (excluding Sundays and public and bank holidays) next following the date of posting and in proving such service it shall be sufficient proof that the envelope containing the notice was properly addressed and posted as a prepaid letter by recorded delivery first class post.


22.	Assignment

This Agreement is for the performance of personal services by Executive and may not be assigned by Executive, except that the rights of Executive hereunder shall pass upon Executive’s death to Executive’s designated beneficiary (or, if there is no such beneficiary, Executive’s estate), provided that Executive shall be entitled, to the extent not prohibited by applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death by giving the Company written notice thereof. This Agreement shall be binding upon and inure to the

11 [initials]

benefit of the Company’s successors and assigns. Without limiting the foregoing, the Company may assign its rights and delegate its duties hereunder in whole or in part to any transferee of all or a portion of the assets or business to which Executive’s employment relates.


23.	Governing Law

The Courts of England and Wales shall have jurisdiction over all disputes arising out of or in reference to this Agreement, provided however that as to any claims or causes of action against Coty, the appropriate State and Federal courts located in New York, New York, shall have exclusive jurisdiction and venue and the parties hereby consent to such exclusive jurisdiction and venue.


24.	No Implied Contract

Nothing in this Agreement shall be construed to impose any obligation on the Company to establish or maintain any benefit, welfare or compensation plan or program or to prevent the modification or termination of any benefit, welfare or compensation plan or program or any action or inaction with respect to any such benefit, welfare or compensation plan or program.


25.	Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. An electronically scanned copy of an executed counterpart shall be given the same effect as the original for purposes of the preceding sentence.


26.	Construction


26.1	Headings

All descriptive headings in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to any heading.


26.2	Contra Proferentem Doctrine Inapplicable

This Agreement shall not be construed for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.


27.	Third Party Rights

Save as expressly provided in this Agreement, a person who is not a party to this agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement. Executive will, at the request of the Company, enter into a separate agreement with any entity within Coty that the Company may require under the terms of which he will agree to be bound by provisions of this Agreement and the document attached at Annex 1 which are to the benefit of such other entity.


28.	Entire Agreement

This Agreement and any documents referred to herein constitute the entire agreement by the parties with respect to the matters covered herein and supersedes any prior agreement,

12 [initials]

condition, practice, custom, usage and obligation with respect to such matters insofar as any such prior agreement, condition, practice, custom, usage or obligation might have given rise to any enforceable right. No agreements, understandings or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Agreement.

SIGNED as a DEED and DELIVERED on the date first written above by
Camillo Pane in the presence of: /s/Camillo Pane

Witness name: Helene Cabasso

Witness signature: /s/Helene Cabasso

Witness address 14 Rue de Casablanca - 75015 Paris

SIGNED as a DEED and DELIVERED on the date first written above by
COTY SERVICES UK LIMITED acting by
Lynn Cunningham in the presence of:

Witness name: Manisha Robson
Witness signature: /s/Manisha Robson
Witness address 150 Sussex Road, Harrow, Middlesex, HAI 4NB

EXECUTED by
COTY INC acting by
Géraud-Marie Lacassagne : /s/Géraud-Marie Lacassagne

13 [initials]

1030Exhibit 10.30

January 21, 2015

Ralph Macchio

24 Cherokee Court

Sparta, NJ 07871

Dear Ralph:

This letter (the “ Amendment ”) amends the agreement dated July 21, 2014 (the “ Agreement ”) between you and Coty Inc. (the “ Company ” and, collectively with its affiliates, “ Coty ”). The parties agree as follows:

1. Effective Date . This Amendment will be effective beginning on the date you have executed the Amendment and delivered it to the Company and it has become irrevocable pursuant to paragraph 10 .

2. Scheduled Separation Date . Paragraph 2 of the Agreement is amended by substituting

“December 31, 2015” for “June 30, 2015”.

3. Salary . Paragraph 3(c) of the Agreement is replaced in its entirety by the following :

“ Salary . The Company shall continue paying you a base salary (“ Base Salary ”) through your Separation Date in accordance with the Company’s regular payroll practices. The rate of such Base Salary through June 30, 2015 shall be $437,100.00 per year, plus the merit increase awarded in October 2014 (in accordance with prior evaluation criteria, and paid at the same time and subject to the same guidelines as for active employees) . For the period beginning on July 1, 2015 and ending on your Separation Date, the rate of such Base Salary shall be doubled.”

4. Medical and Dental Coverage . Paragraph 5(c) of the Agreement is replaced in its entirety by the following:

“ Medical and Dental Coverage . During the Non-Compete Period (as defined in paragraph 7), you will continue to be eligible to participate in the Company’s medical and dental plans for active employees, on the same cost-sharing basis. Thereafter, you will be eligible to receive Retiree Medical benefits under Coty’s post-retirement medical benefits plan. You will receive general information about such Retiree Medical benefits as well as your right to elect continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). In the event that you timely elect Retiree Medical or COBRA continuation coverage you shall be solely responsible for your portion of any group medical and dental insurance premiums, including all administrative charges. For purposes of determining the duration of such COBRA coverage, your COBRA coverage will be deemed to commence on the day after the Non-Compete Period.



	[initials]

5. Ret i rement Treatment . Paragraph 6(a) of the Agreement is amended by substituting

“ December 31, 2015 ” for “ June 30, 2015” .

6. FY 16 Bonus . Paragraph 6(e) will be added to the Agreement as follows :

“FY16 Bonus . Provided you remain employed through December 31, 2015, you will be eligible to earn for the fiscal year ending June 30, 2016 (“FY15”) a bonus under the APP Plan (“FY16 Bonus”) . The FY16 Bonus shall be prorated to December 31, 2015 and will be calculated at a factor of one (1) . The FY16 APP Bonus will be paid no later than December 31, 2015 . ”


7.	Attachment A . The first paragraph of Attachment A is amended by replacing the parenthetical “(the ‘Agreement’) with “(as amended , the ‘Agreement ’ ) ” .


8.	No Reliance . You acknowledge that the Company has made no promises , commitments or representat i ons to you other than those contained in this Amendment and that you have not relied upon any statement or representat i on made by the Company with respect to the basis or effect of this Amendment.


9 .	Consultation with Counsel . You are hereby advised to consult and have had the opportunity to consult with an attorney before signing this Amendment.


10 .	Opportunity to Consider . You acknowledge that you were given 21 days in which to review and consider this Amendment, and that if you executed it before the end of the 21-day period such early execution was completely voluntary .


11.	Opportunity to Revoke . You acknowledge that for a period of seven days after you sign this Amendment you have the right to revoke it by providing notice in writ i ng to the Company’ s General Counsel, by hand delivery, certified mail or overnight courier . This Amendment will not become effective and enforceable until after the expiration of the seven-day revocation period .


12.	Counterparts . This Amendment may be executed in counterparts, each of which will be an original, and all of wh i ch will constitute one and the same instrument .


13 .	Governing Law . This Amendment is governed by the laws of the State of New York, w i thout regard to its conflict of law provisions.

If this Amendment is acceptable to you, please indicate your agreement by signing and dating below .

Sincerely,



COTY INC.		[initials]

/s/Jules P. Kaufman

By: Jules Kaufman

Senior Vice President and General Counsel

I acknowledge that I have read this Amendment, and that I understand and voluntarily accept its terms .

THIS IS A LEGALLY ENFORCEABLE DOCUMENT.



/s/Ralph Macchio		2/9/15
Ralph Macchio		Date
		[initials]

Exhibit 10.33

March 2, 2015

Renato Semerari

C/o Coty Geneva SA Versoix

Amendment to your Employment Agreement with Coty

Dear Renato,

I am pleased to confirm our agreement to evolve your employment agreement signed with Coty Geneva SA Versoi x on July 4, 2012 (the “E mployment A g reement ”) as follo ws :

Section 5 . 1 of the Employment Agreement is cancelled and replaced with the new section 5.1 hereunder:

Either party may terminate th is Agreement with ninety days wri tten notice to the other party. S h o uld the Company terminate the employment without cause, with the exception of a transfer of th e Employee to an o th er direct or indir ect affiliate or sist er company of Coty , the Company s h all pay the Employee, in exchange of a full release and settlement, a severance amounting to fifteen months bas e sala r y, inclusive of any amounts due u n der the applicable l a bor laws and collective agre eme nts and subject to all applic ab le withholdings .

All other terms of your employment contract remain unchanged. All changes become effective as of the signature of this amendment.

I am asking you to confirm your acceptance of this amendment b y returnin g two signed copies with the hand written mention ‘ read and appro ve d’ by March 9, 2015.

Best regards,




/s/Geraud Marie Lacassagne		/s/Rebeca Pascual
Geraud Marie Lacassagne		Rebeca Pascual
SVP Human Resources		Human Resources Director
Coty		Switzerland & TREX

	Read and Accepted
	Date and Signature
	Renato Semerari
	Read and Accepted
	02/03/15
	/s/Renato Semerari

From : Renato Semerari

To : Geraud-Marie Lacassagne

Date : March 6, 2015

Re: Personal & Confidential-Career Opportunities

Dear Geraud Marie,

Contrary to what I indicated previously, I will not be able to make a final decision this week. Discussions have progressed well but I still do not have full visibility when the transaction might close. I remain very determined to grasp that opportunity and I am conscious of the need for Coty to ensure proper continuity of its business.

To that point, I am thankful for the proposed amendment to my employment agreement which shall provide both Coty and me with some flexibility to manage the upcoming period.

You also shared with me the progress made on the search for my successor and you indicated that you were now ready to make an offer. I am well aware that delaying the offer would delay the start date of my successor and increase the risk of disruption at Coty. I am comfortable and supportive for you to make a firm employment offer to that person. I am confident that the situation will resolve one way or another before his start date.

Best

/s/Renato Semerari

Renato Semerari,

President, Categories & Innovation

March 9, 2015

Renate Semerari

C/o Coty Geneva SA Versoix

Dear Renato,

Thanks a lot for keeping me informed of the progress regarding your personal situation.

You asked me to further specify how Coty would handle the APP and your vested equity.

APP - I would anticipate that Coty would pay the FY15 APP on a pro-rated basis if your employment agreement were to cease before the end of the current fiscal year. This would reflect the discussions Bart, you and I had on this topic.

Vested Equity -Your project would require for you to make an investment and you would expect to sell all your vested equities soon after resigning. I confirm that Coty would assist you in this and would buy back your equities at market price if this occurs outside an open window.

Best regards

Géraud Marie

Best regards,

/s/Géraud Marie Lacassagne

Géraud Marie Lacassagne

SVP Human Resources

Exhibit 10.34

DISSOLUTION AGREEMENT

DISSOLUTION AGREEMENT, dated as of 22 June 2015, by and between Coty Inc., a Delaware corporation (the “ Company ”), and Elio Leoni Sceti (the “ Executive ”).

WHEREAS, the Company has determined that Bart Becht will remain as the Company’s Chairman of the Board;

WHEREAS, as a result, the Executive has determined not to assume the position of Chief Executive Officer of the Company, as contemplated in the Employment Agreement between the Company and the Executive dated as of 17 April, 2015 (the “ Employment Agreement ”);

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Company and the Executive agree to dissolve their intended contractual relationship and settle their expected rights and obligations under the Employment Agreement in accordance with the terms and conditions set forth below:

1. Employment. Notwithstanding anything in the Employment Agreement to the contrary, the Executive shall not become an employee of the Company and shall not assume the position of Chief Executive Officer of the Company.

2. Preferred Shares. The Company shall repurchase from the Executive the Preferred Shares (as defined in Section 5 of the Employment Agreement) on the terms and conditions which are set forth in Section 3(b) of the Subscription Agreement on the same basis as though the Executive had commenced his employment with the Company and the Executive had terminated his employment immediately thereafter for Good Reason (as such term is defined in the Employment Agreement).

3. Dissolution Payment. In respect of the dissolution effected hereby, the Company shall pay the Executive the amount described in Section 8(c)(iv) of the Employment Agreement on the same basis as though the Executive had commenced his employment with the Company and the Executive had terminated his employment immediately thereafter for Good Reason. Because the Executive had not commenced employment, none of the other benefits described in Section 8(c) shall be payable.

4. Covenants. The Executive acknowledges that, in anticipation of his undertaking the duties that had been specified in the Employment Agreement, he was provided access to confidential information pertaining to the Company, its business and its prospective business plans and endeavors. Accordingly, the Executive agrees that following the execution of this Agreement he shall be subject to, and bound by, the covenants contained in Section 10 of the Employment Agreement as though such covenants were incorporated herein by reference and made a part hereof (the “Executive’s Covenants”), with the periods specified under the provisions of Sections

10(a) and (b) of the Employment Agreement thereof running from the date hereof on the same basis as though the Executive had commenced his employment with the Company and the Executive had terminated his employment immediately thereafter for Good Reason, except that the covenant provided in Section 10(a) of the Employment Agreement shall only be applicable for a period of 12 months after the date hereof. Notwithstanding anything in this Section 4 (or the provisions of Section 10 of the Employment Agreement incorporated herein), nothing in this Agreement shall preclude Executive from making and holding a minority investment in any entity having aggregate revenues, measured on a trailing 12-month basis from its last completed fiscal quarter, in excess of $100 million, so long as Executive does not provide any services to such entity or take any other action that would otherwise be precluded under the provisions of this Agreement.

5. Remaining Provisions of the Employment Agreement. Except to the extent that specific provisions thereof are expressly incorporated herein by reference, the Employment Agreement is hereby terminated and rendered void and without effect as of the date hereof.

6. Release. Excluding enforcement of the covenants and promises of the Company contained herein, Executive hereby irrevocably and unconditionally releases, acquits and forever discharges the Company and each of the Company’s owners, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives and attorneys of such companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them (collectively “Releasees”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any Federal, state or other governmental statute, regulation or ordinance, that Executive now has, or has ever had, or ever will have, against each or any of the Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of Executive’s execution hereof that directly or indirectly arise out of, relate to, or are connected with, the Employment Agreement, the Subscription Agreement, and the actions taken by any if the Releasees in connection with the termination of the Employment Agreement (any of the foregoing being an “Executive Claim” or, collectively, the “Executive Claims”). The Executive represents and acknowledges that in executing this Agreement he is not relying upon, and has not relied upon, any representation or statement not set forth herein made by any of the agents, representatives or attorneys of the Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise.

7. Nondisparagement. The Executive agrees that the Executive will not make any public comments in any form of media, including, without limitation, social media, or take any actions that are intended to or can reasonably be expected to disparage or denigrate the Company or any Releasees, including, but not limited to, any matters relating to the operation or management of the Company, irrespective of the truthfulness or falsity of such statement. The Company agrees that it shall direct its senior officers and each of the members of its Board of Directors not to make any public comments in any form of media, including, without limitation, social media, or take any actions that are intended to or can reasonably be expected to disparage or denigrate the Executive, including, but not limited to, any matters relating to the reputation of the Company, irrespective of the truthfulness or falsity of such statement. Notwithstanding anything in this Agreement to the contrary, including, without limitation, the immediately preceding sentences of this paragraph 7 and the Executive’s Covenants, this Agreement does not prohibit any person from (a) providing accurate information in connection with any disclosure obligation imposed by applicable law or (b) from providing truthful testimony or accurate information in connection with any investigation being conducted into the business or activities of any of the parties hereto or any affiliate thereof by any government agency or other regulator that is responsible for enforcing a law on behalf of the government or otherwise providing information to the appropriate government regulatory agency or body regarding any conduct or action undertaken or omitted to be taken by any such party or affiliate that such person reasonably believes is illegal or in material non-compliance with any financial disclosure or other regulatory requirement applicable to such party or such affiliate.

8. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to its principles of conflict of laws.

(b) Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the rights and obligations of the parties under the Employment Agreement and the manner in which the Preferred Shares are to be redeemed by the Company and supersedes any prior agreements between the Company and Executive, other than the Subscription Agreement with respect to the Preferred Shares. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein and therein. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and the Chairman of the Board (the “Authorized Director”). Except as otherwise expressly provided herein, this Agreement shall not be assignable by either party without the consent of the other party.

(c) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. No waiver by either party of any breach by the other party of any condition or

provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or the Authorized Director, as the case may be.

(d) Severability . It is expressly understood and agreed that although Executive and the Company consider the Executive’s Covenants to be reasonable, and the Company and the Executive agree that, if a final judicial determination is made by a court of competent jurisdiction that the time or territory restriction, or any other restriction, contained in the Executive’s Covenants is an unenforceable restriction against Executive, such provision shall not be rendered void but shall be deemed amended to apply to such maximum time and territory, if applicable, or otherwise to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any such restriction contained in the Executive’s Covenants is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other portion of the Executive’s Covenants. In the event that any one or more of the other provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(e) Successors. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the parties hereto. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive’ death by giving the Company written notice thereof. In the event of the Executive’s death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.

(f) Withholding Taxes. The Company may withhold from any and all amounts payable under this Agreement such national, local and any other applicable taxes and other social changes as may be required to be withheld pursuant to any applicable law or regulation.

(g) Arbitration. The parties agree that all disputes arising under or in connection with this Agreement will be submitted to arbitration in New York, New York, to the American Arbitration Association (“AAA”) under its rules than prevailing for the type of claim in issue. Notwithstanding the foregoing, any court with jurisdiction over the parties may have jurisdiction over any action brought with regard to or any action brought to enforce any violation or claimed violation of this Agreement. The parties each hereby specifically submit to the personal jurisdiction of any federal or state court located in the County of New York for any such action and further agree that service of process may be made within or without the State of New York by giving notice in the manner provided herein. Each party hereby waives any right to a trial by jury in any dispute between them. In any action or proceeding relating to this Agreement, the parties agree that no damages other than compensatory damages shall be sought or claimed by either party and each party waives any claim, right or entitlement to punitive, exemplary, statutory or consequential damages, or any other damages, and each relevant arbitral panel is specifically divested of any power to award any damages in the nature of punitive, exemplary, statutory or consequential damages, or any other damages of any kind or nature in excess of compensatory damages.

(h) Counterparts, Headings. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.



EXECUTIVE
By:	/s/Elio Leoni Sceti
Its:	Elio Leoni Sceti

COTY INC.
By:	/s/Geraud-Marie Lacassagne
Its:	Geraud-Marie Lacassagne

Exhibit 10.55

FORM OF

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “ Agreement ”), dated as of , 2015, is by and between, Coty Inc., a Delaware corporation (the “ Company ”) and (the “ Subscriber ”) and collectively as “Parties”.

RECITALS

WHEREAS, the Company and the Subscriber desire to enter into this Agreement to obligate the Subscriber to acquire shares of preferred stock of the Company (as described below) to be delivered to the Subscriber pursuant to the terms hereof and the Coty Inc. Equity and Long-Term Incentive Plan (the “ Plan ”).

WHEREAS, the Company desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Company, shares of Series A Preferred Stock of the Company (the “ Shares ”), with the terms and conditions substantially as set forth in that Certificate of Designations filed with the Secretary of State of the State of Delaware relating to the Shares, including the various and several voting powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof set forth in Annex A hereto, for an aggregate cash payment equal to $ (the “ Purchase Price ”), subject to the terms and conditions described herein.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.1 Purchase and Sale of the Shares . Upon the terms and subject to the conditions of this Agreement, at the Closing, the Company agrees to issue and sell to the Subscriber, and the Subscriber agrees to purchase from the Company, the Shares for an aggregate cash purchase price equal to the Purchase Price. Closing .

(a) The sale and purchase of the Shares shall take place at a closing (the “ Closing ”) to be held at the offices of Coty Inc. in New York, New York, on , at , or at such other place or at such other time or on such other date as the Company and the Subscriber mutually may agree in writing. The day on which the Closing takes place is referred to as the “Closing Date.”

(b) At the Closing, the Company shall deliver to the Company’s transfer agent (the “ Transfer Agent ”) an instruction letter authorizing and directing the Transfer Agent to record in the share register of the Company book entry positions representing the Shares issued in the name of the Subscriber.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Subscriber as follows:

Section 2.1 Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. The Company has all requisite power, right and authority to carry on its business as now conducted.

Section 2.2 Share Issuance . The Shares to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be free and clear of all liens and other encumbrances, duly and validly issued and will be fully paid and non-assessable and free from preemptive rights.

Section 2.3 Authority . The Company has full corporate power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by the Company and is legal, valid, binding and enforceable upon and against the Company.

Section 2.4 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (a) violate any provision of the certificate of incorporation or bylaws (or similar organizational documents) of the Company; (b) violate any federal, state or local statute, law, regulation, order, injunction or decree (“ Law ”); or (c) require any consent or approval of any person, including any registration or filing with, or notice to any federal, state or local governmental authority or any agency or instrumentality thereof (a “ Governmental Authority ”).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER

Each Subscriber, severally as to itself only and not jointly as to or with anyone else, hereby represents and warrants to the Company as follows:

Section 3.1 Authority and Enforceability . The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

Section 3.2 Legends . The Subscriber understands and agrees that the certificates for the Shares, if any, shall bear substantially the following legend until such Shares shall have been registered under the Securities Act of 1933, as amended (the “ Securities Act ”) and effectively disposed of in accordance with a registration statement that has been declared effective, and that the Company has no intention of registering such Shares pursuant to the Securities Act:

[THE SHARES REPRESENTED BY THIS [CERTIFICATE/STATEMENT] ARE RESTRICTED FROM SALE, TRANSFER, EXCHANGE OR ASSIGNMENT, EXCEPT PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (I) TO THE COMPANY, (II) BY THE LAWS OF DESCENT AND

DISTRIBUTION, OR (III) UPON RECEIPT OF A WRITTEN OPINION OF COUNSEL TO THE COMPANY OR THE COMPANY’S SECRETARY AND GENERAL COUNSEL.]

Section 3.3 No Conflict; Required Filings and Consents . The execution, delivery and performance by the Subscriber of this Agreement and the consummation by the Subscriber of the transactions contemplated hereby do not and will not (a) violate any Law, or (b) require any consent or approval of any person, including any registration or filing with, or notice to any Governmental Authority.

Section 3.4 Resale; Accredited Investor . The Subscriber is acquiring the Shares solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Shares. The Subscriber is an “accredited investor” as defined in Rule 501(a) under the Securities Act, and a sophisticated purchaser who has made its own independent investigation, review and analysis of the transactions contemplated hereby. The Subscriber has been furnished with all information (or provided access to all information) regarding the attributes of the Shares for which it is subscribing and the merits and risks of an investment in such Shares that it requested to evaluate the investment in such Shares. The Subscriber is relying solely on the representations, warranties and agreements of the Company contained in this Agreement, and agrees that at no time was it presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general or public advertising or solicitation.

ARTICLE IV

GENERAL PROVISIONS

Section 4.1 Amendment and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

Section 4.2 Waiver . No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof. Any such waiver by a party shall be valid only if set forth in writing by such party.

Section 4.3 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by facsimile, e‑mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

Section 4.4 Entire Agreement . This Agreement, together with the Plan, constitute the entire agreement, and supersedes all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement. No party to this Agreement shall have any legal obligation to enter into the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

Section 4.5 Third-Party Beneficiaries . Nothing in this Agreement shall confer upon any person other than the parties and their respective successors and permitted assigns any right of any nature.

Section 4.6 Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and

construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

Section 4.7 Award Subject to Plan; Administration . This Agreement is and shall be construed as an “Other Stock-Based Award” granted to Subscriber pursuant to the Plan (as such term is defined therein). The Remuneration and Nominating Committee of the Board of Directors of Coty, Inc. (the “ Committee ”) administers the Plan and shall administer this Agreement as an award under the Plan. The Subscriber’s rights under this Agreement are expressly subject to the terms and conditions of the Plan, including any guidelines the Committee adopts from time to time. The Subscriber hereby acknowledges receipt of a copy of the Plan.

Section 4.8 Submission to Jurisdiction . Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party or its successors or assigns may be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts). Each of the parties further agrees to accept service of process in any manner permitted by such courts. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 4.9 Assignment; Successors . This Agreement may not be assigned by either party without the prior written consent of the other party, except that the Company may assign this Agreement to any of its Affiliates. Subject to the preceding sentence, this Agreement will be binding upon the parties and their respective successors and assigns. For the purposes of this Agreement, the term “Affiliate” shall mean any entity controlling, controlled by or under common control with the named party.

Section 4.10 Severability . If any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 4.11 Counterparts . This Agreement may be executed in counterparts, including electronic transmission and facsimile counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.



COTY INC.		Address for Notices:
By:
	Name:
	Title:

SUBSCRIBER		Address for Notices:
By:
	Name:
	Title:

Exhibit 21.1



Coty Inc. Subsidiaries As of June 30, 2015
Subsidiary Name	Jurisdiction of Organization
Coty Argentina S.A	Argentina
Coty Australia Pty. Ltd.	Australia
Coty Austria GmbH, wien	Austria
Bourjois S.A.	Belgium
Coty Benelux S.A.	Belgium
Coty Brasil Industria e Comercio de Cosmeticos Ltda.	Brazil
Coty Brazil Retail Cosmeticos S.A.	Brazil
Lancaster do Brasil Cosmeticos Ltda.	Brazil
StarAsia Distribution (Cambodia) Ltd.	Cambodia
Coty Canada Inc.	Canada
TJoy Holdings Co. Ltd.	Cayman
Coty Cosmeticos Chile Limitada	Chile
Coty China Holding Limited	China
Coty International Trade (Shanghai) Co. Ltd.	China
Coty Prestige Shanghai Ltd.	China
Coty R&D (Suzhou) Co. Ltd.	China
Nanjing TJoy Biochemical Co. Ltd.	China
Nanjing Yanting Trade Co. Ltd.	China
StarAsia Distributions Hong Kong Limited	China
Suzhou Ganon Trading Co., Ltd.	China
Suzhou Jiahua Biochemistry Co.	China
Coty Colombia Ltda.	Colombia
Coty Ceska Republika, k.s.	Czech Republic
Bourjois S.A.S.	France
Coty France S.A.S.	France
Coty S.A.S.	France
Else France S.A.S.	France
Fragrance Production S.A.S.	France
Coty Germany GmbH	Germany
Coty Services and Logistics GmbH	Germany
Coty Hellas S.A.	Greece
Bourjois Limited (HK)	Hong Kong
Chi Chun Industrial Co. Ltd.	Hong Kong
Coty Hong Kong. Ltd.	Hong Kong
Coty Prestige Hong Kong Ltd.	Hong Kong
Coty Prestige Shanghai (HK) Ltd.	Hong Kong
Coty Prestige Southeast Asia (HK) Limited	Hong Kong
Ming-De Investment Co. Ltd.	Hong Kong
Super Globe Holdings Ltd.	Hong Kong
Coty Hungary Kft.	Hungary
Coty India Beauty and Fragrance Products Private Ltd.	India



PT Coty Prestige Southeast Asia Indonesia	Indonesia
PT StarAsia Distributions	Indonesia
Coty Ireland Ltd.	Ireland
Coty Italia S.p.A.	Italy
Coty Prestige Japan KK	Japan
OPI Japan KK	Japan
Coty Prestige Southeast Asia (M) SDN. BHD.	Malaysia
StarAsia (Malaysia) Sdn. Bhd.	Malaysia
Coty Mexico S.A. de C.V.	Mexico
Coty Lancaster S.A.M.	Monaco
Bourjois B.V.	Netherlands
Coty B.V.	Netherlands
Coty Benelux B.V.	Netherlands
Coty Investment B.V.	Netherlands
Lancaster B.V.	Netherlands
Coty Prestige Southeast Asia Philippines	Philippines
Coty Polska Sp z.o.o.	Poland
Coty Prestige España - Surcursal em Portugal	Portugal
Coty Puerto Rico Inc.	Puerto Rico
Coty Cosmetics Romania S.r.l.	Romania
Bourjois Paris LLC	Russia
Coty Russia ZAO	Russia
Coty Beauty LLC	Russia
Coty Arabia Trading Company	Saudi Arabia
Coty Asia Pte. Ltd.	Singapore
Coty Prestige Southeast Asia Pte. Ltd.	Singapore
StarAsia Group Pte. Ltd.	Singapore
StarAsia Manufacturing Pte. Ltd.	Singapore
StarAsia Singapore Pte. Ltd.	Singapore
Coty Slovenska Republika s.r.o.	Slovak Republic
Coty Beauty South Africa (Pty) Ltd.	South Africa
Coty South Africa (Pty) Ltd.	South Africa
Coty Korea Ltd.	South Korea
Bourjois España S.A.	Spain
Coty Spain S.L.	Spain
Bourjois S.a.r.l.	Switzerland
Coty (Schweiz) AG	Switzerland
Coty Geneva S.A. Versoix	Switzerland
Coty Prestige (Taiwan) Ltd.	Taiwan
StarAsia Taiwan Co., Ltd.	Taiwan
Coty Prestige Southeast Asia (Thailand) Co. Ltd.	Thailand
Coty Distribution Emirates L.L.C.	United Arab Emirates
Coty Middle East FZCO	United Arab Emirates
Beauty International Ltd.	United Kingdom
Bourjois Limited	United Kingdom
Coty Brands Group Limited	United Kingdom



Coty Export U.K. Ltd.	United Kingdom
Coty Manufacturing UK Ltd.	United Kingdom
Coty Services U.K. Ltd.	United Kingdom
Coty UK Ltd.	United Kingdom
Del Laboratories (U.K.) Limited	United Kingdom
India Projects Ltd.	United Kingdom
Lady Manhattan Ltd.	United Kingdom
Lancaster Group, Ltd.	United Kingdom
Lena White Limited	United Kingdom
Rimmel International Ltd.	United Kingdom
Philosophy Cosmetics, Inc.	United States - AZ
Philosophy, Inc.	United States - AZ
Biotech Research Labs, Inc.	United States - DE
Calvin Klein Cosmetic Corporation	United States - DE
Coty Prestige Travel Retail and Export LLC	United States - DE
Coty US LLC	United States - DE
DLI International Holding II Corp.	United States - DE
Green Acquisition Sub Inc.	United States - DE
Philosophy Beauty Consulting LLC	United States - DE
Rimmel Inc.	United States - DE
DLI International Holding I LLC	United States - DE
OPI Products Inc.	United States - DE
Philosophy Acquisition Company, Inc.	United States - DE
Philosophy Mezzanine Corp.	United States - DE
StarAsia Trading & Services Co. Ltd.	Vietnam

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-189276 on Form S-8 of our reports dated August 17, 2015, relating to the consolidated financial statements and financial statement schedule of Coty Inc. and subsidiaries, and the effectiveness of Coty Inc. and subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Coty Inc. and subsidiaries for the year ended June 30, 2015.

/s/ Deloitte & Touche LLP

New York, New York

August 17, 2015

Exhibit 31.1

Certification

I, Lambertus J.H. Becht, certify that:

1. I have reviewed this Annual Report on Form 10-K of Coty Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2015



	/s/Lambertus J.H. Becht
	Lambertus J.H. Becht
	Interim Chief Executive Officer and Chairman of the Board of Director

Exhibit 31.2

Certification

I, Patrice de Talhouët, certify that:

1. I have reviewed this annual report on Form 10-K of Coty Inc.;

d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2015



	/s/Patrice de Talhouët
	Patrice de Talhouët
	Chief Financial Officer

Exhibit 32.1

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), the undersigned officer of Coty Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the year ended June 30, 2015 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: August 17, 2015	/s/Lambertus J.H. Becht
	Lambertus J.H. Becht
	Interim Chief Executive Officer and Chairman of the Board of Director

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and for no other purpose.

Exhibit 32.2

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)



Date: August 17, 2015	/s/Patrice de Talhouët
	Patrice de Talhouët
	Chief Financial Officer