Cayman Islands*
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6770
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98-1575727
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Paul T. Schnell, Esq.
Gregg A. Noel, Esq.
Maxim O. Mayer-Cesiano, Esq.
Michael J. Schwartz, Esq.
Skadden, Arps, Slate,
Meagher & Flom LLP
One Manhattan West
New York, NY 10001
(212) 735-3000
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R. Scott Shean, Esq.
B. Shayne Kennedy, Esq.
Andrew Clark, Esq.
Phillip S. Stoup, Esq.
Latham & Watkins LLP
650 Town Center Drive,
20th Floor
Costa Mesa, CA 92626
(714) 540-1235
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Daniel J. Espinoza, Esq.
W. Stuart Ogg, Esq.
Goodwin Procter LLP
601 Marshall Street
Redwood City, California
94062
(650) 752-3100
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☐
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Emerging growth company
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☒
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Proposal No. 1(a) — The Obagi Merger Proposal — to consider and vote upon a proposal
to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of November 15, 2021, by and among Waldencast, Obagi Merger Sub, Inc., a Cayman Islands exempted company limited by shares (“Merger Sub”), and Obagi
Global Holdings Limited, a Cayman Islands exempted company limited by shares (“Obagi”), a copy of which is attached to this proxy statement/prospectus statement as Annex A (as may be amended from time to time, the “Obagi Merger
Agreement”). The Obagi Merger Agreement provides, among other things, for the merger of Merger Sub with and into Obagi (the “Obagi Merger”), with Obagi surviving the Obagi Merger as a wholly owned subsidiary of Holdco 2 and an indirect
wholly owned subsidiary of Waldencast plc, in accordance with the terms and subject to the conditions of the Obagi Merger Agreement as more fully described elsewhere in this proxy statement/prospectus (the “Obagi Merger Proposal”);
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Proposal No. 1(b) — The Milk Transaction Proposal —
to consider and vote upon a proposal to approve by ordinary resolution and adopt the Equity Purchase Agreement, dated as of November 15, 2021, by and among Waldencast, Obagi Holdco 1 Limited, a limited company incorporated under the
laws of Jersey (“Holdco 1”), Waldencast Partners LP, a Cayman Islands exempted limited partnership (“Waldencast LP” and together with Holdco 1, the “Milk Purchasers”), Milk, the members of Milk (the “Milk Members”) and Shareholder
Representative Services, LLC, a Colorado limited liability company, solely in its capacity as representative, agent and attorney-in-fact of the Milk Members (the “Equityholder Representative”), a copy of which is attached to this proxy
statement/prospectus statement as Annex B (as may be amended from time to time, the “Milk Equity Purchase Agreement”). The Milk Equity Purchase Agreement provides, among other things, for the purchase of all of the issued and
outstanding membership interests of Milk by the Milk Purchasers (the “Milk Transaction”), in accordance with the terms and subject to the conditions of the Milk Equity Purchase Agreement as more fully described elsewhere in this proxy
statement/prospectus (the “Milk Transaction Proposal” and together with the Obagi Merger Proposal, the “BCA Proposal”);
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Proposal No. 2 — The Domestication Proposal — to consider and vote upon a proposal
to approve by special resolution, the change of Waldencast’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a public limited company under the laws of
Jersey (the “Domestication” and, together with the Obagi Merger and Milk Transaction, the “Business Combination”) (the “Domestication Proposal”);
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Organizational Documents Proposals — to consider and vote upon the following four
separate proposals (collectively, the “Organizational Documents Proposals”) to approve by special resolution, in the case of Organizational Documents Proposals A and D, and by ordinary resolution in the case of Organizational Documents
Proposals B and C, the following material differences between Waldencast’s Amended and Restated Memorandum and Articles of Association (as may be amended from time to time, the “Cayman Constitutional Documents”) and the proposed new
memorandum and articles of association of Waldencast plc (a public limited company incorporated in Jersey following the Domestication) upon the effective date
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(A)
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Proposal No. 3 — Organizational Documents Proposal A — to authorize
the change in the authorized share capital of Waldencast from 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “Waldencast Class A ordinary shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share
(the “Waldencast Class B ordinary shares” and, together with the Class A ordinary shares, the “ordinary shares”), and 5,000,000 preferred shares, par value $0.0001 per share (the “Waldencast preferred shares”), to Class A ordinary
shares, par value $0.0001 per share, of Waldencast plc (the “Waldencast plc Class A ordinary shares”), Class B ordinary shares, par value $0.0001 per share, of Waldencast plc (the “Waldencast plc Non-Economic ordinary shares”) and
preference shares of a par value of $0.0001 per share of Waldencast plc (the “Waldencast plc preferred stock”) (“Organizational Documents Proposal A”);
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(B)
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Proposal No. 4 — Organizational Documents Proposal B — to provide that the board of directors of Waldencast plc (the “Waldencast plc Board”) be divided into three classes, with each class made up of, as nearly as may be possible, one-third of the total
number of directors constituting the entire Waldencast plc Board, with only one class of directors being elected in each year and each class serving a three-year term (“Organizational Documents Proposal B”);
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(C)
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Proposal No. 5 — Organizational Documents Proposal C — to provide that certain provisions of the Proposed Constitutional Document will be subject to the Investor Rights Agreement (as defined herein), including provisions governing the appointment, removal
and replacement of directors, with respect to which Cedarwalk Skincare Ltd., a Cayman Islands exempted company limited by shares, will have certain rights pursuant to the Investor Rights Agreement (“Organizational Documents Proposal
C”);
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(D)
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Proposal No. 6 — Organizational Documents Proposal D — to authorize all other changes in connection with the replacement of Cayman Constitutional Documents with the Proposed Constitutional Document in connection with the consummation of the Business
Combination (copies of which are attached to this proxy as Annex G), including (1) changing the corporate name from “Waldencast Acquisition Corp.” to “Waldencast plc,” (2) making Waldencast plc’s existence for an unlimited duration
and (3) removing certain provisions related to Waldencast plc’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Waldencast’s board of directors believes is
necessary to adequately address the needs of Waldencast plc after the Business Combination (“Organizational Documents Proposal D”);
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Proposal No. 7 — The Director Election Proposal — to consider and vote upon a
proposal to approve by ordinary resolution of the holders of Waldencast Class B ordinary shares, assuming the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, to elect nine directors who,
upon consummation of the Business Combination, will be the directors of Waldencast plc (the “Director Election Proposal”);
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Proposal No. 8 — The Stock Issuance Proposal — to consider and vote upon a proposal
to approve by ordinary resolution for purposes of complying with the applicable provisions of The Nasdaq Stock Market Listing Rule 5635, the issuance of (a) Waldencast plc Class A ordinary shares to the PIPE Investors (as defined
herein), pursuant to the PIPE Investment (as defined herein) and the shareholders of Obagi (“Obagi Shareholders”), pursuant to the Obagi Merger Agreement and (b) units of Waldencast plc to each of Burwell Mountain Trust, Dynamo Master
Fund and Beauty Ventures LLC (the “Forward Purchasers”), pursuant to the Forward Purchase Transaction (as defined herein) (the “Stock Issuance Proposal”);
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Proposal No. 9 — The Milk Issuance Proposal – to consider and vote upon a proposal
to approve by ordinary resolution the issuance of Waldencast plc Non-Economic ordinary shares and the reservation for issue of Waldencast plc Class A ordinary shares in exchange for Waldencast LP Common Units, in each case, to the Milk
Members (the “Milk Issuance Proposal”);
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Proposal No. 10 — The Incentive Award Plan Proposal — to consider and vote upon a
proposal to approve by ordinary resolution, the Waldencast plc 2022 Incentive Award Plan, which is the omnibus equity incentive plan of Waldencast plc (the “Incentive Award Plan Proposal”, and together with the BCA Proposal, the
Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Milk Issuance Proposal, the “Condition Precedent Proposals”); and
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Proposal No. 11 — The Adjournment Proposal — to consider and vote upon a proposal to
approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more
proposals at the extraordinary general meeting (the “Adjournment Proposal”).
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(i)
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(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying
public shares and public warrants prior to exercising your redemption rights with respect to the public shares;
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(ii)
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submit a written request to Continental Stock Transfer & Trust Company (“Continental”), Waldencast’s transfer agent, that
Waldencast plc redeem all or a portion of your public shares for cash; and
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(iii)
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deliver your public shares to Continental, Waldencast’s transfer agent, physically or electronically through The Depository
Trust Company (“DTC”).
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“affiliate” or “Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise;
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“Affiliate Agreements” means contracts (other than offer letters, employment agreements, bonus agreements, severance
agreements, separation agreements, employee non-competition agreements, employee confidentiality and invention assignment agreements, non-competition agreements, separation agreements, or any other agreement entered into in the ordinary
course or equity or incentive equity documents and Governing Documents) between Obagi and its subsidiaries, on the one hand, and Affiliates of Obagi or any of Obagi’s subsidiaries (other than Obagi Hong Kong, Clinactiv or any of their
respective subsidiaries), the officers and managers (or equivalents) of Obagi or any of Obagi’s subsidiaries, the shareholders of Obagi or any of Obagi’s subsidiaries, any employee of Obagi or any of Obagi’s subsidiaries, a member of
the immediate family of the foregoing Persons, or Obagi Hong Kong, Clinactiv or any of their respective subsidiaries;
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“Aggregate Fully Diluted Milk Common Units” means, without duplication, the aggregate number of shares of Milk Common Units
that are (i) issued and outstanding immediately prior to the Milk Transaction Effective Time, (ii) issuable upon the exchange of Milk Preferred Units that are outstanding immediately prior to the Milk Transaction Effective Time,
(iii) issuable upon the exercise of Milk Options and Milk UARs (whether or not then vested or exercisable) that are outstanding immediately prior to the Milk Transaction Effective Time and (iv) issuable upon the exercise of the Milk
Warrants that are outstanding immediately prior to the Milk Transaction Effective Time; provided that any Milk Option and Milk UAR with an exercise or strike price, as applicable, equal to or greater than the Milk Per Unit Transaction
Consideration shall not be counted for purposes of determining the number of Aggregate Fully Diluted Milk Common Units;
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“Aggregate Fully Diluted Obagi Common Shares” means, without duplication, (a) the aggregate number of shares of Obagi Common
Stock that are (i) issued and outstanding immediately prior to the Obagi Merger Effective Time, or (ii) issuable upon the exercise of Obagi Options (whether or not then vested or exercisable) that are outstanding immediately prior to
the Obagi Merger Effective Time or (iii) issuable upon the settlement of Obagi RSUs (whether or not then vested) that are outstanding immediately prior to the Obagi Merger Effective Time, minus (b) any shares of Obagi Common Stock held
in the treasury of Obagi as of immediately prior to the Obagi Merger Effective Time; provided that any Obagi Option with an exercise price equal to or greater than the product obtained by multiplying (A) the Obagi Exchange Ratio by (B)
$10.00 (the “Obagi Per Share Merger Consideration”) shall not be counted for purposes of determining the number of Aggregate Fully Diluted Obagi Common Shares;
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“Aggregate Milk Option Exercise Price” means the aggregate amount that would have been received by Milk if each Milk Option
outstanding immediately prior to the Milk Transaction Effective Time had been exercised as of such time;
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“Aggregate Milk Transaction Consideration” means the Milk Equity Consideration plus
the Milk Cash Consideration plus the Waldencast plc Non-Economic ordinary shares;
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“Aggregate Milk UAR Strike Price” means the aggregate grant date fair market value of shares subject to the Milk UARs;
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“Aggregate Milk Warrant Exercise Price” means the aggregate amount that would have been received by Milk if each Milk Warrant
outstanding immediately prior to the Milk Transaction Effective Time had been exercised as of such time;
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“Aggregate Obagi Option Exercise Price” means the aggregate amount that would have been received by Obagi if each Obagi
Option outstanding immediately prior to the Obagi Merger Effective Time had been exercised as of such time;
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“Amended and Restated Waldencast Partners LP Agreement” means the amended and restated limited partnership agreement of
Waldencast LP;
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“Antitrust Authorities” means the Antitrust Division of the U.S. Department of Justice, the U.S. Federal Trade Commission or
the antitrust or competition law authorities of any other jurisdiction (whether the U.S., foreign or multinational);
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“Beauty Ventures” means Beauty Ventures LLC, which is managed by the Sponsor;
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“Business Combination” means the Obagi Merger, the Milk Transaction and the Domestication;
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“CAGR” means compound annual growth rate;
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“Cayman Constitutional Documents” means Waldencast’s amended and restated memorandum and articles of association (as the same
may be amended from time to time as permitted hereby prior to the Domestication);
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“Cayman Islands Companies Act” means the Cayman Islands Companies Act (As Revised);
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“Cayman Registrar” means the Cayman Registrar of Companies under the Companies Act (As Revised) of the Cayman Islands;
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“Cedarwalk” means Cedarwalk Skincare Ltd., a Cayman Islands exempted company limited by shares;
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“cGMP” means current good manufacturing practices;
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“China Region” means the People’s Republic of China, inclusive of the Hong Kong Special Administrative Region, the Macau
Special Administrative Region, and Taiwan;
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“Clinactiv” means Clinactiv Technology Limited, a Cayman Islands exempted company limited by shares;
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“Clinactiv Consent” means any consent required under the Obagi Existing Credit Agreement in order for Obagi to consummate the
Clinactiv Distribution without causing an event of default or mandatory prepayment event occurring thereunder;
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“Clinactiv Distribution” means the distribution of all of the outstanding equity interests of Clinactiv to Cedarwalk in
accordance with a distribution agreement in a customary form by and among Obagi, Cedarwalk and Waldencast;
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“Closing” means the Milk Closing and the Obagi Closing, together;
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“Closing Date” means the Obagi Closing Date and the Milk Closing Date, together;
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“Code” means the U.S. Internal Revenue Code of 1986, as amended;
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“Condition Precedent Proposals” means, collectively, the BCA Proposal, the Domestication Proposal, the Organizational
Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal, the Milk Issuance Proposal and the Incentive Award Plan Proposal;
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“Continental” means Continental Stock Transfer & Trust Company;
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“contracts” means all legally binding contracts, agreements, arrangements or undertakings (including memorandums of
understanding and letters of understanding), subcontracts, leases, licenses, subleases, deeds, commitments, mortgages, purchase orders, work orders, task orders and guaranties, in each case, whether written or oral;
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“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics,
pandemics or disease outbreaks;
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“Dai Family” means Yumin Dai, Sijue (Steven) Dai, Sicong (Simon) Dai, any of their spouses, lineal descendants or ancestors,
and the respective heirs, executors and controlled investment affiliates of each of the foregoing;
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“Distribution Agreements” means the distribution agreement between Obagi Holdings and Obagi, and the distribution agreement
between Obagi and Cedarwalk, in each case, pursuant to the Obagi China Distribution;
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“Dollars” or “$” means lawful money of the U.S.;
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“Domestication” means the domestication by way of continuance of Waldencast as a Jersey public limited company and
deregistration in the Cayman Islands in accordance with Part 18C of the Jersey Companies Law and the Cayman Islands Companies Act;
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“DTC” means The Depository Trust Company;
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“Equityholder Representative” means Shareholder Representative Services LLC, a Colorado limited liability company;
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“Exchange Act” means the Securities Exchange Act of 1934, as amended;
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“Financing Expenses” has the meaning specified in the definition of Waldencast Transaction Expenses;
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“Forward Purchaser” means each of Burwell Mountain Trust, Dynamo Master Fund, and the Beauty Ventures;
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“Forward Purchase Agreements” means the Third-Party Forward Purchase Agreement and the Sponsor Forward Purchase Agreement,
together;
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“Forward Purchase Amount” means $333.0 million;
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“Forward Purchase Transaction” means the transactions pursuant to the Third-Party Forward Purchase Agreement and the Sponsor
Forward Purchase Agreement, together;
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“founder shares” means the Waldencast Class B ordinary shares purchased by the Sponsor in a private placement prior to the
initial public offering, and the Waldencast Class A ordinary shares that will be issued upon the conversion thereof;
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“GAAP” means generally accepted accounting principles in the U.S.;
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“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal
existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership
agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation, the “Governing Documents” of an exempted company are its memorandum and
articles of association and the “Governing Documents” of a Jersey company are its memorandum and articles of association;
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“Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental
authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal, or arbitrator;
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“Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award entered by or
with any Governmental Authority;
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“Holdco 1” means Obagi Holdco 1 Limited, a private limited company incorporated under the laws of Jersey;
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“Holdco 2” means Obagi Holdco 2 Limited, a private limited company incorporated under the laws of Jersey;
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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder;
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“indebtedness” means with respect to any Person, without duplication, any obligations, contingent or otherwise, in respect of
(a) the principal of and premium (if any) in respect of any indebtedness for borrowed money, including accrued interest and any per diem interest accruals or cost associated with prepaying any such indebtedness solely to the extent such
indebtedness is prepaid, (b) amounts drawn on letters of credit, bank guarantees, bankers’ acceptances and other similar instruments (solely to the extent such amounts have actually been drawn), (c) the principal of and premium (if any)
in respect of obligations evidenced by bonds, debentures, notes and similar instruments, (d) the termination value of interest rate
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“Initial PIPE Investment” means the purchase of shares of Waldencast plc Class A ordinary shares pursuant to the Initial
Subscription Agreements;
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“initial public offering” means Waldencast’s initial public offering that was consummated on March 18, 2021;
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“Initial Subscription Agreements” means the subscription agreements executed on or prior to November 14, 2021, pursuant to
which the Initial PIPE Investment will be consummated;
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“Investor Directors” means Sarah Brown, Juliette Hickman, Lindsay Pattison and Zach Werner;
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“Investor Rights Agreement” means the Investor Rights Agreement, to be entered into by and among Waldencast, Cedarwalk, the
Sponsor and the guarantor of Cedarwalk’s obligations thereunder;
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“IP License Agreement” means the intellectual property license agreement, and side letter to the same agreement, to be
entered by and among Obagi China Distribution, Obagi Worldwide and Obagi Hong Kong;
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“IPO Registration Statement” means the Registration Statement on Form S-1 (333-253370) filed by Waldencast in connection with
its initial public offering, which became effective on March 15, 2021;
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“IRS” means the U.S. Internal Revenue Service;
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“Jersey Companies Law” means the Companies (Jersey) Law 1991, as amended;
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“Jersey Registrar” means the Registrar of Companies in Jersey under the Jersey Companies Law;
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“JOBS Act” means the Jumpstart Our Business Startups Act of 2012;
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“Letter Agreement” means that a letter agreement, dated as of March 15, 2021, by and among Waldencast, the Sponsor and
certain other shareholders of Waldencast;
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“Lock-Up Agreements” means the Obagi Lock-Up Agreement and the Milk Lock-Up Agreement, together;
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“Merger Sub” means Obagi Merger Sub, Inc., a Cayman Islands exempted company limited by shares;
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“Milk” means Milk Makeup LLC, a Delaware limited liability company;
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“Milk Appreciation Rights Plan” means the Milk Makeup LLC Appreciation Rights Plan;
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“Milk Award” means a Milk Option or a Milk UAR;
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“Milk Cash Consideration” means an amount equal to the difference of (a) $140.0 million, minus
the Milk Cash Consideration Reduction Amount, if any, minus $2.5 million, minus $0.05 million, to the extent actually paid at Closing; provided that in
no event will the Milk Cash Consideration equal less than zero dollars ($0.00);
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“Milk Cash Consideration Reduction Amount” means:
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(a)
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if the Milk Closing Available Cash is equal to or greater than $630.0 million, an amount equal to zero dollars ($0.00); or
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(b)
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if the Milk Closing Available Cash is less than $630.0 million and greater than $615.0 million, an amount equal to (i) $630.0
million minus (ii) the Milk Closing Available Cash; or
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(c)
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if the Milk Closing Available Cash is equal to or less than $615.0 million and greater than $565.0 million, an amount equal
to (i) $15.0 million, plus (ii) 25% of the amount equal to (A) $615.0 million, minus (B) the Milk Closing Available Cash; or
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(d)
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if the Milk Closing Available Cash is equal to or less than $565.0 million, an amount equal to (i) $27.5 million, plus (ii) 50% of the amount equal to (A) $565.0 million, minus (B) the Milk Closing Available Cash; provided, however, that under no circumstance shall the
Milk Cash Consideration Reduction Amount be negative;
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“Milk Closing” means the closing of the transactions contemplated by the Milk Equity Purchase Agreement;
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“Milk Closing Available Cash” means the sum of (w) the cash remaining in the Trust Account (after giving effect to the
Waldencast/Milk Share Redemptions (if any)), plus (x) the PIPE Investment Amount actually received by Waldencast prior to or substantially concurrently with the Closing, plus (y) the Forward Purchase Amount actually received by Waldencast prior to or substantially concurrently with the Milk Closing, plus (z) the cash and cash
equivalents of Waldencast, Milk and Obagi and their respective subsidiaries, including the proceeds of any indebtedness incurred after the date hereof (other than any indebtedness of up to $125.0 million to refinance the Obagi Existing
Credit Agreement) or convertible note or other offering (in the case of Waldencast and its subsidiaries, excluding any cash already covered by clauses (w), (x) or (y) above), in each case, as of the Milk Closing;
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“Milk Closing Date” means the date on which the Milk Closing actually occurs;
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“Milk Common Units” means the authorized issued and outstanding common units of Milk;
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“Milk Confidentiality Agreement” means the Confidentiality Agreement, dated as of June 27, 2021, between Waldencast and Milk,
as amended by the Confidentiality Agreement Side Letter, dated as of August 11, 2021, between Waldencast and Milk;
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“Milk Equity Consideration” means a number of Waldencast LP Common Units equal to (x) the Total Implied Milk Equity
Consideration, minus (y) a number of units of Waldencast LP Common Units equal to the quotient obtained by dividing (A) the Milk Cash Consideration by (B) $10.00;
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“Milk Equity Interests” means the Milk Awards, Milk Membership Units and the Milk Warrants, collectively;
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“Milk Equity Purchase Agreement” means the Equity Purchase Agreement, dated as of November 15, 2021, by and among Waldencast,
Waldencast LP, Holdco 1, Milk, the Milk Members and the Equityholder Representative, a copy of which is attached to this proxy statement/prospectus as Annex B;
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“Milk Exchange Ratio” means the ratio equal to (i) the number of Waldencast ordinary shares equal to the number of Waldencast
LP Common Units constituting the Total Implied Milk Equity Consideration divided by (ii) the number of Aggregate Fully Diluted Milk Common Units;
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“Milk Existing Credit Agreement” means the Loan and Security Agreement, dated as of October 10, 2019 (as amended by that
certain First Amendment and Waiver to Loan and Security Agreement, dated as of May 4, 2020, that certain Second Amendment to Loan and Security Agreement, dated as of November 27, 2020, that certain Third Amendment to Loan and Security
Agreement, dated as of February 25, 2021, and that certain Fourth Amendment to Loan and Security Agreement, dated as of April 8, 2021), by and between Milk, as borrower, and PWB;
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“Milk LLC Agreement” means the Fifth Amended and Restated Operating Agreement of Milk, dated as of November 5, 2021;
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“Milk Lock-Up Agreement” means each of the lock-up agreements to be entered into between Waldencast plc and each of the the
Milk Members entering into such lock-up agreements;
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“Milk Members” means the preferred and common members of Milk;
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“Milk Membership Units” means the Milk Common Units and the Milk Preferred Units, collectively;
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“Milk Option” means an option to purchase a Milk Common Unit;
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“Milk Per Unit Transaction Consideration” means the product obtained by multiplying (i) the Milk Exchange Ratio by (ii)
$10.00;
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“Milk Pre-Closing Restructuring” means certain distribution by direct and indirect holders of certain Milk Membership Units
to occur prior to the Milk Closing;
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“Milk Preferred Units” means the authorized preferred units of Milk, comprised of the Milk Series A Preferred Units, Milk
Series B Preferred Units, Milk Series C Preferred Units and Milk Series D Preferred Units;
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“Milk Purchasers” means Waldencast LP and Holdco 1 together;
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“Milk Series A Preferred Units” means the authorized, issued and outstanding Milk Preferred Units designated as Series A
Preferred Units pursuant to the Milk LLC Agreement;
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“Milk Series B Preferred Units” means the authorized, issued and outstanding Milk Preferred Units designated as Series B
Preferred Units pursuant to the Milk LLC Agreement;
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•
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“Milk Series C Preferred Units” means the authorized, issued and outstanding Milk Preferred Units designated as Series C
Preferred Units pursuant to the Milk LLC Agreement;
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“Milk Series D Preferred Units” means the authorized, issued and outstanding Milk Preferred Units designated as Series D
Preferred Units pursuant to the Milk LLC Agreement;
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•
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“Milk Sponsor Support Agreement” means that certain Sponsor Support Agreement, dated as of the date of the Milk Equity
Purchase Agreement, by and among the Sponsor, Waldencast and Milk, as amended or modified from time to time;
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•
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“Milk Transaction” means the Milk Purchasers’ acquisition from the Milk Members, and the Milk Members’ sale to the Milk
Purchasers, of all of the issued and outstanding Milk Membership Units representing all of the issued and outstanding membership interests of Milk in exchange for the Milk Cash Consideration, the Milk Equity Consideration and the
Waldencast plc Non-Economic ordinary shares;
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“Milk Transaction Effective Time” means the time at which the Milk Closing shall be deemed effective;
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“Milk Transaction Expenses” means the following out-of-pocket fees and expenses paid or payable by Milk or any of its
subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby: (a) all documented fees, costs, expenses, brokerage fees,
commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers, (b) change-in-control payments, transaction bonuses,
retention payments, severance or similar compensatory payments payable by Milk or any of its subsidiaries to any current or former employee, independent contractor, officer or director of Milk or any of its subsidiaries as a result of
the transactions contemplated hereby (and not tied to any subsequent event or condition, such as a termination of employment), including the employer portion of payroll taxes arising therefrom, (c) the filing fees payable by Milk or any
of its subsidiaries to the Antitrust Authorities specified in Section 8.1(e) of the Milk Equity Purchase Agreement and (d) amounts owing or that may become owed, payable or otherwise due, directly or indirectly, by Milk or any of its
subsidiaries to any Affiliate of Milk or any of its subsidiaries in connection with negotiation, documentation or the consummation of the transactions contemplated hereby, including fees, costs and expenses related to the termination of
any Affiliate Agreement. For the avoidance of doubt, Milk Transaction Expenses shall not include any fees and expenses of the Milk Members or any expenses of Milk or its subsidiaries to the extent attributable to advice solely for the
benefit of Milk’s direct or indirect equityholders (rather than Milk or its subsidiaries);
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“Milk UARs” means a unit appreciation right in respect of Milk Common Units issued pursuant to the Milk Appreciation Rights
Plan;
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“Milk Warrants” means (i) the warrants to purchase the series of units issued on October 10, 2019, by Milk to PWB (as the
warrantholder), pursuant to which PWB was provided the right to exercise such warrants for 10,297 Milk Series C Preferred Units and (ii) the warrant to purchase the series of units issued on October 10, 2019, by Milk to PWB (as the
warrantholder), pursuant to which PWB was provided the right to exercise such warrants for 6,139 Milk Series D Preferred Units;
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“Minimum Available Waldencast Cash Amount” means $50.0 million;
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“Nasdaq” means The Nasdaq Stock Market LLC;
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“Obagi” means Obagi Global Holdings Limited, a Cayman Islands exempted company limited by shares;
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“Obagi Cash Consideration” means an amount equal to the difference of (a) $380.0 million minus the Obagi Cash Consideration
Reduction Amount;
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“Obagi Cash Consideration Reduction Amount” means
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(a)
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if (i) the Obagi Closing Available Cash is greater than $670.0 million and (ii) the amount of Obagi Transaction Expenses
exceeds $26.0 million (any excess, the “Obagi Transaction Expenses Overage”), an amount equal to the Obagi Transaction Expenses Overage;
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(b)
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if the Obagi Closing Available Cash is equal to or less than (i) $670.0 million, and greater than (ii) $630.0 million, an
amount equal to (A) $380.0 million, minus (B) the Obagi Closing Available Cash, plus (C) the Total Obagi Transaction Expenses, minus (D) the sum of the Waldencast Transaction Expenses and the Milk Transaction Expenses, plus (E) $35.0 million, plus
(F) $89.0 million, plus (G) $140.0 million, plus (H) the amount by which the Obagi Transaction Expenses are less than $26.0 million, if any;
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(c)
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if the Obagi Closing Available Cash is equal to or less than $630.0 million and greater than $615.0 million, an amount equal
to (i) $40.0 million, plus (ii) the Obagi Transaction Expenses Overage;
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(d)
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if the Obagi Closing Available Cash is equal to or less than $615.0 million and greater than $565.0 million, an amount equal
to (i) $40.0 million, plus (ii) the Obagi Transaction Expenses Overage, if any, plus (iii) 25% of the amount equal to (A) $340.0 million, minus (B) the Obagi Transaction Expenses Overage, if any, minus (C) the Obagi Closing Available Cash, plus (D)
the Total Obagi Transaction Expenses, plus (E) $89.0 million, plus (F) $140.0 million, minus (G) $15.0
million, minus (H) the sum of the Waldencast Transaction Expenses and the Milk Transaction Expenses, plus (I) $35.0 million, plus (J) the amount by which the Obagi Transaction Expenses are less than $26.0 million, if any; or
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(e)
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if the Obagi Closing Available Cash is equal to or less than $565.0 million, an amount equal to (i) $52.5 million, plus (ii) the Obagi Transaction Expenses Overage, if any, plus (iii) 50% of the amount equal to (A) $327.5 million, minus
(B) the Obagi Transaction Expenses Overage, if any, minus (C) the Obagi Available Cash, plus (D) the Total Obagi Transaction Expenses, plus (E) $89.0 million, plus (F) $140.0 million, minus (G) $52.5 million, minus
(H) the sum of the Waldencast Transaction Expenses and the Milk Transaction Expenses, plus (I) $35.0 million, plus (J) the amount by which the
Obagi Transaction Expenses are less than $26.0 million, if any;
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•
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“Obagi China Distribution” means collectively (a) the pre-Obagi Closing distribution by Obagi Holdco to Obagi, and the
distribution by Obagi to Cedarwalk, of all of the issued and outstanding shares of capital stock of Obagi Hong Kong and certain related assets pursuant to the Distribution Agreements, (b) the provision of certain transition services by
Obagi Cosmeceuticals and certain of its affiliates to Obagi Hong Kong, and the transactions related thereto, pursuant to the Transition Services Agreement, (c) the supply of products to Obagi Hong Kong for distribution and sale in the
China Region, and the transactions related thereto, pursuant to the Supply Agreement, (d) certain governance and stock purchase rights granted to Cedarwalk and Waldencast, as applicable, pursuant to the Investor Rights Agreement and (e)
the exclusive license of intellectual property pertaining to the Obagi brand by Obagi Worldwide to Obagi Hong Kong, and the transactions related thereto, pursuant to the IP License Agreement;
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•
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“Obagi Closing” means the closing of the transactions contemplated by the Obagi Merger Agreement;
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•
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“Obagi Closing Available Cash” means the sum of (w) the cash remaining in the Trust Account (after giving effect to the
Waldencast/Obagi Share Redemption (if any)), plus (x) the PIPE Investment Amount actually received by Waldencast prior to or substantially concurrently with the Obagi Closing, plus (y) the
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“Obagi Closing Date” means the date on which the Obagi Closing actually occurs;
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“Obagi Common Stock” means the shares in the capital of Obagi of par value US $0.50 each per share;
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“Obagi Cosmeceuticals” means Obagi Cosmeceuticals LLC, a Delaware limited liability company;
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•
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“Obagi Exchange Ratio” means the ratio equal to (i) the number of Waldencast plc Class A ordinary shares constituting the
Total Implied Obagi Equity Consideration divided by (ii) the number of Aggregate Fully Diluted Obagi Common Shares;
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•
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“Obagi Existing Credit Agreement” means the Financing Agreement, dated as of March 16, 2021, by and among Obagi, as ultimate
parent, Obagi Holdco, as parent, Obagi Cosmeceuticals, as borrower, the subsidiary guarantors party thereto, the lenders from time to time party thereto and TCW Asset Management Company LLC, as collateral agent and administrative agent,
a copy of which is attached to this Registration Statement as Exhibit 10.29;
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•
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“Obagi Existing Credit Agreement Consent” means the consent to financing agreement, dated as of the date of Obagi Merger
Agreement, by and among, inter alia, the lenders party thereto, TCW Asset Management Company LLC, as collateral agent and administrative agent, Obagi Holdings, as parent, and Obagi Cosmeceuticals, as borrower;
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•
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“Obagi Group” means the shareholders or holders of other equity interests of Obagi and/or any of their respective directors,
members, partners, officers, employees or affiliates (other than Obagi);
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•
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“Obagi Holdco” means Obagi Holdings Company Limited, a Cayman Islands exempted company limited by shares;
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“Obagi Hong Kong” means Obagi Hong Kong Limited;
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“Obagi Lock-Up Agreement” means each of the lock-up agreements to be entered into between Waldencast plc and each of the
Obagi Shareholders entering into such lock-up agreements;
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•
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“Obagi Merger” means the merger of Merger Sub with and into Obagi, with Obagi surviving the merger as a wholly owned
subsidiary of Holdco 2;
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•
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“Obagi Merger Agreement” means that certain Agreement and Plan of Merger, dated as of November 15, 2021, by and among
Waldencast, Merger Sub and Obagi, a copy of which is attached to this proxy statement/prospectus as Annex A;
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•
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“Obagi Merger Effective Time” means the date and time the Obagi Merger becomes effective;
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“Obagi Netherlands” means Obagi Netherlands B.V., a Netherlands private limited company (besloten
vennootschapand);
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•
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“Obagi Option” means an option to purchase Obagi Common Stock granted under the Obagi Stock Plan;
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“Obagi Per Share Merger Consideration” means the product obtained by multiplying (i) the Obagi Exchange Ratio by (ii) $10.00;
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“Obagi Pre-Closing Restructuring” means the Obagi China Distribution and the Clinactiv Distribution;
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“Obagi RSU” means a restricted stock unit issued in respect of Obagi Common Stock granted pursuant to the Obagi Stock Plan;
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“Obagi Shareholders” means the shareholders of Obagi;
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•
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“Obagi Sponsor Support Agreement” means that certain Sponsor Support Agreement, dated November 15, 2021, by and among the
Sponsor, Waldencast, the Investor Directors and Obagi, as amended and modified from time to time;
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•
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“Obagi Stock Consideration” means a number of shares of Waldencast plc ordinary shares equal to (x) the Total Implied Obagi
Equity Consideration, minus (y) a number of shares of Waldencast plc ordinary shares equal to the quotient obtained by dividing (A) the Obagi Cash Consideration by (B) $10.00;
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•
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“Obagi Stock Plan” means the Obagi Global Holdings Limited 2021 Stock Incentive Plan to be assumed by Waldencast at the Obagi
Merger Effective Time;
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“Obagi Transaction Expenses” means the following out-of-pocket fees and expenses paid or payable by Obagi or any of its
subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation or consummation of the transactions contemplated by the Obagi Merger Agreement: (a) all documented fees, costs,
expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers; (b) change-in-control payments,
transaction bonuses, retention payments, severance or similar compensatory payments payable by Obagi or any of its subsidiaries to any current or former employee, independent contractor, officer or director of Obagi or any of its
subsidiaries as a result of the transactions contemplated by the Obagi Merger Agreement (and not tied to any subsequent event or condition, such as a termination of employment), including the employer portion of payroll taxes arising
therefrom; (c) the filing fees payable by Obagi or any of its subsidiaries to the Antitrust Authorities specified in Section 8.1(e) of the Obagi Merger Agreement; and (d) amounts owing or that may become owed, payable or otherwise due,
directly or indirectly, by Obagi or any of its subsidiaries to any affiliate of Obagi or any of its subsidiaries in connection with the negotiation, documentation or consummation of the transactions contemplated hereby, including fees,
costs and expenses related to the termination of any Affiliate Agreement. For the avoidance of doubt, Obagi Transaction Expenses shall not include any fees and expenses of Obagi’s Shareholders, any Up-C Transaction Expenses, any
Financing Expenses or any expenses of Obagi or its subsidiaries to the extent attributable to advice solely for the benefit of Obagi’s direct or indirect shareholders (rather than Obagi or its subsidiaries);
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“Obagi Worldwide” means Obagi Cosmeceuticals and Obagi Holdings;
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•
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“ordinary shares” means the Waldencast Class A ordinary shares and the Waldencast Class B ordinary shares, collectively;
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•
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“Osibao Note” means the promissory noted dated July 30, 2021, of Osibao Cosmetics International Limited payable to the order
of Obagi Cosmeceuticals, LLC in the principal amount of $2.5 million;
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•
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“Person” means any individual, firm, corporation, partnership, exempted limited partnership, limited liability company,
exempted company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind;
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•
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“PFIC” means a passive foreign investment company;
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•
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“PIPE Investment” means the purchase of shares of Waldencast plc pursuant to the Subscription Agreements;
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•
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“PIPE Investment Amount” means the aggregate gross purchase price received by Waldencast substantially concurrently with or
immediately following Closing for the shares in the PIPE Investment;
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•
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“PIPE Investors” means those certain investors participating in the purchase of shares of Waldencast plc pursuant to the
Subscription Agreements;
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•
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“private placement warrants” means the Waldencast plc private placement warrants outstanding as of the date of this proxy
statement/prospectus and the warrants of Waldencast plc issued as a matter of law upon the conversion thereof at the time of the Domestication;
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•
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“Proposed Constitutional Document” means the proposed memorandum and articles of association of Waldencast plc upon the
effective date of the Domestication attached to this proxy statement/prospectus as Annex G;
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•
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“public shareholders” means holders of public shares, whether acquired in Waldencast’s initial public offering or acquired in
the secondary market;
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•
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“public shares” means the Waldencast Class A ordinary shares (including those underlying the units) that were offered and
sold by Waldencast in its initial public offering and registered pursuant to the IPO Registration Statement or the shares of Waldencast plc Class A ordinary shares issued as a matter of law upon the conversion thereof at the time of the
Domestication, as context requires;
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•
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“public warrants” means the redeemable warrants (including those underlying the units) that were offered and sold by
Waldencast in its initial public offering and registered pursuant to the IPO Registration Statement or the redeemable warrants of Waldencast plc issued as a matter of law upon the conversion thereof at the time of the Domestication, as
context requires;
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“PWB” means Pacific Western Bank;
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•
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“Record Date” means , 2022;
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•
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“redemption” means each redemption of public shares for cash pursuant to the Cayman Constitutional Documents and the Proposed
Constitutional Document;
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“Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement to be entered into by and among
Waldencast plc, Sponsor, the Target Holders, the Investor Directors and the parties set forth on Schedule 2 thereto;
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•
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“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended;
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“SEC” means the U.S. Securities and Exchange Commission;
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“Securities Act” means the Securities Act of 1933, as amended;
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“Sponsor” means Waldencast Long-Term Capital LLC, a Cayman Islands limited liability company;
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“Sponsor Forward Purchase Agreement” means the Forward Purchase Agreement initially entered into on February 22, 2021, by and
among Waldencast, the Sponsor and Dynamo Master Fund (a member of the Sponsor). On December 20, 2021, the Sponsor and Burwell Mountain Trust (a member of the Sponsor) entered into an assignment and assumption agreement, pursuant to
which the Sponsor assigned, and Burwell Mountain Trust assumed, all of the Sponsor’s rights and benefits as purchaser under the Sponsor Forward Purchase Agreement, including the right to purchase the Waldencast plc Units subscribed for
by the Sponsor;
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•
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“Sponsor Support Agreements” means the Obagi Sponsor Support Agreement and the Milk Sponsor Support Agreement, together;
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•
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“Stockholder Support Agreement” means that certain Support Agreement, dated November 15, 2021, by and among Waldencast,
Cedarwalk and Obagi, as amended and modified from time to time;
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•
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“Subscription Agreements” means the Initial Subscription Agreements and Subsequent Subscription Agreements pursuant to which
the PIPE Investment will be consummated;
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“Subsequent PIPE Investment” means the purchase of shares of Waldencast plc Class A ordinary shares pursuant to the
Subsequent Subscription Agreements;
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“Subsequent Subscription Agreements” means the subscription agreements, if any, executed after November 15, 2021, and on or
prior to the Closing Date pursuant to which the Subsequent PIPE Investment will be consummated;
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•
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“subsidiary” means, with respect to any Person, any corporation, company, exempted company, limited liability company,
partnership, exempted limited partnership, association or other business entity of which the first Person: (a) owns, directly or indirectly, more than fifty percent (50%) of the equity securities or equity interests; (b) owns, directly
or indirectly, a majority of the total voting power of the equity securities or equity interests entitled to vote in the election of directors, managers or trustees thereof or other Persons performing similar functions; or (c) has a
right to appoint fifty percent (50%) or more of the directors or managers.
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“Supply Agreement” means the Global Supply Services Agreement substantially in the form attached to the Obagi Merger
Agreement as Exhibit D (with such changes as may be agreed in writing by Obagi and Waldencast), to be entered into by and between Obagi Cosmeceuticals and Obagi Hong Kong;
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•
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“Target Holders” means, as of the date of the Registration Rights Agreement, the former shareholders and members,
respectively, of Obagi and Milk as set forth on Schedule 1 thereto;
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“Third-Party Forward Purchase Agreement” means the Forward Purchase Agreement by and between Waldencast and the Beauty
Ventures whereby, among other things, the Beauty Ventures agreed to acquire Waldencast plc Units. The Sponsor is the managing member of the Beauty Ventures. Members of the Sponsor or their affiliates will begin to receive a twenty
percent (20%) performance fee allocation on the return of the forward purchase securities in excess of the hurdle rate, calculated on the total return generated from forward purchase securities (whether by dividend, transfer or increase
in value as measured from date of issuance), when the return of such securities (less the expenses of the Beauty Ventures) underlying the Third-Party Forward Purchase Agreement exceeds a hurdle rate of five percent (5%) accrued annually
until the fifth anniversary of the issuance of such securities. In the event of a transfer and subsequent sale of any forward purchase securities prior to such fifth anniversary, the performance fee for the period between such transfer
and such fifth anniversary will be calculated based on the proceeds generated by such sale;
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“Total Implied Milk Equity Consideration” means a number of Waldencast LP Common Units equal to the quotient obtained by dividing (i) $340.0 million plus the Aggregate Milk Option Exercise Price plus the Aggregate Milk UAR Strike Price
plus the Aggregate Milk Warrant Exercise Price by (ii) $10.00;
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•
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“Total Implied Obagi Cash Consideration Amount” means $380.0 million;
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•
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“Total Implied Obagi Equity Consideration” means a number of Waldencast plc ordinary shares equal to the quotient obtained by
dividing (i) $655.0 million plus the Aggregate Obagi Option Exercise Price by (ii) $10.00;
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•
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“Total Obagi Transaction Expenses” means the Waldencast Transaction Expenses plus the Obagi Transaction Expenses plus the
Milk Transaction Expenses;
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“Transaction Agreements” means the Obagi Merger Agreement together with the Milk Equity Purchase Agreement;
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•
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“Transaction Proposals” means, collectively, the Condition Precedent Proposals and the Adjournment Proposal;
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“Transactions” means the Obagi Merger together with the Milk Transaction;
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“Transfer Agent” means Continental, acting as transfer agent;
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•
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“Transition Services Agreement” means the transition services agreement to be entered by and among Obagi Cosmeceuticals,
certain of its affiliates, and Obagi Hong Kong;
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“trust account” or “Trust Account” means the trust account established at the consummation of Waldencast’s initial public
offering at J.P. Morgan Chase Bank, N.A. and maintained by Continental, acting as trustee;
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“Trust Agreement” means the Investment Management Trust Agreement, dated as of March 15, 2021, between Waldencast and
Continental, as trustee;
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•
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“Up-C Contributions” means Holdco 1’s contribution of its equity interests in (a) Milk to Waldencast LP in exchange for
limited partnership units in Waldencast LP and (b) Holdco 2 in exchange for limited partnership units in Waldencast LP;
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“Up-C Transaction” means any action required to collectively structure the Obagi Merger and the Milk Transaction as what is
commonly referred to as an “Up-C transaction”;
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“Up-C Transaction Expenses” means any documented fees and expenses, both internal or external, including those payable to
consultants, advisors (financial or otherwise), accountants, attorneys and service providers, incurred by the Company in connection with the Up-C Transaction;
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“U.S. Holder” means a beneficial owner of Waldencast Class A ordinary shares or Waldencast plc Class A ordinary shares (as
the case may be) who or that is, for U.S. federal income tax purposes: (a) an individual citizen or resident of the U.S., (b) a corporation (or other entity that is treated as a corporation for U.S. federal income tax purposes) that is
created or organized (or treated as created or organized) in or under the laws of the U.S. or any state thereof or the District of Columbia, (c) an estate whose income is subject to U.S. federal income tax regardless of its source, or
(d) a trust if (i) a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in
place to be treated as a U.S. person;
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“Waldencast” and the “Registrant” mean Waldencast Acquisition Corp., a Cayman Islands exempted company limited by shares,
prior to its migration and domestication as a public limited company incorporated under the laws of Jersey;
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“Waldencast Class A ordinary shares” means Waldencast’s Class A ordinary shares, par value $0.0001 per share;
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“Waldencast Class B ordinary shares” means Waldencast’s Class B ordinary shares, par value $0.0001 per share;
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“Waldencast LP” means Waldencast Partners LP, a Cayman Islands exempted limited partnership;
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•
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“Waldencast LP Common Units” means limited partnership units of Waldencast LP that, in the case of such units issued as part
of, or in respect of, the Milk Equity Consideration, are redeemable at the option of the holder of such units and, if such option is exercised, exchangeable at the option of Waldencast plc for Waldencast plc Class A ordinary shares or
cash in accordance with the terms of the Amended and Restated Waldencast Partners LP Agreement;
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“Waldencast/Milk Share Redemptions” means the election of an eligible (as determined in accordance with the Cayman
Constitutional Documents) holder of Waldencast Class A ordinary shares to redeem all or a portion of the ordinary shares held by such holder at a per-share price, payable in cash, equal to a pro rata share of the aggregate amount on
deposit in the Trust Account (including any interest earned on the funds held in the Trust Account) (as determined in accordance with the Cayman Constitutional Documents) in connection with the Transaction Proposals;
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“Waldencast/Obagi Share Redemptions” means the election of an eligible (as determined in accordance with the Cayman
Constitutional Documents) holder of Waldencast Class A ordinary shares to redeem all or a portion of the ordinary shares held by such holder at a per-share price, payable in cash, equal to a pro rata share of the aggregate amount on
deposit in the Trust Account (including any interest earned on the funds held in the Trust Account) (as determined in accordance with the Cayman Constitutional Documents) in connection with the Transaction Proposals;
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•
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“Waldencast plc” means Waldencast after the Domestication and its name change from Waldencast Acquisition Corp. to Waldencast
plc;
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•
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“Waldencast plc 2022 Incentive Award Plan” means the omnibus equity incentive plan of Waldencast plc to be approved and
adopted by the board of directors of Waldencast, subject to the shareholders of Waldencast approving the BCA Proposal and the Domestication Proposal at the extraordinary general meeting to be effective prior to the Closing Date;
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•
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“Waldencast plc Board” means the board of directors of Waldencast plc;
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•
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“Waldencast plc Class A ordinary shares” means shares of Waldencast plc common stock, par value $0.0001 per share;
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•
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“Waldencast plc Non-Economic ordinary shares” means, after the Milk Closing, Class B ordinary fully paid shares in the
capital of Waldencast plc, par value $0.0001 per share, with such shares entitled to one vote per share, and no additional rights, including no economic rights;
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•
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“Waldencast plc Option” means an option to purchase Waldencast plc Class A ordinary shares;
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“Waldencast plc ordinary shares” means the Waldencast plc Class A ordinary shares and the Waldencast plc Non-Economic
ordinary shares;
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“Waldencast plc RSU” means a restricted stock unit with respect to Waldencast plc Class A ordinary shares;
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“Waldencast plc SAR” means a stock appreciation right with respect to Waldencast plc Class A ordinary shares;
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“Waldencast plc Units” means units of Waldencast plc;
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•
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“Waldencast plc warrant” means a warrant to acquire one Waldencast plc Class A ordinary share;
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•
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“Waldencast Transaction Expenses” means the following out-of-pocket fees and expenses paid or payable by Waldencast or any of
its affiliates (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation or consummation of the Obagi Merger: (a) all fees, costs, expenses, brokerage fees, commissions, finders’ fees and
disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers; (b) the filing fees payable by Waldencast or any of its subsidiaries to the Antitrust
Authorities as specified in Section 8.1(e) of the Obagi Merger Agreement; (c) all fees and expenses incurred in connection with preparing and filing this proxy statement/prospectus and obtaining approval of the Nasdaq under Section 7.3
of the Obagi Merger Agreement; (d) repayment of any Working Capital Loans; (e) any fees and expenses incurred in connection with the PIPE Investment; (f) any deferred underwriting commissions and other fees and expenses relating to
Waldencast’s initial public offering or operations; (g) any other fees and expenses as a result of or in connection with the negotiation, documentation or consummation of the transactions contemplated hereby; (h) the Up-C Transaction
Expenses; and (i) any other fees and expenses incurred in connection with (x) obtaining the consent of TCW Asset Management Company LLC and any other parties required under the terms of the Obagi Existing Credit Agreement to (A) enter
into and consummate the Obagi Merger and the transactions contemplated thereby or (B) permit any indebtedness outstanding under the Obagi Existing Credit Agreement to remain outstanding following the Closing, (y) any amendment to, or
refinancing of, the Obagi Existing Credit Agreement or (z) the incurrence of any new indebtedness, if requested by Waldencast (the “Financing Expenses”). Waldencast Transaction Expenses shall not include any fees and expenses of
Waldencast’s shareholders (other than Working Capital Loans);
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|
“Waldencast units” and “units” mean the units of Waldencast, each unit representing one Waldencast Class A ordinary share and
one-third of one redeemable warrant to acquire one Waldencast Class A ordinary share, that were offered and sold by Waldencast in its initial public offering and registered pursuant to the IPO Registration Statement (less the number of
units that have been separated into the underlying public shares and underlying warrants upon the request of the holder thereof);
|
•
|
“warrants” means the public warrants and the private placement warrants; and
|
•
|
“Working Capital Loans” means any loan made to Waldencast by any of the Sponsor, an affiliate of the Sponsor, or any of
Waldencast’s officers or directors, and evidenced by a promissory note, for the purpose of financing costs incurred in connection with a Business Combination.
|
•
|
Waldencast’s ability to complete the Business Combination or, if Waldencast does not consummate such Business Combination,
any other initial business combination;
|
•
|
satisfaction or waiver (if applicable) of the conditions to the Obagi Merger, including, among other things:
|
•
|
the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Obagi Merger
and related agreements and transactions by the respective shareholders of Waldencast and Obagi; (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part (the “Registration Statement”);
(iii) obtainment, expiration or termination of the waiting period under the HSR Act, as applicable; (iv) the absence of any Governmental Order (as defined in the Obagi Merger Agreement) enjoining or otherwise prohibiting the
consummation of the Obagi Merger in the certain specified governing jurisdictions; provided that the Governmental Authority (as defined in the Obagi Merger Agreement) issuing such Governmental Order has jurisdiction over the parties
thereto with respect to the transactions contemplated thereby, or any law or regulation in such governing jurisdictions that would result in the consummation of the Obagi Merger being illegal or otherwise prohibited; (v) the
satisfaction of all closing conditions in the Milk Equity Purchase Agreement and the completion of the transactions contemplated thereby; (vi) that Waldencast have at least $5,000,001 of net tangible assets (inclusive of the PIPE
Investment Amount and the Forward Purchase Amount, in each case, actually received by Waldencast prior to or substantially concurrently with the Closing (as defined herein)) upon Closing; (vii) the completion of the domestication by way
of continuance of Waldencast as a Jersey public limited company and deregistration in the Cayman Islands in accordance with Part 18C of the Companies (Jersey) Law 1991, as amended (the “Jersey Companies Law”) and the Cayman Islands
Companies Act (As Revised) (the “Cayman Islands Companies Act”) (such domestication, the “Domestication”); (viii) the completion of the Obagi China Distribution and (ix) customary bringdown of the representations, warranties and
covenants of the parties therein;
|
•
|
the Obagi Cash Consideration equals or exceeds $327.5 million, minus the Obagi Transaction Expenses Overage; and
|
•
|
the Minimum Available Waldencast Cash Amount equals or exceeds $50.0 million;
|
•
|
satisfaction or waiver (if applicable) of the conditions to the Milk Equity Purchase Agreement, including, among other
things:
|
•
|
the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Milk
Transaction and related agreements and transactions by the shareholders of Waldencast; (ii) effectiveness of the Registration Statement (iii) obtainment, expiration or termination
|
•
|
the Milk Cash Consideration equals or exceeds $112.5 million; and
|
•
|
the Minimum Available Waldencast Cash Amount equals or exceeds $50.0 million;
|
•
|
the occurrence of any other event, change or other circumstances that could give rise to the termination of the Obagi Merger
Agreement or the Milk Equity Purchase Agreement;
|
•
|
the amount of redemptions by Waldencast’s public shareholders;
|
•
|
our ability to raise financing in the future;
|
•
|
the Sponsor and Waldencast’s directors and executive officers potentially having conflicts of interest with regard to the
Business Combination with Obagi and Milk;
|
•
|
exposure to unknown or contingent liabilities associated with Obagi and/or Milk;
|
•
|
the Sponsor’s election to purchase shares or warrants from public shareholders prior to the consummation of the Business
Combination;
|
•
|
the impact of the COVID-19 pandemic on our, Obagi’s and Milk’s ability to consummate the Business Combination, and on
Waldencast plc’s operations following the Business Combination;
|
•
|
our ability to develop and maintain an effective system of internal control over financial reporting and accurately report
our financial results in a timely manner;
|
•
|
the ability of Obagi and Milk to maintain and enhance their products and brands and to attract customers;
|
•
|
the ability of Obagi and Milk to execute their business models, including market acceptance of their planned products and
sufficient production volumes at acceptable quality levels and prices, protecting their proprietary rights and the success of strategic relationships with third parties; and
|
•
|
other factors detailed in the section entitled “Risk Factors.”
|
Q:
|
Why am I receiving this proxy statement/prospectus?
|
A:
|
Waldencast shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the
Transaction Agreements and approve the Business Combination. The Obagi Merger Agreement provides for, among other things, the merger of Merger Sub with and into Obagi, with Obagi surviving the merger as wholly owned subsidiary of Holdco
2 and an indirect wholly owned subsidiary of Waldencast plc, in accordance with the terms and subject to the conditions of the Obagi Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. The Milk Equity
Purchase Agreement provides, among other things, for the purchase of all of the issued and outstanding membership interests of Milk by the Milk Purchasers, in accordance with the terms and subject to the conditions of the Milk Equity
Purchase Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “BCA Proposal” for more detail.
|
Q:
|
What is the transaction structure?
|
A:
|
The current organizational structure of Waldencast is as follows:
|
Q:
|
What proposals are shareholders of Waldencast being asked to vote upon?
|
A:
|
At the extraordinary general meeting, Waldencast is asking holders of ordinary shares to consider and vote upon:
|
•
|
proposals to approve by ordinary resolution and adopt the Transaction Agreements;
|
•
|
a proposal to approve by special resolution the Domestication;
|
•
|
the following four separate proposals to approve by special resolution and ordinary resolution, as applicable and as more
fully described elsewhere in this proxy statement/prospectus, the following material differences between the Cayman Constitutional Documents and the Proposed Constitutional Document:
|
•
|
to authorize the change in the authorized share capital of Waldencast from (i) 500,000,000 Waldencast Class A ordinary
shares, 50,000,000 Waldencast Class B ordinary shares and 5,000,000 preferred shares, par value $0.0001 per share, to (ii) Waldencast plc Class A ordinary shares, Waldencast plc Non-Economic ordinary shares and shares of
Waldencast plc preferred stock, respectively;
|
•
|
to provide that the Waldencast plc Board be divided into three classes, with each class made up of, as nearly as may be
possible, one-third of the total number of directors constituting the entire Waldencast plc Board, with only one class of directors being elected in each year and each class serving a three-year term;
|
•
|
to provide that certain provisions of the Proposed Constitutional Document will be subject to the Investor Rights Agreement,
including provisions governing the appointment, removal and replacement of directors, with respect to which Cedarwalk will have certain rights pursuant to the Investor Rights Agreement; and
|
•
|
to authorize all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed
Constitutional Document as part of the Domestication, including (1) changing the corporate name from “Waldencast Acquisition Corp.” to “Waldencast plc,” (2) making Waldencast plc’s existence for an unlimited duration and (3) removing
certain provisions related to Waldencast’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Waldencast’s board of directors believes is necessary to adequately
address the needs of Waldencast plc after the Business Combination;
|
•
|
a proposal to approve by ordinary resolution of the holders of Waldencast Class B ordinary shares, such holders being the
Sponsor and the Investor Directors, the election of nine directors to serve staggered terms, who, upon consummation of the Business Combination, will be the directors of Waldencast plc;
|
•
|
proposals to approve by ordinary resolution, for purposes of complying with applicable listing rules of Nasdaq, the issuance
of (a) Waldencast plc Class A ordinary shares to the PIPE Investors, pursuant to the PIPE Investment, and to the Obagi Shareholders, pursuant to the Obagi Merger Agreement and (b) Waldencast plc Units to the Forward Purchasers, pursuant
to the Forward Purchase Transaction;
|
•
|
a proposal to approve by ordinary resolution the issuance of Waldencast plc Non-Economic ordinary shares and the reservation
for issue of Waldencast plc Class A ordinary shares in exchange for Waldencast LP Common Units, in each case, to the Milk Members;
|
•
|
a proposal to approve by ordinary resolution the Waldencast plc 2022 Incentive Award Plan; and
|
•
|
a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit
further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.
|
Q:
|
Are the proposals conditioned on one another?
|
A:
|
Yes. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the
extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal.
|
Q:
|
Why is Waldencast proposing the Business Combination?
|
A:
|
Waldencast was organized to effect a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization
or similar business combination, with one or more businesses or entities.
|
Q:
|
What will Obagi Shareholders and Milk Members receive in return for Waldencast’s acquisition of all of the
issued and outstanding equity interests of Obagi and Milk?
|
A:
|
It is anticipated that, at the Obagi Merger Effective Time (after giving effect to the Obagi Pre-Closing Restructuring, as
defined herein and as more fully described in the Obagi Merger Agreement and elsewhere in this proxy statement/prospectus), among other things, the outstanding shares of Obagi Common Stock as of immediately prior to the Obagi Merger
Effective Time (other than in respect of excluded shares as described more fully in the Obagi Merger Agreement) will be cancelled and converted into the right to receive, (a) an amount in cash equal to the quotient obtained by dividing
(i) the Obagi Cash Consideration by (ii) the number of Aggregate Fully Diluted Obagi Common Shares; and (b) a number of Waldencast plc Class A ordinary shares
|
(In millions, except share data)
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum
Redemptions(1)
|
| |
Assuming
90% Redemptions
|
Cash to Obagi Shareholders
|
| |
$380.0
|
| |
$380.0
|
| |
$327.5
|
| |
$282.2
|
Waldencast plc Class A Shares to Obagi Shareholders
|
| |
22,851,564
|
| |
22,851,564
|
| |
28,101,564
|
| |
32,634,659
|
(1)
|
Assumes that 21,984,625 Class A ordinary shares are redeemed in connection with the Business Combination, which is the maximum
number of shares that may be redeemed without causing the Minimum Cash Condition to the closing of the Business Combination to be unsatisfied.
|
(In millions, except share data)
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum
Redemptions
|
| |
Assuming
90% Redemptions
|
Cash to Milk Members
|
| |
$140.0
|
| |
$140.0
|
| |
$120.3
|
| |
$82.8
|
Waldencast LP Common Units to Milk Members
|
| |
18,343,883
|
| |
18,343,883
|
| |
20,314,508
|
| |
24,068,228
|
Waldencast plc Non-Economic ordinary shares
|
| |
18,343,883
|
| |
18,343,883
|
| |
20,314,508
|
| |
24,068,228
|
Q:
|
What equity stake will current Waldencast shareholders, Obagi Shareholders and Milk Members hold in
Waldencast plc immediately after the consummation of the Business Combination?
|
A:
|
As of the date of this proxy statement/prospectus, there are (i) 43,125,000 ordinary shares issued and outstanding, which
includes the 8,545,000 founder shares held by the Sponsor, 80,000 founder shares held by the Investor Directors and the 34,500,000 public shares, and (ii) 17,433,333 warrants issued and outstanding, which includes the 5,933,333 private
placement warrants held by the Sponsor and the 11,500,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Waldencast Class A ordinary share and,
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions(1)
|
| |
Assuming
90% Redemptions
|
||||||||||||
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
Waldencast Public Shareholders
|
| |
34,500,000
|
| |
27.0%
|
| |
24,150,000
|
| |
20.5%
|
| |
12,515,375
|
| |
11.0%
|
| |
3,450,000
|
| |
3.0%
|
Burwell National Trust and Dynamo Master Fund(2)
|
| |
16,000,000
|
| |
12.5%
|
| |
16,000,000
|
| |
13.6%
|
| |
16,000,000
|
| |
14.1%
|
| |
16,000,000
|
| |
14.2%
|
Beauty FPA Investor(3)
|
| |
17,300,000
|
| |
13.5%
|
| |
17,300,000
|
| |
14.7%
|
| |
17,300,000
|
| |
15.3%
|
| |
17,300,000
|
| |
15.4%
|
Founder Shares(4)
|
| |
8,625,000
|
| |
6.7%
|
| |
8,625,000
|
| |
7.3%
|
| |
8,625,000
|
| |
7.6%
|
| |
8,625,000
|
| |
7.7%
|
PIPE Investors(5)
|
| |
10,500,000
|
| |
8.2%
|
| |
10,500,000
|
| |
8.9%
|
| |
10,500,000
|
| |
9.3%
|
| |
10,500,000
|
| |
9.3%
|
Cumulative Waldencast shareholders
|
| |
86,925,000
|
| |
67.8%
|
| |
76,575,000
|
| |
65.0%
|
| |
64,940,375
|
| |
57.3%
|
| |
55,875,000
|
| |
49.6%
|
Existing Obagi Owners interest in Waldencast(6)
|
| |
22,851,564
|
| |
17.8%
|
| |
22,851,564
|
| |
19.4%
|
| |
28,101,564
|
| |
24.8%
|
| |
32,634,659
|
| |
29.0%
|
Existing Milk Owners interest in Waldencast(7)
|
| |
18,343,883
|
| |
14.3%
|
| |
18,343,883
|
| |
15.6%
|
| |
20,314,508
|
| |
17.9%
|
| |
24,068,228
|
| |
21.4%
|
Shares from Milk Warrants(8)
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
128,144,607
|
| |
100.0%
|
| |
117,794,607
|
| |
100.0%
|
| |
113,380,607
|
| |
100.0%
|
| |
112,602,047
|
| |
100.0%
|
1)
|
Assumes that 21,984,625 Class A ordinary shares are redeemed in connection with the Business Combination which is the maximum
number of shares that may be redeemed without causing the Minimum Cash Condition to the closing of the Business Combination to be unsatisfied. The net cash consideration payable to the existing Obagi owners would decrease from $380.0
million to $327.5 million and to the existing Milk owners from $140.0 million to $120.3 million, and the economic ownership and voting power via shares of the existing Obagi and Milk owners would increase proportionally following the
Business Combination.
|
2)
|
16,000,000 Class A ordinary shares acquired pursuant to the Sponsor Forward Purchase Agreement for an investment of $160.0
million by Burwell Mountain Trust and Dynamo Master Fund (members of our Sponsor) in exchange for a portion of the Forward Purchase Amount.
|
3)
|
17,300,000 Class A ordinary shares acquired pursuant to the Third-Party Forward Purchase Agreement for an investment of $173.0
million by the Beauty Ventures in exchange for a portion of the Forward Purchase Amount.
|
4)
|
8,625,000 Class A ordinary shares, including 80,000 shares held by the Investor Directors issued upon conversion of the
existing Waldencast Class B ordinary shares. Waldencast Class A ordinary shares are issued upon the automatic conversion of the Waldencast Class B ordinary shares concurrently with the consummation of the Business Combination.
|
5)
|
Represents the private placement pursuant to which Waldencast entered into Subscription Agreements with certain PIPE Investors
whereby such investors have agreed to subscribe for Class A ordinary shares at a purchase price of $10.00 per share. The PIPE Investors participating in the PIPE Investment, have agreed to purchase an aggregate of 10,500,000 Class A
ordinary shares.
|
6)
|
Represents Obagi owners’ interest in 22,851,564 shares of Waldencast plc Class A ordinary shares, which remain unchanged in
the 30% scenario, increase in the Maximum Redemption scenario to 28,101,564 and to 32,634,659 in the 90% scenario due to the reduction in net cash consideration payable.
|
7)
|
Represents the Milk Members’ noncontrolling economic interest in Waldencast LP Common Units, which are redeemable at the
option of the holder of such units, and if such option is exercised, are exchangeable, at the option of Waldencast plc, for Waldencast plc Class A ordinary shares on a 1-for-1 basis or cash (together with the cancellation of an equal
number of shares of voting, Waldencast plc Non-Economic ordinary shares), and if exchanged for such Waldencast plc Class A ordinary shares, will increase in the Maximum Redemption scenario due to the reduction in net cash consideration
payable.
|
8)
|
Represents Class A ordinary shares that were converted from Milk Warrants at the Closing of the Business Combination.
|
9)
|
Note, percentages totals may not foot due to rounding.
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions
|
| |
Assuming
90% Redemptions
|
||||||||||||
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
Waldencast Public Shareholders(1)
|
| |
51,933,333
|
| |
30.8%
|
| |
41,583,333
|
| |
26.4%
|
| |
29,948,708
|
| |
19.5%
|
| |
20,883,333
|
| |
13.7%
|
Burwell Mountain Trust and Dynamo Master Fund(2)
|
| |
22,333,333
|
| |
13.3%
|
| |
22,333,333
|
| |
14.1%
|
| |
22,333,333
|
| |
14.5%
|
| |
22,333,333
|
| |
14.6%
|
Beauty FPA Investor(3)
|
| |
23,066,666
|
| |
13.7%
|
| |
23,066,666
|
| |
14.6%
|
| |
23,066,666
|
| |
15.0%
|
| |
23,066,666
|
| |
15.1%
|
Founder Shares
|
| |
8,625,000
|
| |
5.1%
|
| |
8,625,000
|
| |
5.5%
|
| |
8,625,000
|
| |
5.6%
|
| |
8,625,000
|
| |
5.6%
|
PIPE Investors
|
| |
10,500,000
|
| |
6.2%
|
| |
10,500,000
|
| |
6.6%
|
| |
10,500,000
|
| |
6.8%
|
| |
10,500,000
|
| |
6.9%
|
Cumulative Waldencast shareholders
|
| |
116,458,332
|
| |
69.2%
|
| |
106,108,332
|
| |
67.2%
|
| |
94,473,707
|
| |
61.5%
|
| |
85,408,332
|
| |
55.9%
|
Existing Obagi Owners interest in Waldencast(4)
|
| |
30,788,000
|
| |
18.3%
|
| |
30,788,000
|
| |
19.5%
|
| |
36,038,000
|
| |
23.5%
|
| |
40,571,095
|
| |
26.5%
|
Existing Milk Owners interest in Waldencast(5)
|
| |
21,093,664
|
| |
12.5%
|
| |
21,093,664
|
| |
13.3%
|
| |
23,064,289
|
| |
15.0%
|
| |
26,818,009
|
| |
17.5%
|
Shares from Milk Warrants
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
168,364,156
|
| |
100.0%
|
| |
158,014,156
|
| |
100.0%
|
| |
153,600,156
|
| |
100.0%
|
| |
152,821,596
|
| |
100.0%
|
1)
|
Includes the impact of the exercise of 11,500,000 of public warrants and 5,933,333 private placement warrants.
|
2)
|
Includes the exercise of 6,333,333 of warrants (inclusive of the sponsor working capital loan warrants).
|
3)
|
Includes the exercise of 5,766,666 of warrants.
|
4)
|
Includes the exercise of rollover equity awards, consisting of 6,085,600 stock options, and 1,850,836 restricted stock units.
|
5)
|
Includes the exercise of rollover equity awards, consisting of 2,512,219 unit appreciation rights and 237,562 options.
|
6)
|
Note, percentages totals may not foot due to rounding.
|
|
| |
Per Share Value
|
Trust value
|
| |
$345,031,000
|
Total Class A Common Shares
|
| |
$34,500,000
|
Trust value per Class A Common Share
|
| |
$10.00
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions
|
| |
Assuming
90% Redemptions
|
Redemptions ($)
|
| |
$—
|
| |
$103,509
|
| |
$219,866
|
| |
$310,528
|
Redemptions (Shares)
|
| |
—
|
| |
$10,350,000
|
| |
21,984,625
|
| |
31,050,000
|
Deferred underwriting commission
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
Cash left in trust account post redemption minus deferring
underwriting commission
|
| |
$332,956
|
| |
$229,447
|
| |
$113,090
|
| |
$22,428
|
Total Class A common stock and Class B ordinary shares
issued at IPO, post redemption and before Closing of the Transaction
|
| |
43,125,000
|
| |
32,775,000
|
| |
21,140,375
|
| |
12,075,000
|
Trust value per share
|
| |
$7.72
|
| |
$7.00
|
| |
$5.35
|
| |
$1.86
|
|
| |
No
Redemptions
|
| |
30%
Redemptions
|
| |
Maximum
Redemptions
|
| |
90%
Redemptions
|
Redemptions ($)
|
| |
$—
|
| |
$103,509
|
| |
$219,866
|
| |
$310,528
|
Redemptions (Shares)
|
| |
—
|
| |
10,350,000
|
| |
21,984,625
|
| |
31,050,000
|
Total Deferred Underwriting Commission ($)
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
Effective Deferred Underwriting Commission (as a
percentage of cash left in Trust Account post redemptions)
|
| |
3%
|
| |
5%
|
| |
10%
|
| |
35%
|
Total Underwriting Commission ($)
|
| |
$18,975
|
| |
$18,975
|
| |
$18,975
|
| |
$18,975
|
Effective Total Underwriting
Commission (as a percentage of cash left in Trust Account post redemptions)
|
| |
5%
|
| |
8%
|
| |
15%
|
| |
55%
|
Q:
|
What is the maximum number of shares that may be redeemed and still allow Waldencast to satisfy the Obagi
Minimum Cash Consideration Condition and the Milk Minimum Cash Consideration Condition?
|
A:
|
The maximum number of public shares that may be redeemed and still allow Waldencast to satisfy each of the Obagi Minimum Cash
Consideration Condition and the Milk Minimum Cash Consideration Condition is 21,984,625 Class A ordinary shares for aggregate redemption payments of $219.9 million based on the estimated per share redemption value of $10.00. The Obagi
Minimum Cash Consideration Condition and the Milk Cash Consideration Condition are waivable by Obagi and Milk pursuant to the respective Transaction Agreements, and if so waived, the maximum amount of redemptions could exceed the
21,984,625 public shares redemption scenario as presented in this proxy statement/prospectus.
|
Q:
|
How has the announcement of the Business Combination affected the trading price of the Waldencast Class A
ordinary shares?
|
A:
|
On November 12, 2021, the trading date before the public announcement of the Business Combination, Waldencast’s public units,
Class A ordinary shares and warrants closed at $10.47, $10.00 and $1.45, respectively. On February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, Waldencast’s public units, Waldencast
Class A ordinary shares and warrants closed at $10.26, $10.00 and $0.80, respectively.
|
Q:
|
Will Waldencast obtain new financing in connection with the Business Combination?
|
A:
|
Yes. The respective PIPE Investors have agreed to purchase, in the aggregate, 10,500,000 Waldencast plc Class A ordinary
shares at $10.00 per share for an aggregate commitment amount of $105.0 million. The PIPE Investment is contingent upon, among other things, the closing of the Business Combination. In the event the Minimum Cash Condition is not
satisfied, the Business Combination would not be consummated unless Obagi or Milk, as applicable, waives the Minimum Cash Conditions. See the section entitled “BCA Proposal — Related Agreements —
Related Agreements to the Obagi Merger and the Milk Transaction — PIPE Subscription Agreements.”
|
Q:
|
Why is Waldencast proposing the Domestication?
|
A:
|
Our board of directors believes that there are significant advantages to us that will arise as a result of a change of
Waldencast’s domicile to Jersey. Furthermore, Waldencast’s board of directors believes that any direct benefit that the Jersey Companies Law provides to a company also indirectly benefits its shareholders, who are the owners of the
company. Waldencast’s board of directors believes that there are several reasons why a continuation into Jersey is in the best interests of the Company and its shareholders, including, that Jersey Companies Law:
|
•
|
is founded on the same underlying principles as English company law and, therefore, Jersey companies are very familiar to
investors and counterparties who regularly deal with English companies;
|
•
|
applies a flexible capital maintenance regime focused on cashflow-based solvency requirements for a variety of corporate
actions (see below);
|
•
|
preserves creditor protection in relation to distributions (dividends, etc.) the making of which is not dependent on any sort
of distributable profits/distributable reserves concept, but is instead based on a requirement for the directors who authorize the distribution to make a 12-month, forward-looking, cashflow-based solvency statement in a statutorily
prescribed form;
|
•
|
does not impose any restrictions on financial assistance in connection with the acquisition of shares in the relevant company
or on the ability of a Jersey company to pay commissions or give discounts in connection with the issue of its shares;
|
•
|
permits what would be referred to in many civil law jurisdictions as ‘capital contributions,’ where contributions from
shareholders can be credited to capital (share premium) without issuing shares; and
|
•
|
allows Jersey companies to domesticate or migrate (that is, change jurisdiction of incorporation/corporate seat without
breaking corporate existence) to another jurisdiction that permits the same and also allows for the tax residence of the company (via changes made to the location of board meetings and the place of central management of control) to
change to reflect the needs of the business of the company.
|
Q:
|
What amendments will be made to the current constitutional documents of Waldencast?
|
A:
|
The Transaction Agreements contemplate, among other things, the Domestication. Accordingly, in addition to voting on the
Business Combination, Waldencast’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace Waldencast’s Cayman Constitutional Documents, in each case, under the Cayman
Constitutional Documents and the Cayman Islands Companies Act, with the Proposed Constitutional Document, in each case, under the Jersey Companies Law, which differ materially from the Cayman Constitutional Documents in the following
respects:
|
|
| |
Cayman Constitutional Documents
|
| |
Proposed Constitutional Document
|
Existence for Unlimited Duration (Organizational Documents
Proposal D)
|
| |
The Cayman Constitutional Documents provide that if Waldencast does not
consummate a business combination (as defined in the Cayman Constitutional Documents) by March 18, 2023, Waldencast will cease all operations except for the purposes of winding up and will redeem the public shares and liquidate
Waldencast trust account.
|
| |
The Proposed Constitutional Document provides that Waldencast plc is to have
existence of unlimited duration.
|
|
| |
|
| |
|
|
| |
See Article 49 of the Existing Articles.
|
| |
See paragraph 3 of the Proposed Memorandum.
|
|
| |
|
| |
|
Provisions Related to Status as Blank Check Company
(Organizational Documents Proposal D)
|
| |
The Cayman Constitutional Documents include various provisions related to
Waldencast’s status as a blank check company prior to the consummation of a business combination.
|
| |
The Proposed Constitutional Document does not include such provisions related
to Waldencast’s status as a blank check company, which no longer will apply upon consummation of the Business Combination, as Waldencast plc will cease to be a blank check company at such time.
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|
| |
|
| |
|
|
| |
See Article 49 of the Existing Articles.
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| |
|
Q:
|
How will the Domestication affect my ordinary shares, warrants and units?
|
A:
|
As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding Waldencast
Class A ordinary shares will convert automatically, on a one-for-one basis, into a Waldencast plc Class A ordinary share, (2) each of the then issued and outstanding Waldencast Class B ordinary shares will convert automatically, on a
one-for-one basis, into a Waldencast plc Class A ordinary share, (3) each then issued and outstanding Waldencast warrant will convert automatically into a Waldencast plc warrant, pursuant to the Warrant Agreement and (4) each of the
then issued and outstanding units of Waldencast that have not been previously separated into the underlying Waldencast Class A ordinary shares and underlying Waldencast warrants upon the request of the holder thereof will be cancelled
and will entitle the holder thereof to one Waldencast plc Class A ordinary share and one-third of one Waldencast plc warrant. See the section entitled “Domestication Proposal” for additional
information.
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Q:
|
What are the U.S. federal income tax consequences of the Domestication?
|
A:
|
As discussed more fully in “U.S. Federal Income Tax Considerations—Effects of the Business
Combination to U.S. Holders,” Skadden, Arps, Slate, Meagher & Flom LLP has delivered an opinion that the Domestication will qualify as a “reorganization” within the meaning of Section 368(a)(l)(F) of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”). Assuming that the Domestication so qualifies, U.S. Holders of Waldencast Class A ordinary shares will generally not recognize gain or loss for U.S. federal income tax purposes on the
Domestication. Please see the section entitled “U.S. Federal Income Tax Considerations—Effects of the Business Combination to U.S. Holders” for additional information.
|
Q:
|
Did the board of directors of Waldencast obtain a third-party valuation or fairness opinion in determining
whether or not to proceed with the Business Combination?
|
Q:
|
Do I have redemption rights?
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A:
|
If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for
cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they
vote in respect of the BCA Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”
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Q:
|
How do I exercise my redemption rights?
|
A:
|
If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:
|
•
|
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying
public shares and public warrants prior to exercising your redemption rights with respect to the public shares;
|
•
|
submit a written request to Continental, Waldencast’s transfer agent, that Waldencast plc redeem all or a portion of your
public shares for cash; and
|
•
|
deliver your public shares to Continental, Waldencast’s transfer agent, physically or electronically through The Depository
Trust Company (“DTC”).
|
Q:
|
If I am a holder of units, can I exercise redemption rights with respect to my units?
|
A:
|
No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public
warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the
underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, Waldencast’s transfer agent, directly and instruct them to do so. You are requested to cause your public
shares to be separated and delivered to Continental, Waldencast’s transfer agent, by , Eastern Time, on , 2022 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect
to your public shares.
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Q:
|
What are the U.S. federal income tax consequences of exercising my redemption rights?
|
A:
|
The receipt of cash by a U.S. holder of Waldencast Class A ordinary shares in redemption of such shares will be a taxable
transaction for U.S. federal income tax purposes. Please see the section entitled “U.S. Federal Income Tax Considerations—Effects to U.S. Holders of Exercising Redemption Rights” for additional
information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.
|
Q:
|
What happens to the funds deposited in the trust account after consummation of the Business Combination?
|
A:
|
Following the closing of Waldencast’s initial public offering, an amount equal to $345.0 million ($10.00 per unit) of the net
proceeds from Waldencast’s initial public offering and the sale of the private placement warrants (inclusive of the partial exercise by the underwriters of the over-allotment option) was placed in the trust account. As of September 30,
2021, funds in the trust account totaled $345.0 million and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds
|
Q:
|
What happens if a substantial number of the public shareholders vote in favor of the Obagi Merger Proposal
and the Milk Transaction Proposal and exercise their redemption rights?
|
A:
|
Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption
rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.
|
Q:
|
What conditions must be satisfied to complete the Business Combination?
|
A:
|
The Obagi Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among
others, (i) approval of the Obagi Merger Agreement and related agreements and transactions by the respective shareholders of Waldencast and Obagi, (ii) effectiveness of the Registration Statement, (iii) expiration or termination of the
waiting period under the HSR Act, (iv) receipt of approval for listing on Nasdaq of the Waldencast plc Class A ordinary shares to be issued in connection with the Obagi Merger, (v) that Waldencast have at least $5,000,001 of net
tangible assets upon Closing (inclusive of the PIPE Investment Amount and the Forward Purchase Amount actually received by Waldencast prior to or substantially concurrently with the Closing), (vi) the absence of any injunctions or
adoption of any laws prohibiting the Obagi Merger, (vii) the Milk Equity Purchase Agreement closing conditions being satisfied, (viii) the completion of the Obagi China Distribution, (ix) the completion of the Domestication, (x) that a
material adverse effect on Obagi will not have occurred and (xi) customary bringdown of the representations, warranties and covenants of the parties therein.
|
Q:
|
When do you expect the Business Combination to be completed?
|
A:
|
It is currently expected that the Business Combination will be consummated in the first half of 2022. This date depends,
among other things, on the approval of the proposals to be put to Waldencast shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by Waldencast’s shareholders
at the extraordinary general meeting and Waldencast elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient
votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Business Combination, see the sections entitled “BCA
Proposal — Obagi Merger Proposal — The Obagi Merger Agreement” and “BCA Proposal — Milk Transaction Proposal — The Milk Equity Purchase Agreement.”
|
Q:
|
What happens if the Business Combination is not consummated?
|
A:
|
Waldencast will not complete the Domestication to Jersey unless all other conditions to the consummation of the Business
Combination have been satisfied or waived by the parties in accordance with the terms of the Transaction Agreements. If Waldencast is not able to complete the Business Combination with Obagi and Milk by March 18, 2023, and is not able
to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, Waldencast will: (1) cease all operations except for the purpose of winding up; (2) as
promptly as reasonably possible, but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(less up to $0.1 million of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public
shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law;
|
Q:
|
Do I have appraisal rights in connection with the proposed Business Combination and the proposed
Domestication?
|
A:
|
Neither Waldencast’s shareholders nor Waldencast’s warrant holders have appraisal rights in connection with the Business
Combination or the Domestication under the Cayman Islands Companies Act or under the Jersey Companies Law. Under the Jersey Companies Law, dissenting shareholders of a Jersey company have no appraisal rights that would provide the right
to receive payment in cash for the judicially determined fair value of the shares. However, under Jersey law, dissenting shareholders may, following the Domestication, object to the Royal Court of Jersey on the grounds they are unfairly
prejudiced by the proposed Business Combination and the proposed Domestication.
|
Q:
|
What do I need to do now?
|
A:
|
Waldencast urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein,
carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder or warrant holder. Waldencast’s shareholders should then vote as soon as possible in accordance with the instructions provided
in this proxy statement/prospectus and on the enclosed proxy card.
|
Q:
|
How do I vote?
|
A:
|
If you are a holder of record of ordinary shares on the Record Date for the extraordinary general meeting, you may vote in
person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed
postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you
beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a
valid proxy from your broker, bank or nominee.
|
Q:
|
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
|
A:
|
No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial
holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to
obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national
and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided
to you by your broker, bank or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. Your
bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should
instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote,
your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary
general meeting, and otherwise will have no effect on a particular proposal.
|
Q:
|
When and where will the extraordinary general meeting be held?
|
Q:
|
Who is entitled to vote at the extraordinary general meeting?
|
A:
|
The Waldencast board of directors has fixed , 2022 as the Record Date for the extraordinary general meeting. If you were a
shareholder of Waldencast at the close of business on the Record Date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is
present in person or is represented by proxy at the extraordinary general meeting.
|
Q:
|
How many votes do I have?
|
A:
|
Waldencast shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record
as of the Record Date. As of the close of business on the Record Date for the extraordinary general meeting, there were ordinary shares issued and outstanding, of which were issued and outstanding public shares.
|
Q:
|
What constitutes a quorum?
|
A:
|
A quorum of Waldencast shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary
general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the Record Date for the extraordinary general
meeting, 21,562,501 ordinary shares would be required to achieve a quorum.
|
Q:
|
What vote is required to approve each proposal at the extraordinary general meeting?
|
A:
|
The following votes are required for each proposal at the extraordinary general meeting:
|
•
|
Obagi Merger Proposal: The approval of the Obagi Merger Proposal
requires an ordinary resolution under the Cayman Constitutional Documents, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary
general meeting.
|
•
|
Milk Transaction Proposal: The approval of the Milk Transaction
Proposal requires an ordinary resolution under the Cayman Constitutional Documents, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the
extraordinary general meeting.
|
•
|
Domestication Proposal: The approval of the Domestication
Proposal requires a special resolution under the Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy
and entitled to vote thereon and who vote at the extraordinary general meeting.
|
•
|
Organizational Documents Proposals: The separate approval of each
of the Organizational Documents Proposals A and D requires a special resolution under the Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least two-thirds of the ordinary
shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting and the separate approval of each of the Organizational Documents Proposals B and C requires an ordinary resolution
under the Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who
vote at the extraordinary general meeting.
|
•
|
Director Election Proposal: The approval of the Director Election
Proposal requires an ordinary resolution of the holders of Waldencast Class B ordinary shares under the Cayman Constitutional Documents, such holders being the Sponsor and the Investor Directors, being the affirmative vote of a majority
of the Waldencast Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.
|
•
|
Stock Issuance Proposal: The approval of the Stock Issuance
Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general
meeting.
|
•
|
Milk Issuance Proposal: The approval of the Milk Issuance
Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general
meeting.
|
•
|
Incentive Award Plan Proposal: The approval of the Incentive
Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the
extraordinary general meeting.
|
•
|
Adjournment Proposal: The approval of the Adjournment Proposal
requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.
|
Q:
|
What are the recommendations of Waldencast’s board of directors?
|
A:
|
Waldencast’s board of directors believes that the Obagi Merger Proposal, the Milk Transaction Proposal and the other
proposals to be presented at the extraordinary general meeting are in the best interest of Waldencast’s shareholders and unanimously recommends that its shareholders and, in the case of the Director Election Proposal, its shareholders
holding Waldencast Class B ordinary shares, vote “FOR” the Obagi Merger Proposal, “FOR” the Milk Transaction Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director
Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Milk Issuance Proposal, “FOR” the Incentive Award Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.
|
Q:
|
How does the Sponsor intend to vote their shares?
|
A:
|
The Sponsor and the Investor Directors have agreed to vote in favor of the Business Combination, regardless of how our public
shareholders vote. Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business
combination, the Sponsor and the Investor Directors have agreed to, among other things, vote in favor of the Transaction Agreements and the transactions contemplated thereby, in each case, subject to the terms and conditions
contemplated by the Obagi Sponsor Support Agreement and the Milk Sponsor Support Agreement, and waive their redemption rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by
them as contemplated by the Letter Agreement. The ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus,
the Sponsor and Investor Directors own 20% of the issued and outstanding ordinary shares.
|
Q:
|
What happens if I sell my Waldencast ordinary shares before the extraordinary general meeting?
|
A:
|
The Record Date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and
earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable Record Date, but before the extraordinary general meeting, unless you grant a proxy to the
transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares (if time permits).
|
Q:
|
May I change my vote after I have mailed my signed proxy card?
|
A:
|
Yes. Shareholders may send a later-dated, signed proxy card to Waldencast’s Secretary at Waldencast’s address set forth below
so that it is received by Waldencast’s Secretary prior to the vote at the extraordinary general meeting (which is scheduled to take place on , 2022) or attend the extraordinary general meeting in person and vote. Shareholders also
may revoke their proxy by sending a notice of revocation to Waldencast’s Secretary, which must be received by Waldencast’s Secretary prior to the vote at the extraordinary general meeting. However, if your shares are held in “street
name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.
|
Q:
|
What happens if I fail to take any action with respect to the extraordinary general meeting?
|
A:
|
If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by
shareholders and the Business Combination is consummated, you will become a shareholder or warrant holder of Waldencast plc. If you fail to take any action with respect to the extraordinary general meeting and the Business Combination
is not approved, you will remain a shareholder or warrant holder of Waldencast. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in
connection with the Business Combination (if time permits).
|
Q:
|
What should I do with my share certificates, warrant certificates or unit certificates?
|
A:
|
Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share
certificates to Continental, Waldencast’s transfer agent, prior to the extraordinary general meeting.
|
Q:
|
What should I do if I receive more than one set of voting materials?
|
A:
|
Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus
and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If
you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to
cast a vote with respect to all of your ordinary shares.
|
Q:
|
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?
|
A:
|
Waldencast will pay the cost of soliciting proxies for the extraordinary general meeting. Waldencast has engaged Morrow to
assist in the solicitation of proxies for the extraordinary general meeting. Waldencast has agreed to pay Morrow a fee of up to $ , plus disbursements (to be paid with non-trust account funds). Waldencast will also reimburse banks,
brokers and other custodians, nominees and fiduciaries representing beneficial owners of Waldencast Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Waldencast Class A ordinary shares
and in obtaining voting instructions from those owners. Waldencast’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the internet or in person. They will not be paid any additional amounts for
soliciting proxies.
|
Q:
|
Where can I find the voting results of the extraordinary general meeting?
|
A:
|
The preliminary voting results will be expected to be announced at the extraordinary general meeting. Waldencast will publish
final voting results of the extraordinary general meeting in a Current Report on Form 6-K within four business days after the extraordinary general meeting.
|
Q:
|
Who can help answer my questions?
|
A:
|
If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any
document incorporated by reference in this proxy statement/prospectus or the enclosed proxy card, you should contact:
|
(A)
|
Organizational Documents Proposal A — to authorize the change in the
authorized share capital of Waldencast from 500,000,000 Class A ordinary shares, par value $0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 5,000,000 preferred shares, par value $0.0001 per
share (the “Waldencast preferred shares”), to Class A ordinary shares, par value $0.0001 per share, of Waldencast plc , Class B ordinary shares, par value $0.0001 per share, of Waldencast plc and preference shares of a
par value of $0.0001 per share of Waldencast plc (“Organizational Documents Proposal A”);
|
(B)
|
Organizational Documents Proposal B — to provide that the Waldencast
plc Board be divided into three classes, with each class made up of, as nearly as may be possible, one-third of the total number of directors constituting the entire Waldencast plc Board, with only one class of directors being
elected in each year and each class serving a three-year term (“Organizational Documents Proposal B”);
|
(C)
|
Organizational Documents Proposal C — to provide that certain
provisions of the Proposed Constitutional Document will be subject to the Investor Rights Agreement, including provisions governing the appointment, removal and replacement of directors, with respect to which Cedarwalk will have
certain rights pursuant to the Investor Rights Agreement (“Organizational Documents Proposal C”);
|
(D)
|
Organizational Documents Proposal D — to authorize all other changes
in connection with the replacement of Cayman Constitutional Documents with the Proposed Constitutional Document in connection with the consummation of the Business Combination (copies of which are attached to this proxy as Annex G),
including (1) changing the corporate name from “Waldencast Acquisition Corp.” to “Waldencast plc,” (2) making Waldencast plc’s existence for an unlimited duration and (3) removing certain provisions related to Waldencast plc’s
status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Waldencast’s board of directors believes is necessary to adequately address the needs of Waldencast plc
after the Business Combination (“Organizational Documents Proposal D”);
|
•
|
Large and Resilient Addressable Market. The global skincare and color cosmetics
markets were valued at approximately $155 billion and $66 billion, respectively, in 2020, accounting for approximately 30% and 13% of the global beauty, personal care and wellness market, according to industry sources. Going forward,
these two markets are expected to grow at a compound annual growth rate (“CAGR”) of 7.9% and 7.0%, respectively, from 2021 to 2023. We believe the key drivers of growth include the shift in desire for quality over price, increased
appetite for clean, natural, and higher-performance products, emerging market expansion, and adaptability to e-commerce channels, particularly by skincare and makeup consumers. The beauty, personal care and wellness market has proven
to be resilient through economic cycles and, in particular, is expected to maintain strong momentum in its growth following the COVID-19 lockdowns, with estimated year-on-year growth of 8.4% in 2021, and 6.4% for 2022 and 2023,
according to industry sources. The Waldencast board of directors believes that there are significant growth opportunities for Obagi in the global skincare market.
|
•
|
Highly Fragmented Market with Growth Driven by Independent Brands. The top five
brands in the global beauty, personal care and wellness market, being Colgate-Palmolive Company (“Colgate-Palmolive”), The Estée Lauder Companies Inc., Unilever PLC (“Unilever”), The Procter & Gamble Company (“P&G”) and
L’Oréal S.A (“L’Oréal”), account for only 32% of the market share. Of these, Colgate-Palmolive, Unilever and P&G experienced reductions in their market shares over the period from 2015 to 2020, according to industry sources. New
consumer trends and technology are driving the gain in market share of disruptor
|
•
|
Obagi is a Market Leader Within the Professional Skincare Market. Obagi is a
market leader in the global professional skincare market, ranked first in independent brands in this market, and first, compared to brands (more generally) in this market, in product portfolio, innovation, and marketing based on
perception and satisfaction among U.S. physicians, according to independent research conducted in 2020. It was second in sales in 2019 in this segment of U.S. professional skincare products companies. The skincare market is the
fastest growing segment in the global beauty, personal care and wellness market, with the expectation for the global skincare market to grow in revenue from $62 billion in 2021 to $ 209 billion by 2025, according to industry sources.
The Waldencast board of directors believes that Obagi has significant potential for expansion in this fast growing market.
|
•
|
Obagi’s Robust, Science-Based Product Portfolio. Obagi currently holds over 80
patents worldwide in respect of its products, which are developed by a world class research and development team, and undergo rigorous product efficacy testing from panels comprising leading dermatologists from universities and
research organizations across the U.S. Over 90% of Obagi’s sales are derived from medical grade skincare products, ranging in price from $22.00 to $471.00.
|
•
|
Obagi’s Experienced Management Team of Dermo-Cosmetics Experts. The Waldencast
board of directors believes that Obagi’s management team has extensive experience in key aspects of the beauty, personal care and wellness market, particularly the dermo-cosmetics sector. Obagi’s management team is led by Jaime
Castle, who serves as President and Chief Executive Officer, and executives with experience from leading companies such as Bausch Health Companies Inc. (“Bausch Health”), The Boeing Company (“Boeing”), Glo, Inc. (“Glo”) and
Neutrogena. We expect that Obagi executives will continue with the combined company following the Business Combination. For additional information regarding Obagi’s executive officers, see the section entitled “Management of Waldencast plc Following the Business Combination — Executive Officers.”
|
•
|
Milk’s Leading Clean Make-Up Brand. Milk is a leading clean make-up brand with a
strong following among Gen-Z consumers, known for its cultural relevance and iconic products. The brand is anchored by this strong community following and the Waldencast board of directors believe there are significant growth
opportunities.
|
•
|
Milk’s Strong Community Engagement and Portfolio of Innovative Products. We
believe Milk has an exciting portfolio of innovative and iconic products and a strong community following attracted to its brand values of “good for you, good for the planet, and good for our community.” As of November 22, 2021, Milk
had approximately 1,900,000 Instagram followers, 8,600,000 likes and 122,000,000 hash-tagged video views on TikTok, 653,000 monthly views on Pinterest, 99,000 Facebook followers, 89,000 YouTube subscribers and 62,000 Twitter
followers. The Waldencast board of directors believes Milk has the potential to grow through innovation and launches from its current portfolio of cosmetic products to other segments of the beauty, personal care and wellness market,
such as skincare, haircare, bath and shower, and fragrance.
|
•
|
Milk’s Strong Partnership with Sephora. Milk has an established presence in the
U.S. and Canada through its partnership with Sephora, with Milk’s products featured in all 1,335 physical Sephora retail stores in the U.S., and all 82 physical Sephora retail stores in Canada. However, milkmakeup.com currently only
ships to the U.S. and the Waldencast board of directors believes there is an opportunity to increase Milk’s presence in high-growth international markets, through increasing Milk’s presence in Sephora’s non-North American brick and
mortar stores, as well as partnerships with other beauty retail stores worldwide.
|
•
|
Milk’s Experienced Management Team of Make-Up and Cosmetic Industry Experts. The
Waldencast board of directors believes that Milk’s management team has extensive experience in key aspects of the beauty, personal care and wellness sectors, particularly the make-up and cosmetics sectors. Milk’s management team is
led by Tim Coolican, who serves as Chief Executive Officer, and executives with experience from leading companies such as L’Oréal, Unilever, Bliss World Inc. (“Bliss”) and Benefit Cosmetics LLC
|
•
|
Attractive Entry Valuations. The Waldencast board of directors determined that
(a) the pro forma enterprise valuations of Obagi and Milk were reasonable in comparison to certain comparable, publicly traded companies and (b) Waldencast plc will have an anticipated initial pre-transaction enterprise value of
$1,200 million, implying a 4.8x multiple of 2022 projected revenue.
|
•
|
Potential Inability to Complete the Obagi Merger and Milk Transaction. The
Waldencast board of directors considered the possibility that the Obagi Merger and/or the Milk Transaction and, thereby, the Business Combination, may not be completed and the potential adverse consequences to Waldencast if the
Business Combination is not completed, in particular the expenditure of time and resources in pursuit of the Business Combination and the loss of the opportunity to participate in the transaction. They considered the uncertainty
related to the Closing, including due to closing conditions primarily outside of the control of the parties to the transaction (such as the need for shareholder and antitrust approval). The Transaction Agreements and the Sponsor
Support Agreements also include exclusivity provisions that limit Waldencast, the Sponsor and certain of their respective affiliates from soliciting certain other business combination proposals on behalf of Waldencast, which limits
Waldencast’s ability to consider certain other potential business combinations until the earlier of the termination of the Transaction Agreements or the consummation of the Business Combination.
|
•
|
Obagi and Milk’s Business Risks. The Waldencast board of directors considered that
Waldencast shareholders would be subject to the execution risks associated with Waldencast plc if they retained their public shares following the Closing, which were different from the risks related to holding public shares of
Waldencast prior to the Closing. In this regard, the Waldencast board of directors considered that there were risks associated with successful implementation of Waldencast plc’s long-term business plan and strategy and Waldencast plc
realizing the anticipated benefits of the Business Combination on the timeline expected or at all, including due to factors outside of the parties’ control such as the potential negative impact of the COVID-19 pandemic and related
macroeconomic uncertainty. The Waldencast board of
|
•
|
Implementation Complexities. Although a simultaneous business combination with two
target entities is consistent with Waldencast’s objective of establishing a global, multi-brand beauty and wellness platform, the Waldencast board of directors considered the potential added complexity of implementation of the
proposed Business Combination.
|
•
|
Post-Business Combination Corporate Governance. The Waldencast board of directors
considered the corporate governance provisions of the Transaction Agreements, the Investor Rights Agreement and the Proposed Constitutional Documents and the effect of those provisions on the governance of Waldencast plc following the
Closing. Cedarwalk will have the right to designate one director to the Waldencast plc Board for as long as Cedarwalk owns 5% of the then outstanding Waldencast plc common stock. The Waldencast board of directors was aware that this
right is not generally available to shareholders of Waldencast, including shareholders that may hold a large number of shares.
|
•
|
No Survival of Remedies for Breach of Representations, Warranties or Covenants of Obagi
or Milk. The Waldencast board of directors considered that the terms of the Transaction Agreements provide that Waldencast will not have any surviving remedies against Obagi, Milk or their stockholders after the Closing to
recover for losses as a result of any inaccuracies or breaches of the Obagi and Milk representations, warranties or covenants set forth in the Transaction Agreements. The Waldencast board of directors determined that this structure
was appropriate and customary in light of the fact that several similar transactions include similar terms and the current stockholders of Obagi and Milk will be stockholders in Waldencast plc.
|
•
|
Litigation. The Waldencast board of directors considered the possibility of
litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could enjoin consummation of the Business Combination. The Waldencast board of directors also considered the lawsuit was
commenced in New York state court on October 6, 2016, captioned Joseph v. Rassi, et al., Case No. 510914/2016 (N.Y. Sup. Ct. Oct. 6, 2016) in which the plaintiff has asserted claims against founders Mazdack Rassi, Erez Shternlicht and
Moishe Mana, as well as against Legs Media LLC, Milk Agency, LLC, Milk Makeup Holdings, LLC, Milk Makeup Management, LLC, Milk Studios, LLC, Milk and Scott Sassa. Plaintiff alleges that Rassi, Shternlicht, and Mana breached the duty
they owed to Legs Media by misappropriating its “corporate opportunity” related to the Milk Makeup concept for their own benefit. There is a parallel proceeding in Delaware Court of Chancery, captioned Mana v. Joseph, Civil Action No.
12715 (Del. Ch. Sept. 2, 2016) in which Rassi, Mana, Shternlicht, Legs Media, LLC, Milk Studios, LLC, Milk, and Milk Agency, LLC have asserted various claims against Joseph and, among other things, are seeking declaratory judgment
that Joseph has no ownership interest in Milk Studios, LLC or Milk. Additionally, certain founders of Milk have agreed, pursuant to an amended and restated founder support and indemnification agreement, dated January 24, 2019, subject
to the terms and conditions thereto, to provide indemnification to Milk and its representatives for losses that arise from (i) any claims brought by or on behalf of any purported current or former holder of equity or rights in Milk or
its affiliates arising out of facts and circumstances in existence prior to December 23, 2016, (ii) any claims against Milk by or on behalf of any Milk affiliates arising out of facts and circumstances in existence prior to
December 23, 2016, and (iii) Milk’s maintenance and administration of benefit plans. The indemnification agreement would cover potential losses related to the previously disclosed outstanding litigation related to “corporate
opportunity.” For further details, see the section entitled “Risk Factors — Risks Related to Milk — Risks Related to Legal and Regulatory Proceedings — We are involved, and may become involved in the
future, in disputes and other legal or regulatory proceedings, including an ongoing legal proceeding involving our founders, that, if adversely decided or settled, could materially and adversely affect our business, financial
condition and results of operations.”
|
•
|
Fees and Expenses. The Waldencast board of directors considered the fees and
expenses associated with completing the Business Combination.
|
•
|
Diversion of Management. The Waldencast board of directors considered the
potential for diversion of management and employee attention during the period prior to the completion of the Business Combination, and the potential negative effects on Obagi and Milk’s businesses.
|
•
|
Interests of Waldencast’s Directors and Executive Officers. Waldencast’s directors
and executive officers may have interests in the Business Combination as individuals that are in addition to, and may be different from, the interests of Waldencast’s shareholders, as described in the section entitled “BCA Proposal — Interests of Waldencast’s Directors and Executive Officers in the Business Combination.” However, Waldencast’s board of directors concluded that the potentially disparate interests
would be mitigated because (i) these interests were disclosed in the prospectus for Waldencast’s initial public offering and are included in this proxy statement/prospectus, (ii) most of these disparate interests would exist with
respect to a business combination by Waldencast with any other target business or businesses, and (iii) Waldencast’s directors and executive officers hold equity interests in Waldencast with value that, after the Closing, will be
based on the future performance of Waldencast plc’s common stock. In addition, Waldencast’s independent directors reviewed and considered these interests during their evaluation of the Business Combination and in unanimously
approving, as members of the Waldencast board of directors, the Transaction Agreements and the related agreements and the transactions contemplated thereby, including the Business Combination.
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions(1)
|
| |
Assuming
90% Redemptions
|
||||||||||||
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
Waldencast Public Shareholders
|
| |
34,500,000
|
| |
27.0%
|
| |
24,150,000
|
| |
20.5%
|
| |
12,515,375
|
| |
11.0%
|
| |
3,450,000
|
| |
3.0%
|
Burwell National Trust and Dynamo Master Fund(2)
|
| |
16,000,000
|
| |
12.5%
|
| |
16,000,000
|
| |
13.6%
|
| |
16,000,000
|
| |
14.1%
|
| |
16,000,000
|
| |
14.2%
|
Beauty FPA Investor(3)
|
| |
17,300,000
|
| |
13.5%
|
| |
17,300,000
|
| |
14.7%
|
| |
17,300,000
|
| |
15.3%
|
| |
17,300,000
|
| |
15.4%
|
Founder Shares(4)
|
| |
8,625,000
|
| |
6.7%
|
| |
8,625,000
|
| |
7.3%
|
| |
8,625,000
|
| |
7.6%
|
| |
8,625,000
|
| |
7.7%
|
PIPE Investors(5)
|
| |
10,500,000
|
| |
8.2%
|
| |
10,500,000
|
| |
8.9%
|
| |
10,500,000
|
| |
9.3%
|
| |
10,500,000
|
| |
9.3%
|
Cumulative Waldencast shareholders
|
| |
86,925,000
|
| |
67.8%
|
| |
76,575,000
|
| |
65.0%
|
| |
64,940,375
|
| |
57.3%
|
| |
55,875,000
|
| |
49.6%
|
Existing Obagi Owners interest in Waldencast(6)
|
| |
22,851,564
|
| |
17.8%
|
| |
22,851,564
|
| |
19.4%
|
| |
28,101,564
|
| |
24.8%
|
| |
32,634,659
|
| |
29.0%
|
Existing Milk Owners interest in Waldencast(7)
|
| |
18,343,883
|
| |
14.3%
|
| |
18,343,883
|
| |
15.6%
|
| |
20,314,508
|
| |
17.9%
|
| |
24,068,228
|
| |
21.4%
|
Shares from Milk Warrants(8)
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
128,144,607
|
| |
100.0%
|
| |
117,794,607
|
| |
100.0%
|
| |
113,380,607
|
| |
100.0%
|
| |
112,602,047
|
| |
100.0%
|
1)
|
Assumes that 21,984,625 Class A ordinary shares are redeemed in connection with the Business Combination which is the
maximum number of shares that may be redeemed without causing the Minimum Cash Condition to the closing of the Business Combination to be unsatisfied. The net cash consideration payable to the existing Obagi owners would decrease from
$380.0 million to $327.5 million and to the existing Milk owners from $140.0 million to $120.3 million, and the economic ownership and voting power via shares of the existing Obagi and Milk owners would increase proportionally
following the Business Combination.
|
2)
|
16,000,000 Class A ordinary shares acquired pursuant to the Sponsor Forward Purchase Agreement for an investment of $160.0
million by Burwell Mountain Trust and Dynamo Master Fund (members of our Sponsor) in exchange for a portion of the Forward Purchase Amount.
|
3)
|
17,300,000 Class A ordinary shares acquired pursuant to the Third-Party Forward Purchase Agreement for an investment of
$173.0 million by the Beauty Ventures in exchange for a portion of the Forward Purchase Amount.
|
4)
|
8,625,000 Class A ordinary shares, including 80,000 shares held by the Investor issued upon conversion of the existing
Waldencast Class B ordinary shares. Waldencast Class A ordinary shares are issued upon the automatic conversion of the Waldencast Class B ordinary shares concurrently with the consummation of the Business Combination.
|
5)
|
Represents the private placement pursuant to which Waldencast entered into Subscription Agreements with certain PIPE
Investors whereby such investors have agreed to subscribe for Class A ordinary shares at a purchase price of $10.00 per share. The PIPE Investors participating in the PIPE Investment, have agreed to purchase an aggregate of 10,500,000
Class A ordinary shares.
|
6)
|
Represents Obagi owners’ interest in 22,851,564 shares of Waldencast plc Class A ordinary shares, which remain unchanged in
the 30% scenario, increase in the Maximum Redemption scenario to 28,101,564 and to 32,634,659 in the 90% scenario due to the reduction in net cash consideration payable.
|
7)
|
Represents the Milk Members’ noncontrolling economic interest in Waldencast LP Common Units, which are redeemable at the
option of the holder of such units, and if such option is exercised, are exchangeable, at the option of Waldencast plc, for Waldencast plc Class A ordinary shares on a 1-for-1 basis or cash (together with the cancellation of an equal
number of shares of voting, Waldencast plc Non-Economic ordinary shares), and if exchanged for such Waldencast plc Class A ordinary shares, will increase in the Maximum Redemption scenario due to the reduction in net cash
consideration payable.
|
8)
|
Represents Class A ordinary shares that were converted from Milk Warrants at the closing of the Business Combination.
|
9)
|
Note, percentages totals may not foot due to rounding.
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions
|
| |
Assuming
90% Redemptions
|
||||||||||||
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
Waldencast Public Shareholders(1)
|
| |
51,933,333
|
| |
30.8%
|
| |
41,583,333
|
| |
26.4%
|
| |
29,948,708
|
| |
19.5%
|
| |
20,883,333
|
| |
13.7%
|
Burwell Mountain Trust and Dynamo Master Fund(2)
|
| |
22,333,333
|
| |
13.3%
|
| |
22,333,333
|
| |
14.1%
|
| |
22,333,333
|
| |
14.5%
|
| |
22,333,333
|
| |
14.6%
|
Beauty FPA Investor(3)
|
| |
23,066,666
|
| |
13.7%
|
| |
23,066,666
|
| |
14.6%
|
| |
23,066,666
|
| |
15.0%
|
| |
23,066,666
|
| |
15.1%
|
Founder Shares
|
| |
8,625,000
|
| |
5.1%
|
| |
8,625,000
|
| |
5.5%
|
| |
8,625,000
|
| |
5.6%
|
| |
8,625,000
|
| |
5.6%
|
PIPE Investors
|
| |
10,500,000
|
| |
6.2%
|
| |
10,500,000
|
| |
6.6%
|
| |
10,500,000
|
| |
6.8%
|
| |
10,500,000
|
| |
6.9%
|
Cumulative Waldencast shareholders
|
| |
116,458,332
|
| |
69.2%
|
| |
106,108,332
|
| |
67.2%
|
| |
94,473,707
|
| |
61.5%
|
| |
85,408,332
|
| |
55.9%
|
Existing Obagi Owners interest in Waldencast(4)
|
| |
30,788,000
|
| |
18.3%
|
| |
30,788,000
|
| |
19.5%
|
| |
36,038,000
|
| |
23.5%
|
| |
40,571,095
|
| |
26.5%
|
Existing Milk Owners interest in Waldencast(5)
|
| |
21,093,664
|
| |
12.5%
|
| |
21,093,664
|
| |
13.3%
|
| |
23,064,289
|
| |
15.0%
|
| |
26,818,009
|
| |
17.5%
|
Shares from Milk Warrants
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
168,364,156
|
| |
100.0%
|
| |
158,014,156
|
| |
100.0%
|
| |
153,600,156
|
| |
100.0%
|
| |
152,821,596
|
| |
100.0%
|
1)
|
Includes the impact of the exercise of 11,500,000 of public warrants and 5,933,333 private placement warrants.
|
2)
|
Includes the exercise of 6,333,333 of warrants (inclusive of the sponsor working capital loan warrants).
|
3)
|
Includes the exercise of 5,766,666 of warrants.
|
4)
|
Includes the exercise of rollover equity awards, consisting of 6,085,600 stock options, and 1,850,836 restricted stock units.
|
5)
|
Includes the exercise of rollover equity awards, consisting of 2,512,219 unit appreciation rights and 237,562 options.
|
6)
|
Note, percentages totals may not foot due to rounding.
|
|
| |
Per Share Value
|
Trust value
|
| |
$345,031,000
|
Total Class A Common Shares
|
| |
$34,500,000
|
Trust value per Class A Common Share
|
| |
$10.00
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
30% Redemptions
|
| |
Assuming
Maximum Redemptions
|
| |
Assuming
90% Redemptions
|
Redemptions ($)
|
| |
$—
|
| |
$103,509
|
| |
$219,866
|
| |
$310,528
|
Redemptions (Shares)
|
| |
—
|
| |
$10,350,000
|
| |
$21,984,625
|
| |
31,050,000
|
Deferred underwriting commission
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
Cash left in trust account post redemption minus
deferring underwriting commission
|
| |
$332,956
|
| |
$229,447
|
| |
$113,090
|
| |
$22,428
|
Total Class A common stock and Class B ordinary shares
issued at IPO, post redemption and before Closing of the Transaction
|
| |
43,125,000
|
| |
32,775,000
|
| |
21,140,375
|
| |
12,075,000
|
Trust value per share
|
| |
$7.72
|
| |
$7.00
|
| |
$5.35
|
| |
$1.86
|
|
| |
No
Redemptions
|
| |
30% Redemptions
|
| |
Maximum
Redemptions
|
| |
90% Redemptions
|
Redemptions ($)
|
| |
$—
|
| |
$103,509
|
| |
$219,866
|
| |
$310,528
|
Redemptions (Shares)
|
| |
—
|
| |
10,350,000
|
| |
21,984,625
|
| |
31,050,000
|
Total Deferred Underwriting Commission ($)
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
| |
$12,075
|
Effective Deferred Underwriting Commission (as a
percentage of cash left in Trust Account post redemptions)
|
| |
3%
|
| |
5%
|
| |
10%
|
| |
35%
|
Total Underwriting Commission ($)
|
| |
$18,975
|
| |
$18,975
|
| |
$18,975
|
| |
$18,975
|
Effective Total Underwriting Commission (as a percentage
of (cash left in Trust Account post redemptions))
|
| |
5%
|
| |
8%
|
| |
15%
|
| |
55%
|
•
|
Obagi Merger Proposal: The approval of the Obagi Merger
Proposal requires an ordinary resolution under Waldencast’s amended and restated memorandum and articles of association (as the same may be amended from time to time as permitted hereby prior to the Domestication) (the “Cayman
Constitutional Documents”), being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.
|
•
|
Milk Transaction Proposal: The approval of the Milk Transaction
Proposal requires an ordinary resolution under Cayman Constitutional Documents, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the
extraordinary general meeting.
|
•
|
Domestication Proposal: The approval of the Domestication
Proposal requires a special resolution under Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy
and entitled to vote thereon and who vote at the extraordinary general meeting.
|
•
|
Organizational Documents Proposals: The separate approval of
each of the Organizational Documents Proposals A and D requires a special resolution under the Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least two-thirds of the
ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting and the separate approval of each of the Organizational Documents Proposals B and C requires an ordinary
resolution under the Cayman Constitutional Documents and the Cayman Islands Companies Act, being the affirmative vote of holders of at least a majority of the ordinary shares represented in person or by proxy and entitled to vote
thereon and who vote at the extraordinary general meeting.
|
•
|
Director Election Proposal: The approval of the Director
Election Proposal requires an ordinary resolution of the holders of Waldencast Class B ordinary shares under Cayman Constitutional Documents, such holders being the Sponsor and the Investor Directors, being the affirmative vote of a
majority of the Waldencast Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.
|
•
|
Stock Issuance Proposal: The approval of the Stock Issuance
Proposal requires an ordinary resolution under the Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary
general meeting.
|
•
|
Milk Issuance Proposal: The approval of the Milk Issuance
Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary
general meeting.
|
•
|
Incentive Award Plan Proposal: The approval of the Incentive
Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the
extraordinary general meeting.
|
•
|
Adjournment Proposal: The approval of the Adjournment Proposal
requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general
meeting.
|
•
|
(i) hold public shares or (ii) if you hold public shares through units, you elect to separate your units into the
underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;
|
•
|
submit a written request to Continental, Waldencast’s transfer agent, that Waldencast plc redeem all or a portion of your
public shares for cash; and
|
•
|
deliver your public shares to Continental, Waldencast’s transfer agent, physically or electronically through DTC.
|
•
|
The 8,545,000 Waldencast Class B ordinary shares owned by Sponsor, if valued based on the closing price of $10.00 per
public share on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $85.5 million
(after giving effect to the conversion of such Waldencast Class B ordinary shares into Waldencast plc Class A ordinary shares in connection with the Obagi Merger and Milk Transaction, including after giving effect to the
Domestication). In January 2021, the Sponsor purchased such 7,187,500 Waldencast Class B ordinary shares for an aggregate purchase price of $0.025 million prior to Waldencast’s initial public offering. The Sponsor transferred 20,000
Class B ordinary shares to each of the Investor Directors, resulting in the Sponsor holding 7,107,500 Waldencast Class B ordinary shares. In March 2021, Waldencast effected a share capitalization resulting in the Sponsor holding an
aggregate of 8,545,000 Waldencast Class B ordinary shares. If Waldencast does not consummate a business combination by March 18, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it
would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and
liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 8,625,000 Waldencast Class B ordinary
shares owned by the Sponsor and the Investor Directors would be worthless because following the redemption of the public shares, Waldencast would likely have few, if any,
|
•
|
The Sponsor purchased an aggregate of 5,933,333 private placement warrants from Waldencast simultaneously with the
consummation of Waldencast’s initial public offering for an aggregate purchase price of $8.9 million, which will automatically convert into 5,933,333 Waldencast plc warrants in connection with the Business Combination (including after
giving effect to the Domestication). The 5,933,333 private placement warrants, if valued based on the closing price of $0.80 per public warrant on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of
this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $4.7 million, but may expire and become worthless if Waldencast fails to complete a business combination by March 18,
2023. As a result of Sponsor’s interest in the Waldencast Class B ordinary shares and private placement warrants, Sponsor and its affiliates have an incentive to complete an initial business combination and may have a conflict of
interest in the transaction, including without limitation, in determining whether a particular business is an appropriate business with which to effect Waldencast’s initial business combination.
|
•
|
Waldencast entered into the Third-Party Forward Purchase Agreement with the Beauty Ventures. The Sponsor is the managing
member of Beauty Ventures. Members of the Sponsor or their affiliates will begin to receive a twenty percent (20%) performance fee allocation on the return of the forward purchase securities in excess of the hurdle rate, calculated on
the total return generated from forward purchase securities (whether by dividend, transfer or increase in value as measured from date of issuance), when the return of such securities (less the expenses of the Beauty Ventures)
underlying the Third-Party Forward Purchase Agreement exceeds a hurdle rate of five percent (5%) accrued annually until the fifth anniversary of the issuance of such securities. In the event of a transfer and subsequent sale of any
forward purchase securities prior to such fifth anniversary, the performance fee for the period between such transfer and such fifth anniversary will be calculated based on the proceeds generated by such sale.
|
•
|
The Initial PIPE Investors have subscribed for $105.0 million of the PIPE Investment, for which they will receive up to
10,500,000 Waldencast plc Class A ordinary shares. The 10,500,000 Waldencast plc Class A ordinary shares which the Initial PIPE Investors have subscribed for in the Initial PIPE Investment, if unrestricted and freely tradable, would
have had an aggregate market value of $105.0 million based upon the closing price of $10.00 per public share on Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. See
the section entitled “Certain Relationships and Related Person Transactions — Waldencast Acquisition Corp. — PIPE Subscription Agreements.”
|
•
|
In the event that Waldencast fails to consummate a business combination within the prescribed time frame (pursuant to the
Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Waldencast will be required to provide for payment of claims of creditors that were not waived that may be
brought against Waldencast within the ten years following such redemption. In order to protect the amounts held in Waldencast’s trust account, the Sponsor has agreed that it will be liable to Waldencast if and to the extent any claims
by a third party (other than Waldencast’s independent auditors) for services rendered or products sold to Waldencast, or a prospective target business with which Waldencast has discussed entering into a transaction agreement, reduce
the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of
the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as
to any claims under the indemnity of the underwriters of Waldencast’s initial public offering against certain liabilities, including liabilities under the Securities Act.
|
•
|
Waldencast’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred
by them in connection with certain activities on Waldencast’s behalf, such as identifying and investigating possible business targets and business combinations, as well as repayment of working capital advances. However, if Waldencast
fails to consummate a business combination by March 18, 2023, they will not have any claim against the trust account for reimbursement or repayment. Accordingly,
|
•
|
As noted above, the Sponsor purchased 7,187,500 Waldencast Class B ordinary shares, 80,000 of which were transferred to the
Investor Directors, for an aggregate purchase price of $0.025 million, or approximately $0.003 per share (after taking into account the forfeiture by Sponsor of 937,500 founder shares, as a result of the underwriters’ exercise of the
over-allotment option). As a result, Sponsor and the Investor Directors will have a rate of return on its investment that differs from the rate of return of Waldencast shareholders who purchased Waldencast shares at various other
prices, including Waldencast shares included in Waldencast units that were sold at $10.00 per unit in Waldencast’s initial public offering. The closing price of Waldencast public shares on February 10, 2022, the most recent
practicable date prior to the date of this proxy statement/prospectus, was $10.00. As a result of and upon the effective time of the Domestication, among other things, each of the then issued and outstanding Waldencast Class B
ordinary shares will convert automatically, on a one-for-one basis, into a Waldencast plc Class A ordinary share. In the event the stock price of the post-combination company falls below the price paid by a Waldencast shareholder at
the time of purchase of the Waldencast shares by such shareholder, a situation may arise in which Sponsor maintains a positive rate of return while such Waldencast shareholder does not.
|
•
|
The Sponsor (including its representatives and affiliates) and Waldencast’s directors and officers may in the future become
affiliated with entities that are engaged in a similar business to Waldencast. The Sponsor and Waldencast’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check
companies prior to Waldencast completing its initial business combination. Waldencast’s directors and officers also may become aware of business opportunities that may be appropriate for presentation to Waldencast, and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be
resolved in Waldencast’s favor and such potential business opportunities may be presented to other entities prior to their presentation to Waldencast, subject to applicable fiduciary duties under Cayman Islands Companies Act.
Waldencast’s Cayman Constitutional Documents provide that Waldencast renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter that may be a corporate
opportunity for Waldencast, on the one hand, and one of its officers or directors, on the other. Waldencast does not believe, however, that the fiduciary duties or contractual obligations of its officers or directors or waiver of
corporate opportunity materially affected its search for an acquisition target or will materially impact its ability to complete the Business Combination. No opportunity was presented to Waldencast that was also presented to
Waldencast Ventures LP and its subsidiaries, related businesses and investments (“Waldencast Ventures”) or any Affiliate of Waldencast. In addition, no opportunity that would have been appropriate for presentation to Waldencast was
also presented to Waldencast Ventures LP and its subsidiaries, related businesses and investments. There have been no new investments by Waldencast Ventures since Waldencast’s initial public offering.
|
•
|
Waldencast’s existing directors and officers will be eligible for continued indemnification and continued coverage under
Waldencast’s directors’ and officers’ liability insurance after the Obagi Merger and Milk Transaction and pursuant to the Transaction Agreements.
|
•
|
Pursuant to the Registration Rights Agreement, the Sponsor, certain stockholders of Waldencast, Obagi and Milk and certain
of their respective affiliates will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the Waldencast plc Class A ordinary shares and warrants
held by such parties following the consummation of the Business Combination.
|
Sources
|
| |
Uses
|
||||||
($ in millions)
|
|||||||||
IPO cash proceeds, net of redemptions
|
| |
$345.0
|
| |
Cash to balance sheet(2)
|
| |
$202.1
|
PIPE cash proceeds
|
| |
105.0
|
| |
Cash to sellers
|
| |
520.0
|
Founder FPA proceeds
|
| |
160.0
|
| |
Cash to Obagi sellers
|
| |
380.0
|
Beauty FPA proceeds
|
| |
173.0
|
| |
Cash to Milk sellers
|
| |
140.0
|
Seller rollover equity
|
| |
518.8
|
| |
Fees and expenses(3)
|
| |
63.2
|
Other(1)
|
| |
2.3
|
| |
Seller rollover equity
|
| |
518.8
|
Total sources
|
| |
$1,304.1
|
| |
Total uses
|
| |
$1,304.1
|
(1)
|
Represents cash from the settlement of amounts due from officers of
$0.8 million and cash drawn from the Working Capital Loan of $1.5 million.
|
(2)
|
Any cash to the balance sheet is intended to be utilized for the
further development of Obagi and Milk, future acquisitions and other purposes in line with the best interests of the combined company.
|
(3)
|
Reflects the cash disbursement for the preliminary estimated direct
and incremental transaction costs of $63.2 million incurred by Waldencast, Obagi and Milk prior to, or concurrent with, the Closing, including deferred underwriting commission of approximately $12.1 million to be paid pursuant to
the underwriting agreement entered into in connection with Waldencast’s initial public offering upon consummation of the business combination.
|
Sources
|
| |
Uses
|
||||||
($ in millions)
|
|||||||||
IPO cash proceeds, net of redemptions
|
| |
$241.5
|
| |
Cash to balance sheet(2)
|
| |
$98.6
|
PIPE cash proceeds
|
| |
105.0
|
| |
Cash to sellers
|
| |
520.0
|
Founder FPA proceeds
|
| |
160.0
|
| |
Cash to Obagi sellers
|
| |
380.0
|
Beauty FPA proceeds
|
| |
173.0
|
| |
Cash to Milk sellers
|
| |
140.0
|
Seller rollover equity
|
| |
518.8
|
| |
Fees and expenses(3)
|
| |
63.2
|
Other(1)
|
| |
2.3
|
| |
Seller rollover equity
|
| |
518.8
|
Total sources
|
| |
$1,200.6
|
| |
Total uses
|
| |
$1,200.6
|
(1)
|
Represents cash from the settlement of amounts due from officers of
$0.8 million and cash drawn from the Working Capital Loan of $1.5 million.
|
(2)
|
Any cash to the balance sheet is intended to be utilized for the
further development of Obagi and Milk, future acquisitions and other purposes in line with the best interests of the combined company.
|
(3)
|
Reflects the cash disbursement for the preliminary estimated direct
and incremental transaction costs of $63.2 million incurred by Waldencast, Obagi and Milk prior to, or concurrent with, the Closing, including deferred underwriting commission of approximately $12.1 million to be paid pursuant to
the underwriting agreement entered into in connection with Waldencast’s initial public offering upon consummation of the business combination.
|
Sources
|
| |
Uses
|
||||||
($ in millions)
|
|||||||||
IPO cash proceeds, net of redemptions
|
| |
$125.2
|
| |
Cash to balance sheet(2)
|
| |
$54.4
|
PIPE cash proceeds
|
| |
105.0
|
| |
Cash to sellers
|
| |
447.8
|
Founder FPA proceeds
|
| |
160.0
|
| |
Cash to Obagi sellers
|
| |
327.5
|
Beauty FPA proceeds
|
| |
173.0
|
| |
Cash to Milk sellers
|
| |
120.3
|
Seller rollover equity
|
| |
591.0
|
| |
Fees and expenses(3)
|
| |
63.2
|
Other(1)
|
| |
2.3
|
| |
Seller rollover equity
|
| |
591.0
|
Total sources
|
| |
$1,156.5
|
| |
Total uses
|
| |
$1,156.5
|
(1)
|
Represents cash from the settlement of amounts due from officers of
$0.8 million and cash drawn from the Working Capital Loan of $1.5 million.
|
(2)
|
Any cash to the balance sheet is intended to be utilized for the
further development of Obagi and Milk, future acquisitions and other purposes in line with the best interests of the combined company.
|
(3)
|
Reflects the cash disbursement for the preliminary estimated direct
and incremental transaction costs of $63.2 million incurred by Waldencast, Obagi and Milk prior to, or concurrent with, the Closing, including deferred underwriting commission of approximately $12.1 million to be paid pursuant to
the underwriting agreement entered into in connection with Waldencast’s initial public offering upon consummation of the business combination.
|
Sources
|
| |
Uses
|
||||||
($ in millions)
|
|||||||||
IPO cash proceeds, net of redemptions
|
| |
$34.5
|
| |
Cash to balance sheet(1)
|
| |
$46.6
|
PIPE cash proceeds
|
| |
105.0
|
| |
Cash to sellers
|
| |
364.9
|
Founder FPA proceeds
|
| |
160.0
|
| |
Cash to Obagi sellers
|
| |
282.2
|
Beauty FPA proceeds
|
| |
173.0
|
| |
Cash to Milk sellers
|
| |
82.8
|
Seller rollover equity
|
| |
673.9
|
| |
Fees and expenses(2)
|
| |
63.2
|
Other(1)
|
| |
2.3
|
| |
Seller rollover equity
|
| |
673.9
|
Total sources
|
| |
$1,148.7
|
| |
Total uses
|
| |
$1,148.7
|
(1)
|
Represents cash from the settlement of amounts due from officers of
$0.8 million and cash drawn from the Working Capital Loan of $1.5 million.
|
(2)
|
Any cash to the balance sheet is intended to be utilized for the
further development of Obagi and Milk, future acquisitions and other purposes in line with the best interests of the combined company.
|
(3)
|
Reflects the cash disbursement for the preliminary estimated direct
and incremental transaction costs of $63.2 million incurred by Waldencast, Obagi and Milk prior to, or concurrent with, the Closing, including deferred underwriting commission of approximately $12.1 million to be paid pursuant to
the underwriting agreement entered into in connection with Waldencast’s initial public offering upon consummation of the business combination.
|
•
|
Our sales and profitability may suffer if ongoing economic uncertainties in any of our major markets inhibit people from
spending their disposable income on aesthetic and skin health products.
|
•
|
The loss of a significant customer could materially and adversely affect our business, financial condition and results of
operations.
|
•
|
We face intense competition, in some cases from companies that have significantly greater resources than we do, which could
limit our ability to generate sales and/or render our products obsolete.
|
•
|
Our revenues and financial results depend significantly on sales of our Obagi Nu-Derm products. If we are unable to
manufacture or sell the Nu-Derm products in sufficient quantities and in a timely manner, or maintain physician and/or patient acceptance of Nu-Derm products, our business will be materially and adversely impacted.
|
•
|
We are dependent on third parties that we enter into agreements with to manufacture and distribute products for us and for
other essential services and to whom we license our intellectual property rights.
|
•
|
Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our
financial results.
|
•
|
Any damage to our reputation or brands may materially and adversely affect our business, financial condition and results of
operations.
|
•
|
The drug regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming and
inherently unpredictable, and if we are required to seek and obtain any regulatory approvals that may be required for our products, we may be unable to obtain or maintain such regulatory approvals, which would substantially harm our
business.
|
•
|
Our products containing the active ingredient, hydroquinone are marketed as prescription-use only drugs but have not
received marketing authorization from the FDA or other regulatory authorities, and the FDA could require us to obtain an NDA for these products, which would require a significant investment of time and money, and could prohibit us
from continuing to sell such products until the NDA is approved.
|
•
|
Our products may cause adverse events or side effects, or could be associated with safety issues, that could result in
recalls, withdrawals, or regulatory enforcement action.
|
•
|
Failure to obtain regulatory approvals in foreign jurisdictions would prevent us from marketing our products
internationally.
|
•
|
We are dependent on information technology systems and infrastructure; failure to protect sensitive information of our
consumers and information technology systems against security breaches could damage our reputation and brand and substantially harm our business.
|
•
|
Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy and data
protection. Many of these laws and regulations are subject to change and uncertain interpretation, and any failure or perceived failure to comply could result in claims, changes to our business practices, monetary penalties or
increased costs of operations, or otherwise could harm our business.
|
•
|
If we are unable to protect our proprietary rights, we may not be able to compete effectively.
|
•
|
We and our manufacturers and suppliers license certain product and device technologies from third parties. If these
licenses are breached, terminated or disputed, our ability to commercialize products dependent on these technologies and patents may be compromised.
|
•
|
To grow, we will need to increase the size of our organization, and we may encounter difficulties managing our growth,
which could adversely affect our results of operations.
|
•
|
The cosmetics industry is highly competitive, and if we are unable to compete effectively, our results will suffer.
|
•
|
Any damage to our reputation or brand or dilution of our brand uniqueness may materially and adversely affect our business,
financial condition and results of operations.
|
•
|
We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and
results of operations.
|
•
|
We rely on a number of third-party suppliers, distributors and other vendors, and they may not continue to produce products
or provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand, cause consumer dissatisfaction and require us to find alternative suppliers of our products.
|
•
|
We maintain single supply relationships for certain key components, and our business and operating results could be harmed
if supply is restricted or ends, or the price of raw materials used in our manufacturing process increases.
|
•
|
The loss of a significant reseller could materially and adversely affect our business, financial condition and results of
operations.
|
•
|
A negative reputation event to any of our retail partners could cause a decline in our net revenues or a reduction in our
earnings.
|
•
|
We have growing operations in China, which exposes us to risks inherent in doing business in that country.
|
•
|
New laws, regulations, enforcement trends or changes in existing regulations governing the introduction, marketing and sale
of our products to consumers could harm our business.
|
•
|
We are involved, and may become involved in the future, in disputes and other legal or regulatory proceedings, including an
ongoing legal proceeding involving our founders, that, if adversely decided or settled, could materially and adversely affect our business, financial condition and results of operations.
|
•
|
Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties.
|
•
|
Our business could be negatively impacted by reputational attacks on our brand, founders or employees, whether founded or
unfounded.
|
•
|
Based on recent market trends, in the event that Waldencast’s stock price is at, around or below $10.00 per share during
the redemption period, there will likely be significant redemptions by Waldencast’s public shareholders in connection with the Business Combination, resulting in a greater risk that the Obagi Minimum Cash Conditions or Milk Minimum
Cash Conditions will not be met, or that there will be a reduced amount of cash available to Waldencast plc following the consummation of the Business Combination and as a result, would likely require Waldencast plc to obtain
additional financing in order to fund its planned operations to the point where Waldencast plc’s business is generating positive cash flows.
|
•
|
The Sponsor and the Investor Directors have agreed to vote in favor of the Business Combination, regardless of how
Waldencast’s public shareholders vote.
|
•
|
We may be forced to close the Business Combination even if we determine it is no longer in our shareholders’ best interest.
|
•
|
Since the Sponsor and Waldencast’s directors and executive officers have interests that are different, or in addition to
(and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Obagi and Milk is appropriate as our initial business combination. Such
interests include that the Sponsor will lose its entire investment in us if the Business Combination is not completed.
|
•
|
The exercise of Waldencast’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms
of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in Waldencast’s shareholders’ best interest.
|
•
|
We, Obagi and Milk will incur significant transaction and transition costs in connection with the Business Combination.
|
•
|
The Transactions may be completed even though material adverse effects may result from the announcement of the
Transactions, industry-wide changes and other causes.
|
•
|
If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market
price of, prior to the Business Combination, Waldencast’s securities or, following the Business Combination, Waldencast plc’s securities, may decline.
|
•
|
The announcement of the proposed Business Combination could disrupt Obagi’s, Milk’s and/or Waldencast plc’s relationships
with its customers, suppliers, business partners and others, as well as its operating results and business generally.
|
•
|
We may make investments into or acquire other companies, which could divert our management’s attention, result in dilution
to our shareholders and otherwise disrupt our operations, and we may have difficulty integrating any such acquisitions successfully or realizing the anticipated benefits therefrom, any of which could have an adverse effect on our
business, financial condition and results of operations.
|
•
|
We may face risks related to companies in the beauty and skincare industries.
|
•
|
Delays in completing the Transactions may substantially reduce the expected benefits of the Transactions.
|
•
|
We are subject to risks related to our dependency on our directors and officers and, following the consummation of the
Business Combination, will be subject to risks related to our dependency on key personnel, employees and independent contractors of Obagi and Milk, including highly skilled technical experts, as well as risks related to attracting,
retaining and developing human capital in a highly competitive market.
|
•
|
We will incur increased costs as a result of becoming a public company.
|
•
|
Subsequent to consummation of the Business Combination, we may be exposed to unknown or contingent liabilities and may be
required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities,
which could cause you to lose some or all of your investment.
|
•
|
Investors may not have the same benefits as an investor in an underwritten public offering.
|
•
|
The board of directors of Waldencast did not obtain a third-party valuation or fairness opinion in determining whether or
not to proceed with the Business Combination.
|
•
|
The historical financial results of Obagi and Milk and unaudited pro forma financial information included elsewhere in this
proxy statement/prospectus may not be indicative of what Waldencast plc’s actual financial position or results of operations would have been.
|
•
|
Following the consummation of the Business Combination, our only significant asset will be our ownership interest in Obagi
and Milk and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on Waldencast plc Class A ordinary shares or satisfy our other financial obligations.
|
•
|
The Sponsor may elect to purchase shares or warrants from public shareholders prior to the consummation of the Business
Combination, which may influence the vote on the Business Combination and reduce the public “float” of our securities.
|
•
|
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by shareholders may be less than $10.00 per share (which was the offering price per unit in our initial public offering).
|
•
|
If, after we distribute the proceeds in the trust account to our public shareholders, Waldencast files a winding-up or
bankruptcy or insolvency petition or an involuntary winding-up or bankruptcy or insolvency petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of
directors may be viewed as having breached their fiduciary duties, thereby exposing the members of our board of directors and us to claims of damages.
|
•
|
If, before distributing the proceeds in the trust account to our public shareholders, we file a winding-up or bankruptcy or
insolvency petition or an involuntary winding-up or bankruptcy or insolvency petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the
per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
|
•
|
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them
upon redemption of their shares.
|
•
|
The public shareholders will experience immediate dilution as a consequence of the issuance of Waldencast plc Class A
ordinary shares as consideration in the Business Combination, the PIPE Investment and the Forward Purchase Transaction and due to future issuances pursuant to the Waldencast plc 2022 Incentive Award Plan and, potentially, the
Promissory Note. Having a minority share position may reduce the influence that our current stockholders have on the management of Waldencast plc.
|
•
|
Warrants will become exercisable for Waldencast plc Class A ordinary shares, which would increase the number of shares
eligible for future resale in the public market and result in dilution to our shareholders.
|
•
|
Even if the Business Combination is consummated, we may amend the terms of the warrants in a manner that may be adverse to
holders with the approval by the holders of at least 65% of the then outstanding public warrants.
|
•
|
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your
warrants worthless.
|
•
|
Nasdaq may not list Waldencast plc’s securities on its exchange, which could limit investors’ ability to make transactions
in Waldencast plc’s securities and subject Waldencast plc to additional trading restrictions.
|
•
|
Waldencast’s, Obagi’s and Milk’s ability to consummate the Business Combination, and the operations of Waldencast plc
following the Business Combination, may be materially adversely affected by the COVID-19 pandemic and other events.
|
•
|
Waldencast has identified material weaknesses in its internal control over financial reporting as of September 30, 2021. If
Waldencast is unable to develop and maintain an effective system of internal control over financial reporting, Waldencast may not be able to accurately report its financial results in a timely manner, which may adversely affect
investor confidence in Waldencast and materially and adversely affect Waldencast’s business and operating results.
|
•
|
Waldencast and, following the Business Combination, Obagi and Milk, may face litigation and other risks as a result of the
material weaknesses in Waldencast’s internal control over financial reporting.
|
•
|
Waldencast’s warrants are accounted for as derivative liabilities with changes in fair value each period included in
earnings, which may have an adverse effect on the market price of our securities.
|
•
|
Foreign currency exchange rate fluctuations and restrictions on the repatriation of cash could adversely affect our results
of operations, financial position and cash flows.
|
•
|
Following the Business Combination, Waldencast plc will be subject to the U.K. Bribery Act, the U.S. Foreign Corrupt
Practices Act and other anti-corruption laws and anti-money laundering laws. Failure to comply with these laws could subject us to penalties and other adverse consequence.
|
•
|
Your rights and responsibilities as a shareholder will be governed by Jersey law, which differs in some material respects
with respect to the rights and responsibilities of shareholders of U.S. companies.
|
•
|
It may be difficult to enforce a U.S. judgment against us or our directors and officers outside the U.S., or to assert U.S.
securities law claims outside the U.S.
|
•
|
Waldencast plc’s only material asset will be its indirect interest in Waldencast LP, and Waldencast plc will be accordingly
dependent upon distributions from Waldencast LP to pay dividends, taxes and other expenses.
|
•
|
Any disparity between the U.S. corporate tax rate and the U.S. tax rate applicable to non-corporate Members of Waldencast
LP may complicate Waldencast plc’s ability to maintain its intended capital structure, which could impose transaction costs on it and require management attention.
|
•
|
The price of Waldencast plc Class A ordinary shares and warrants may be volatile.
|
•
|
If analysts do not publish research about Waldencast plc’s business or if they publish inaccurate or unfavorable research,
Waldencast plc’s stock price and trading volume could decline.
|
•
|
A market for our securities may not develop or be sustained, which would adversely affect the liquidity and price of our
securities.
|
•
|
Any legal proceedings, investigations or claims against us could be costly and time-consuming to defend and could harm our
reputation regardless of the outcome. In addition, our business and operations could be negatively affected if they become subject to any securities litigation or shareholder activism, which could cause us to incur significant
expense, hinder execution of business and growth strategy and impact our share price.
|
•
|
Future resales of Waldencast plc Class A ordinary shares after the consummation of the Business Combination may cause the
market price of Waldencast plc’s securities to drop significantly, even if Waldencast plc’s business is doing well.
|
•
|
The obligations associated with being the publicly traded entity in the “Up-C” structure will involve significant expenses
and will require significant resources and management attention, which may divert from Waldencast plc’s business operations.
|
•
|
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate the Business
Combination, require substantial financial and management resources and increase the time and costs of completing a business combination.
|
•
|
We are currently an emerging growth company within the meaning of the Securities Act, and to the extent we have taken
advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other
public companies.
|
•
|
As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file
less information with the SEC than a U.S. company. This may limit the information available to holders of the ordinary shares.
|
•
|
As a foreign private issuer, we are permitted to rely on exemptions from certain stock exchange corporate governance
standards. As a result, our shareholders may be afforded less protection than shareholders of companies that are subject to all corporate governance requirements of the Exchange Act and U.S. stock exchanges.
|
•
|
We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.
|
(in thousands, except for share data)
|
| |
For the nine months ended
September 30, 2021
|
Formation and operating costs
|
| |
$964
|
Loss from operations
|
| |
(964)
|
|
| |
|
Other income (expense):
|
| |
|
Interest income on operating account
|
| |
1
|
Interest income on marketable securities held in Trust Account
|
| |
30
|
Offering expenses related to warrant issuance
|
| |
(719)
|
Change in fair value of forward purchase agreement liabilities
|
| |
2,664
|
Change in fair value of warrant liabilities
|
| |
4,010
|
Total other income
|
| |
5,986
|
|
| |
|
Net income
|
| |
$5,022
|
|
| |
|
Weighted average shares outstanding, Class A ordinary
shares subject to possible redemption
|
| |
24,895,604
|
Basic and diluted net income per share, Class A ordinary
Shares subject to possible redemption
|
| |
$0.15
|
Weighted average shares outstanding, Non-redeemable Class B ordinary shares
|
| |
7,977,564
|
Basic and diluted net income per share, Non-redeemable Class B ordinary
shares
|
| |
$0.15
|
(in thousands)
|
| |
For the nine months ended
September 30, 2021
|
Net cash used in operating activities
|
| |
$(1,168)
|
Net cash used in investing activities
|
| |
$ (345,000)
|
Net cash provided by financing activities
|
| |
$346,503
|
(in thousands)
|
| |
As of September 30,
2021
|
Total assets
|
| |
$ 345,703
|
Total liabilities
|
| |
$36,062
|
Class A ordinary shares subject to possible redemption
|
| |
$ 345,000
|
Total shareholders' deficit
|
| |
$(35,359)
|
|
| |
For the nine months ended September 30,
|
| |
For the year ended December 31,
|
||||||
(in thousands, except for share data)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
Net revenue
|
| |
$152,714
|
| |
$50,864
|
| |
$84,145
|
| |
$117,085
|
Total costs and expenses
|
| |
132,459
|
| |
64,585
|
| |
92,118
|
| |
105,873
|
Operating (loss) income
|
| |
20,255
|
| |
(13,721)
|
| |
(7,973)
|
| |
11,212
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
8,099
|
| |
4,532
|
| |
6,281
|
| |
6,834
|
Loss on Extinguishment of Debt
|
| |
2,317
|
| |
—
|
| |
—
|
| |
—
|
Gain on PPP Loan forgiveness (Note 8)
|
| |
(6,824)
|
| |
—
|
| |
—
|
| |
—
|
Other expense, net
|
| |
251
|
| |
9
|
| |
11
|
| |
147
|
Income tax expense (benefit)
|
| |
2,112
|
| |
(6,507)
|
| |
(5,094)
|
| |
(1,589)
|
Net income (loss)
|
| |
$14,300
|
| |
$(11,755)
|
| |
$(9,171)
|
| |
$5,820
|
Net income (loss) per share of common stock - Basic and
Diluted
|
| |
$1.79
|
| |
$(1.47)
|
| |
$(1.14)
|
| |
$0.73
|
Weighted average shares of common stock outstanding -
Basic and Diluted
|
| |
8,000,002
|
| |
8,000,002
|
| |
8,000,002
|
| |
8,000,002
|
|
| |
For the nine months ended September 30,
|
| |
For the year ended December 31,
|
||||||
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
Net cash provided by (used in) operating activities
|
| |
$ 15,185
|
| |
$(12,504)
|
| |
$(7,251)
|
| |
$3,776
|
Net cash used in investing activities
|
| |
$(4,112)
|
| |
$(1,349)
|
| |
$(1,887)
|
| |
$(788)
|
Net cash provided by (used in) financing activities
|
| |
$5,437
|
| |
$23,740
|
| |
$ 14,319
|
| |
$ (6,814)
|
(in thousands)
|
| |
As of September 30,
2021
|
| |
As of December 31,
2020
|
| |
As of December 31,
2019
|
Total assets
|
| |
$ 241,041
|
| |
$ 218,423
|
| |
$ 213,278
|
Total liabilities
|
| |
$ 137,357
|
| |
$ 127,031
|
| |
$114,745
|
Total shareholder's equity
|
| |
$ 103,684
|
| |
$91,392
|
| |
$98,533
|
Total liabilities and shareholder's equity
|
| |
$ 241,041
|
| |
$ 218,423
|
| |
$ 213,278
|
|
| |
For the nine months ended
September 30,
|
| |
For the year ended December 31,
|
||||||
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
Net sales
|
| |
$ 39,663
|
| |
$ 31,426
|
| |
$39,515
|
| |
$50,811
|
Total costs and expenses
|
| |
39,417
|
| |
38,642
|
| |
51,755
|
| |
59,482
|
Operating income (loss)
|
| |
246
|
| |
(7,216)
|
| |
(12,240)
|
| |
(8,671)
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
Interest expense, net
|
| |
1
|
| |
16
|
| |
301
|
| |
1,369
|
Other expense, net
|
| |
61
|
| |
298
|
| |
393
|
| |
918
|
Income tax provision
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net income (loss)
|
| |
$184
|
| |
$(7,530)
|
| |
$ (12,934)
|
| |
$ (10,958)
|
Comprehensive income (loss)
|
| |
$184
|
| |
$(7,530)
|
| |
$ (12,934)
|
| |
$ (10,958)
|
|
| |
For the nine months ended
September 30,
|
| |
For the year ended December 31,
|
||||||
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
Net cash provided by (used in) operating activities
|
| |
$227
|
| |
$(7,771)
|
| |
$(4,694)
|
| |
$(20,124)
|
Net cash used in investing activities
|
| |
$ (961)
|
| |
$(3,754)
|
| |
$(6,001)
|
| |
$(1,106)
|
Net cash provided by financing activities
|
| |
$—
|
| |
$ 10,000
|
| |
$ 10,000
|
| |
$25,000
|
(in thousands)
|
| |
As of September 30,
2021
|
| |
As of December 31,
2020
|
| |
As of December 31,
2019
|
Total assets
|
| |
$36,335
|
| |
$34,988
|
| |
$46,255
|
Total liabilities
|
| |
$8,769
|
| |
$7,738
|
| |
$15,919
|
Total redeemable preferred units
|
| |
$85,904
|
| |
$66,981
|
| |
$56,651
|
Total members' equity
|
| |
$(58,338)
|
| |
$(39,731)
|
| |
$(26,315)
|
Total liabilities, redeemable preferred units, and
members' equity
|
| |
$36,335
|
| |
$34,988
|
| |
$46,255
|
•
|
Assuming No Redemptions: This scenario assumes that none of Waldencast’s
shareholders elect to redeem their Class A ordinary shares for a pro rata portion of cash in the Trust Account, and thus the full amount of the approximately $345.0 million held in the Trust Account is available for the Business
Combination.
|
•
|
Assuming Maximum Redemptions: There is no specified Maximum Redemptions threshold;
however, the Closing is conditioned upon minimum closing available cash of $565.0 million (calculated as the cash in the trust account after giving effect to redemptions, plus the PIPE Investment, the FPA proceeds and the cash and
cash equivalents of Waldencast prior to closing) which does not result in 100% redemptions. Hence, this scenario assumes that Waldencast’s shareholders will redeem 21,984,625 shares of Class A ordinary shares for aggregate redemption
payments of $219.9 million. The number of public redemption shares of 21,984,625 shares was calculated based on the estimated per share redemption value of $10.00 ($345.0 million of cash from trust account divided at September 30,
2021 by 34,500,000 outstanding Waldencast public shares).
|
|
| |
Pro Forma Combined
(Assuming No Redemptions)
|
| |
Pro Forma Combined
(Assuming Maximum
Redemptions)
|
|
| |
(in thousands, except share and per share data)
|
|||
Summary Unaudited Pro Forma Condensed Combined Statement of
Operations Data Nine Months Ended September 30, 2021
|
| |
|
| |
|
Revenue
|
| |
$173,878
|
| |
$173,878
|
Net income (loss) per share - basic
|
| |
$0.03
|
| |
$0.03
|
Weighted-average common shares outstanding - basic
|
| |
109,800,724
|
| |
93,066,099
|
Net income (loss) per share - diluted
|
| |
$0.03
|
| |
$0.03
|
Weighted-average common shares outstanding - diluted
|
| |
130,159,863
|
| |
115,395,863
|
Summary Unaudited Pro Forma Condensed Combined Statement of
Operations Data Year Ended December 31, 2020
|
| |
|
| |
|
Revenue
|
| |
$118,221
|
| |
$118,221
|
Net income (loss) per share - basic and diluted
|
| |
$(0.86)
|
| |
$(0.98)
|
Weighted-average common shares outstanding - basic and diluted
|
| |
109,800,724
|
| |
93,066,099
|
Summary Unaudited Pro Forma Condensed Combined Balance
Sheet as of September 30, 2021
|
| |
|
| |
|
Total assets
|
| |
$1,383,645
|
| |
$1,235,985
|
Total liabilities
|
| |
246,654
|
| |
246,654
|
Total equity
|
| |
1,136,991
|
| |
989,331
|
•
|
have economic or business interests or goals that are inconsistent with ours;
|
•
|
take actions contrary to our instructions, requests, policies or objectives;
|
•
|
be unable or unwilling to fulfill their obligations to comply with applicable regulations, including those regarding the
safety and quality of products and ingredients and good manufacturing practices;
|
•
|
have financial difficulties;
|
•
|
encounter raw material or labor shortages;
|
•
|
encounter increases in raw material or labor costs that may affect our procurement costs;
|
•
|
disclose our confidential information or intellectual property to competitors or third parties;
|
•
|
engage in activities or employ practices that may harm our reputation; and
|
•
|
work with, be acquired by, or come under control of, our competitors.
|
•
|
adverse changes in tariff and trade protection measures;
|
•
|
unexpected changes or differences in foreign regulatory requirements;
|
•
|
potentially negative consequences from changes in tax laws;
|
•
|
the potential business failure of one or more of our distribution partners;
|
•
|
changing economic conditions in countries where our products are sold or manufactured;
|
•
|
exchange rate risks;
|
•
|
potential political unrest and hostilities;
|
•
|
potential natural disasters in countries where our products are sold;
|
•
|
differing degrees of protection for intellectual property; and
|
•
|
difficulties in coordinating foreign distribution.
|
•
|
failure to integrate management information systems, personnel, research and development and marketing, operations, sales and
support;
|
•
|
disruption of our ongoing business and diversion of management’s attention from other business matters;
|
•
|
potential loss of the acquired company’s customers;
|
•
|
failure to develop further the acquired company’s technology;
|
•
|
unanticipated costs and liabilities; and
|
•
|
other accounting consequences.
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of any clinical trials we
may be required to conduct;
|
•
|
we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product is
safe and effective for its proposed indication or bioequivalent to a listed drug;
|
•
|
the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign
regulatory authorities for approval;
|
•
|
serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using
drugs similar to our products;
|
•
|
we may be unable to demonstrate that a product’s clinical and other benefits outweigh its safety risks;
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or
clinical trials;
|
•
|
the data collected from clinical trials may not be acceptable or sufficient to support the submission of an NDA, ANDA or
other submission or to obtain regulatory approval in the U.S. or elsewhere, and we may be required to conduct additional clinical studies;
|
•
|
the FDA’s or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the
specifications of our products;
|
•
|
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of
third-party manufacturers with which we contract for clinical and commercial supplies; and
|
•
|
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a
manner rendering our clinical data insufficient for any approvals.
|
•
|
Comparative metabolism studies in rats and mice by oral and dermal routes;
|
•
|
Reproductive toxicity study in rats and mice by oral route; and
|
•
|
Dermal carcinogenicity studies of HQ in mice and rats.
|
•
|
regulatory authorities may suspend, limit or withdraw approvals of such product (to the extent subject to such approvals), or
seek an injunction against its manufacture or distribution;
|
•
|
regulatory authorities may require warnings or issue safety alerts, Dear Healthcare Provider letters, press releases or other
communications containing warnings or other safety information about the product;
|
•
|
we may be required to change the way the product is administered or conduct clinical trials;
|
•
|
we may be subject to fines, injunctions or the imposition of criminal penalties;
|
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we could be sued and held liable for harm caused to patients; and
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our reputation may suffer.
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the failure of the third party to manufacture our products on schedule, or at all, including if our third-party contractors
give greater priority to the supply of other products over our products or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;
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the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms;
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the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or
inconvenient for us;
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the breach by the third-party contractors of our agreements with them;
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the failure of third-party contractors to comply with applicable regulatory requirements; and
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the failure of the third party to manufacture our products according to our specifications.
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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully
soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or
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the federal civil false claims laws, including, without limitation, the federal False Claims Act, which can be enforced
through “qui tam,” or whistleblower actions, by private citizens, on behalf of the federal government, and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing
to be presented, false or fraudulent claims for payment of government funds, or knowingly making or using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly
and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;
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the Civil Monetary Penalties Law, which prohibits, among other things, an individual or entity from offering remuneration to
a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider any item or service for which
payment may be made by the federal healthcare program;
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the criminal healthcare fraud provisions of HIPAA and related rules that prohibit knowingly and willfully executing a scheme
or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare
benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
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the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals, and medical
supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Centers for Medicare & Medicaid Services under the Open Payments Program, information related to
payments or other transfers of value made to teaching hospitals, physicians (as defined by statute) and certain non-physician practitioners including physician assistants and nurse practitioners, as well as ownership and investment
interests held by physicians and their immediate family members;
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federal consumer protection and unfair competition laws, which broadly regulate platform activities and activities that
potentially harm consumers; and
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state and foreign law equivalents of each of the above federal laws, such as anti-kickback, self-referral and false claims
laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and self-pay patients.
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divert existing management, scientific and financial resources;
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subject us to significant liabilities;
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result in a ruling that allows our competitors to market competitive products without obtaining a license from us;
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require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us, if at all; or
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force us to discontinue selling or modify our products, or to develop new products.
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the level of research and development investment required to maintain and improve our competitive position;
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the success of our product sales and related collections;
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our need or decision to acquire or license complementary businesses, products or technologies;
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costs relating to the expansion of our distribution channels;
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costs relating to the expansion of the sales force, management and operational support;
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competing technological and market developments; and
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costs relating to changes in regulatory policies or laws that affect our operations.
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demand for and market acceptance of our products;
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the development of new competitive products by others;
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changes in regulatory classifications of our products;
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changes in physician or patient acceptance of the use of physician-dispensed products;
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changes in treatment practices of physicians who currently prescribe our products;
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reduced demand for our products during the summer months due to variability of patient compliance resulting from travel and
other disruptive activities, particularly during July and August;
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delays between our expenditures to acquire new product lines or expand into new distribution channels and the generation of
revenues from those new products or distribution channels;
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capital investments and expenditures to support strategic initiatives;
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the timing, release and competitiveness of our products;
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increases in the cost of raw materials used to manufacture our products;
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the mix of products that we sell during any time period;
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the amount and timing of operating expenses;
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increased price competition;
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our ability to achieve and sustain a level of liquidity sufficient to grow and support our business and operations;
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legal costs and settlement expenses associated with litigation and related reimbursements from insurance carriers, if any;
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changes in the regulatory environment;
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legal costs and potential penalties related to regulatory matters; and
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adverse changes in the level of economic activity in the U.S. and other major regions in which we do business, including any
economic downturn caused by the COVID-19 pandemic and other factors outside our control.
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grow awareness, relevance and trial of our brand and products;
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source, launch and execute our innovation plans with excellence;
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maintain a regular supply of our core existing products and execute effective go-to-market strategies to grow them;
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maintain and further strengthen our relationships with our retail partners in each market where we operate;
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maintain and enhance our reputation as a provider of high-quality products;
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secure new points of distribution in new markets and retailers;
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maintain the ability to sell our products within our retail partners and operate and ship from our own platforms without
interruption;
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enhance the productivity of our brand within our points of distribution;
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maintain and enhance our digital platforms and capabilities;
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execute our go-to-market strategies effectively;
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protect our key talent from leaving;
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ensure that we are able to sell our products to our retailers with attractive margins that deliver profit;
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achieve our growth targets with the financial investments outlined in our plans; and
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predict our growth and manage our financial investments appropriately in order to deliver our targets.
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we may lose one or more significant retailers, or sales of our products through these retailers may decrease;
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the ability of our third-party suppliers to produce our products and of our distributors to distribute our products could be
disrupted;
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our products may be the subject of regulatory actions, including, but not limited to, actions by the FDA, the FTC and the
Consumer Product Safety Commission (“CPSC”) in the U.S.;
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we may be unable to introduce new products that appeal to consumers or otherwise successfully compete with our competitors in
the cosmetics industry;
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we may be unsuccessful in enhancing the recognition and reputation of our brand, and our brand may be damaged as a result of,
among other reasons, our failure, or alleged failure, to comply with applicable ethical, social, product, labor or environmental standards;
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we may experience service interruptions, data corruption, cyber-based attacks or network security breaches which result in
the disruption of our operating systems or the loss of confidential information of our consumers;
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we may be unable to retain key members of our senior management team or attract and retain other qualified personnel; and
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we may be affected by any adverse economic conditions in the U.S. or internationally.
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limited visibility into, and difficulty predicting from quarter to quarter, the level of activity in our customers’
practices;
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changes in the technology or advertising landscape that increase costs for consumer reach, engagement, acquisition or
conversion;
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changes in geographic, channel, or product mix;
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weakness in consumer spending as a result of a slowdown in the global, U.S. or other economies;
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higher manufacturing costs;
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competition in general and competitive developments in the market;
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changes in relationships with our customers and distributors, including timing of orders;
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changes in the timing of when revenues are recognized, including as a result of the timing of receipt of product orders and
shipments, the introduction of new products, product offerings or promotions, modifications to our terms and conditions or as a result of new accounting pronouncements or changes to critical accounting estimates;
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fluctuations in currency exchange rates against the U.S. dollar;
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our inability to scale, suspend or reduce production based on variations in product demand;
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seasonal fluctuations in demand;
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success of or changes to our marketing programs from quarter to quarter;
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increased advertising or marketing efforts or aggressive price competition from competitors;
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changes to our effective tax rate;
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unanticipated delays and disruptions in the manufacturing process caused by insufficient capacity or availability of raw
materials, turnover in the labor force or the introduction of new production processes, power outages or natural or other disasters beyond our control;
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underutilization of manufacturing facilities;
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major changes in available technology or the preferences of customers may cause our current product offerings to become less
competitive or obsolete;
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costs and expenditures in connection with litigation;
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costs and expenditures in connection with the establishment of treatment planning and fabrication facilities in international
locations;
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costs and expenditures in connection with the hiring and deployment of direct sales force personnel;
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unanticipated delays in our receipt of customer records for any reason;
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disruptions to our business due to political, economic or other social instability or any governmental regulatory or similar
actions, including the impact of a pandemic such as the COVID-19 pandemic, any of which results in changes in consumer spending habits or consumers being unable or unwilling to visit spas, as well as any impact on workforce absenteeism;
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inaccurate forecasting of net sales, production and other operating costs;
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investments in research and development to develop new products and enhancements; and
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timing of industry tradeshows.
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have economic or business interests or goals that are inconsistent with ours;
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take actions contrary to our instructions, requests, policies or objectives;
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be unable or unwilling to fulfill their obligations under relevant purchase orders, including obligations to meet our
production deadlines, quality standards, pricing guidelines and product specifications, or to comply with applicable regulations, including those regarding the safety and quality of products and ingredients and good manufacturing
practices;
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have financial difficulties;
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encounter raw material or labor shortages;
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encounter increases in raw material or labor costs which may affect our procurement costs;
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disclose our confidential information or intellectual property to competitors or third parties;
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engage in activities or employ practices that may harm our reputation; and
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work with, be acquired by, or come under control of our competitors.
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any reduction in consumer traffic and demand at our retailers as a result of economic downturns, pandemics or other health
crises, changes in consumer preferences or reputational damage as a result of, among other developments, data privacy breaches, regulatory investigations or employee misconduct;
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any credit risks associated with the financial condition of our retailers; and
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the effect of consolidation or weakness in the retail industry or at certain retailers, including store closures and the
resulting uncertainty.
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local political and economic instability;
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increased expense of developing, testing and making localized versions of our products;
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difficulties in hiring and retaining employees;
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differing employment practices and laws and labor disruptions;
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pandemics, such as the COVID-19 pandemic, and natural disasters;
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difficulties in managing international operations, including any travel restrictions imposed on us or our customers, such as
those imposed in response to the COVID-19 pandemic;
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fluctuations in currency exchange rates;
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foreign exchange controls that could make it difficult to repatriate earnings and cash;
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import and export controls, license requirements and restrictions;
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controlling production volume and quality of the manufacturing process;
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acts of terrorism and acts of war;
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general geopolitical instability and the responses to it, such as the possibility of economic sanctions, trade restrictions
and changes in tariffs (e.g., recent economic sanctions implemented by the U.S. against China and Russia and tariffs imposed by the U.S. and China);
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interruptions and limitations in telecommunication services;
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product or material transportation delays or disruption, including as a result of customs clearance, violence, protests,
police and military actions, or natural disasters;
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risks of noncompliance by our employees, contractors, or partners or agents with, and burdens of complying with, a wide
variety of extraterritorial, regional and local laws, including competition laws and anti-bribery laws such as the FCPA and the UK Bribery Act 2010, despite our compliance efforts and activities;
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the impact of government-led initiatives to encourage the purchase or support of domestic vendors, which can affect the
willingness of customers to purchase products from, or collaborate to promote interoperability of products with, companies whose headquarters or primary operations are not domestic;
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an inability to obtain or maintain adequate intellectual property protection for our brand and products;
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longer payment cycles and greater difficulty in accounts receivable collection;
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a legal system subject to undue influence or corruption;
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a business culture in which illegal sales practices may be prevalent; and
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potential adverse tax consequences.
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divert existing management, scientific and financial resources;
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subject us to significant liabilities;
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•
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result in a ruling that allows our competitors to market competitive products without obtaining a license from us;
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require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us, if at all; or
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force us to discontinue selling or modify our products, or to develop new products or to rebrand our products.
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In January 2021, the Sponsor subscribed for an aggregate of 7,187,500 Waldencast Class B ordinary shares for an aggregate
purchase price of $0.025 million, or approximately $0.003 per share. In February 2021, the Sponsor transferred 20,000 Waldencast Class B ordinary shares to each of the Investor Directors, resulting in the Sponsor holding 7,107,500
Waldencast Class B ordinary shares. As part of Waldencast’s initial public offering, the Sponsor and certain other shareholders, including the Investor Directors, agreed pursuant to the Letter Agreement, among other things, to waive
their respective redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of a business combination and their respective rights to liquidating distributions from the trust
account in respect of the founder shares if Waldencast fails to complete a business combination within the required period. Waldencast did not provide any separate consideration to the Sponsor or those certain other shareholders,
including the Investor Directors, for such waiver. In March 2021, we effected a share capitalization resulting in the Sponsor holding an aggregate of 8,545,000 Waldencast Class B ordinary shares. As such, the Sponsor and the Investor
Directors collectively own 20% of our issued and outstanding shares.
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The 8,545,000 Waldencast Class B ordinary shares owned by Sponsor, if valued based on the closing price of $10.00 per public
share on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $85.5 million (after
giving effect to the conversion of such Waldencast Class B ordinary shares into shares of Waldencast plc Class A ordinary shares in connection with the Transactions, including after giving effect to the Domestication). If Waldencast
does not consummate a business combination by
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The 80,000 Waldencast Class B ordinary shares collectively owned by the Investor Directors, if valued based on the closing
price of $10.00 per public share on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of
$0.8 million (after giving effect to the conversion of such Waldencast Class B ordinary shares into shares of Waldencast plc Class A ordinary shares in connection with the Transactions, including after giving effect to the
Domestication). If Waldencast does not consummate a business combination by March 18, 2023 (or during any Extension Period), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public
shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of
creditors and the requirements of other applicable law. In such event, the 80,000 Waldencast Class B ordinary shares owned by the Investor Directors would be worthless because following the redemption of the public shares, Waldencast
would likely have few, if any, net assets and because the Sponsor and Waldencast’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account with respect to any Waldencast
Class A ordinary shares and Waldencast Class B ordinary shares held by it or them, as applicable, if Waldencast fails to complete a business combination within the required period.
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The Sponsor purchased an aggregate of 5,933,333 private placement warrants from Waldencast simultaneously with the
consummation of Waldencast’s initial public offering for an aggregate purchase price of $8.9 million, which will automatically convert into 5,933,333 Waldencast plc warrants in connection with the Transactions (including after giving
effect to the Domestication). The 5,933,333 private placement warrants, if valued based on the closing price of $0.80 per public warrant on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this
proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $4.7 million, but may expire and become worthless if Waldencast fails to complete a business combination by March 18, 2023. As
a result of Sponsor’s interest in the Waldencast Class B ordinary shares and private placement warrants, Sponsor and its affiliates have an incentive to complete an initial business combination and may have a conflict of interest in the
transaction, including without limitation, in determining whether a particular business is an appropriate business with which to effect Waldencast’s initial business combination.
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The Sponsor and Dynamo Master Fund (a member of the Sponsor) initially entered into the Sponsor Forward Purchase Agreement
with us that provides for the purchase of an aggregate of 16,000,000 Waldencast plc Units comprised of 16,000,000 Waldencast Class A ordinary shares and 5,333,333 redeemable warrants, for an aggregate purchase price of $160.0 million,
or $10.00 per one Waldencast Class A ordinary share and one-third of one redeemable warrant, in a private placement to close substantially concurrently with the Closing. On December 20, 2021, the Sponsor and Burwell Mountain Trust (a
member of the Sponsor) entered into an assignment and assumption agreement, pursuant to which the Sponsor assigned, and Burwell Mountain Trust assumed, all of the Sponsor’s rights and benefits as purchaser under the Sponsor Forward
Purchase Agreement. Additionally, the Beauty Ventures entered into the Third-Party Forward Purchase Agreement with us that provides for the purchase of an aggregate of 17,300,000 Waldencast plc Units comprised of 17,300,000 Waldencast
Class A ordinary shares and 5,766,666 redeemable warrants, for an aggregate purchase price of $173.0 million, or $10.00 per one Waldencast Class A ordinary share and one-third of one redeemable warrant, in a private placement to close
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In the event that Waldencast fails to consummate a business combination within the prescribed time frame (pursuant to the
Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Waldencast will be required to provide for payment of claims of creditors that were not waived that may be brought
against Waldencast within the ten years following such redemption. In order to protect the amounts held in Waldencast’s trust account, the Sponsor has agreed that it will be liable to Waldencast if and to the extent any claims by a
third party (other than Waldencast’s independent auditors) for services rendered or products sold to Waldencast, or a prospective target business with which Waldencast has discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any
claims under the indemnity of the underwriters of Waldencast’s initial public offering against certain liabilities, including liabilities under the Securities Act.
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In order to finance transaction costs in connection with a Business Combination, the Sponsor has advanced funds to Waldencast
for working capital purposes, including $1.5 million as of February 8, 2022. These outstanding advances have been documented in a convertible promissory note, dated as of August 18, 2021 (the “Promissory Note”), issued by Waldencast to
the Sponsor, pursuant to which Waldencast may borrow up to $1.5 million from the Sponsor (including those amounts which are currently outstanding). The Promissory Note is non-interest bearing, unsecured and due and payable in full on
the earlier of (x) March 18, 2023 and (y) the date Waldencast consummates its initial business combination. If Waldencast does not complete the initial business combination within the required period, Waldencast may use a portion of the
working capital held outside the trust account to repay such advances and any other working capital advances made to Waldencast, but no proceeds held in the trust account would be used to repay such advances and any other working
capital advances made to Waldencast, and Sponsor may not be able to recover the value it has loaned to Waldencast and any other working capital advances it may make.
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Waldencast’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by
them in connection with certain activities on Waldencast’s behalf, such as identifying and investigating possible business targets and business combinations, as well as repayment of any working capital advances. However, if Waldencast
fails to consummate a business combination by March 18, 2023, they will not have any claim against the trust account for reimbursement or repayment. Accordingly, Waldencast may not be able to reimburse such expenses or repay such
advances if the Business Combination or another business combination, is not completed by such date. As of December 31, 2021, Waldencast’s officers and directors and their affiliates are entitled to approximately $1.5 million in
reimbursable out-of-pocket expenses including repayment of amounts pursuant to Working Capital Loans. As of February 8, 2022, there were approximately $0.3 million of unpaid reimbursable expenses or working capital advances outstanding
(which consists of funds advanced to Waldencast by Sponsor pursuant to the Promissory Note).
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As noted above, the Sponsor purchased 7,187,500 Waldencast Class B ordinary shares for an aggregate purchase price of $0.025
million, or approximately $0.003 per share (after taking into account the forfeiture by Sponsor of 937,500 Waldencast Class B ordinary shares, as a result of the underwriters’ exercise of the over-allotment option) and now holds an
aggregate of 8,545,000 Waldencast Class B ordinary shares taking
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The Sponsor (including its representatives and affiliates) and Waldencast’s directors and officers may in the future become
affiliated with entities that are engaged in a similar business to Waldencast. The Sponsor and Waldencast’s directors and officers are not prohibited from sponsoring, investing or otherwise becoming involved with any other blank check
companies prior to Waldencast completing its initial business combination. Waldencast’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to Waldencast, and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be
resolved in Waldencast’s favor and such potential business opportunities may be presented to other entities prior to their presentation to Waldencast, subject to applicable fiduciary duties under Cayman Islands Companies Act.
Waldencast’s Cayman Constitutional Documents provide that Waldencast renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter that may be a corporate opportunity
for Waldencast, on the one hand, and one of its officers or directors, on the other, or that may be a corporate opportunity for both Waldencast and one of its officers or directors. Waldencast does not believe, however, that the
fiduciary duties or contractual obligations of its officers or directors or waiver of corporate opportunity materially affected its search for an acquisition target or will materially impact its ability to complete the Business
Combination. While certain of Waldencast’s directors and officers (Michel Brousset, Hind Sebti and Tassilo Festetics) serve as officers or directors of Waldencast Ventures, no opportunity was presented to Waldencast that was also
presented to Waldencast Ventures or any Affiliate of Waldencast and no opportunity that would have been appropriate for presentation to Waldencast was also presented to Waldencast Ventures. There have been no new investments by
Waldencast Ventures since Waldencast’s initial public offering. Waldencast’s board of directors has implemented guidelines, pursuant to which, unless and until Waldencast and Waldencast Ventures merge or otherwise become affiliated
entities, Mr. Brousset and Mr. Festetics will spend on average at least 90% and Ms. Sebti at least 80% of their monthly average working time providing services to Waldencast, and such directors and officers will not be separately
compensated by Waldencast Ventures, other than their equity interests in Waldencast Ventures already in place.
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Waldencast’s existing directors and officers will be eligible for continued indemnification and continued coverage under
Waldencast’s directors’ and officers’ liability insurance after the Transactions and pursuant to the Transaction Agreements.
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Pursuant to the Registration Rights Agreement, the Sponsor and the holders of the Waldencast Class B ordinary shares, private
placement warrants and any warrants that may be issued on conversion of working capital loans will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect
to the shares of Waldencast plc Class A ordinary shares and warrants held by such parties following the consummation of the Business Combination.
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Waldencast Ventures and Burwell Mountain Trust, controlled by certain of our directors (Michel Brousset and Felipe Dutra,
respectively), and Dynamo Master Fund, are members of the Sponsor. Each of Michel Brousset, Felipe Dutra and Dynamo Master Fund disclaims any beneficial ownership of the Waldencast shares held by the Sponsor.
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(i)
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any change in applicable laws or GAAP or any interpretation thereof following the date of the Transaction Agreements;
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(ii)
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any change in interest rates or economic, political, business or financial market conditions generally;
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(iii)
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the taking of any action required by the Obagi Merger Agreement or the Milk Equity Purchase Agreement, as applicable;
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(iv)
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any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar
occurrences), pandemic (including COVID-19, or any COVID-19 Measures (as defined herein) or any change in such COVID-19 Measures following the date of the Transaction Agreements) or change in climate;
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(v)
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any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or
international political conditions;
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(vi)
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any failure of Obagi or Milk, as applicable, to meet any projections or forecasts (provided that clause (vi) shall not
prevent a determination that any Event not otherwise excluded from the definition of Obagi Material Adverse Effect or Milk Material Adverse Effect underlying such failure to meet projections or forecasts has resulted, or would
reasonably be expected to result, in an Obagi Material Adverse Effect or a Milk Material Adverse Effect, as applicable);
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(vii)
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any Events generally applicable to the industries or markets in which Obagi and its subsidiaries or Milk and its
subsidiaries, as applicable, operate (including increases in the cost of products, supplies, materials or other goods purchased from third-party suppliers);
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(viii)
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the announcement of the Obagi Merger Agreement or the Milk Equity Purchase Agreement and consummation of the transactions
contemplated thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any
landlords, customers, suppliers, distributors, partners or employees of Obagi and its subsidiaries (with respect to the Obagi Merger Agreement) or of Milk and its subsidiaries (with respect to the Milk Equity Purchase Agreement) (it
being understood that this clause (viii) shall be disregarded for purposes of the representation and warranty set forth in Section 4.4 of the Obagi Merger Agreement and the condition to the Obagi Closing with respect thereto or in
Section 4.3 of the Milk Equity Purchase Agreement and the condition to the Milk Closing with respect thereto);
|
(ix)
|
any matter set forth on Obagi’s or Milk’s disclosure letter, as applicable; or
|
(x)
|
any action taken by, or at the written request of, Waldencast or Merger Sub (with respect to the Obagi Merger Agreement) or
the Milk Purchasers (with respect to the Milk Equity Purchase Agreement).
|
•
|
its employees may experience uncertainty about their future roles, which might adversely affect Obagi’s, Milk’s and
Waldencast plc’s ability to retain and hire key personnel and other employees;
|
•
|
customers, suppliers, business partners and other parties with which Obagi and Milk maintain business relationships may
experience uncertainty about the future of these relationships in light of the Business Combination and seek alternative relationships with third parties, seek to alter their business relationships with Waldencast plc or fail to extend
an existing relationship with Obagi or Milk, as applicable, to Waldencast plc; and
|
•
|
Obagi and Milk have expended and Waldencast plc will continue to expend significant costs, fees and expenses for professional
services and transaction costs in connection with the proposed Business Combination.
|
•
|
inability to integrate or benefit from acquired technologies or services in a profitable manner;
|
•
|
unanticipated costs or liabilities, including legal liabilities, associated with any such acquisition;
|
•
|
difficulty converting the customers of an acquired business into our current and future offerings;
|
•
|
diversion of management’s attention or resources from other business concerns;
|
•
|
adverse effects on our existing business relationships with customers, members or strategic partners as a result of the
acquisition;
|
•
|
complexities associated with managing the geographic separation of acquired businesses and consolidating multiple physical
locations;
|
•
|
coordination of product development and sales and marketing functions;
|
•
|
the potential loss of key employees;
|
•
|
acquisition targets not having as robust internal controls over financial reporting as would be expected of a public company;
|
•
|
becoming subject to new regulations as a result of an acquisition, including if we acquire a business serving customers in a
regulated industry or acquire a business with customers or operations in a country in which we do not already operate;
|
•
|
possible cash flow interruption or loss of revenue as a result of transitional matters; and
|
•
|
use of substantial portions of our available cash to consummate an acquisition.
|
•
|
an inability to compete effectively in a highly competitive environment with many incumbents having substantially greater
resources, which may therefore have the ability to spend more aggressively than us on advertising, promotions and/or marketing activities and have more flexibility than us to respond to changing business and economic conditions;
|
•
|
an inability to manage rapid change, increasing consumer expectations and growth;
|
•
|
an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty;
|
•
|
decreases in consumer spending or in retailer and consumer confidence and demand for skincare and beauty products on our
platform;
|
•
|
a reliance on proprietary technology to provide services and to manage our operations, and the failure of this technology to
operate effectively, or our failure to use such technology effectively;
|
•
|
an inability to deal with our subscribers’ or customers’ privacy concerns;
|
•
|
an inability to attract and retain subscribers or customers;
|
•
|
an inability to license or enforce intellectual property rights on which our business may depend;
|
•
|
any significant disruption in our computer systems or those of third parties that we would utilize in our operations;
|
•
|
an inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
|
•
|
potential liability for negligence, copyright, trademark infringement or state consumer fraud or other claims based on the
nature and content of materials that we may distribute;
|
•
|
competition for advertising revenue;
|
•
|
competition for the leisure and entertainment time and discretionary spending of subscribers or customers, which may
intensify in part due to advances in technology and changes in consumer expectations and behavior;
|
•
|
competition for consumer recognition and market share with products that have achieved significant national and international
brand name recognition and consumer loyalty;
|
•
|
disruption or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,”
misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events;
|
•
|
an inability to obtain necessary hardware, software and operational support;
|
•
|
reliance on third-party manufacturers, distributors, vendors or other service providers;
|
•
|
changes in consumer preferences, volatility in the prices of raw materials and competition in the retail market;
|
•
|
increased and evolving oversight by federal, state, local and/or foreign regulatory authorities, which may require us to
reformulate or discontinue certain products or revise product packaging, labeling or promotional claims; and
|
•
|
an inability to obtain or retain licenses on which our business may depend.
|
•
|
a limited availability of market quotations for Waldencast plc’s securities;
|
•
|
reduced liquidity for Waldencast plc’s securities;
|
•
|
a determination that Waldencast plc Class A ordinary shares are a “penny stock”, which will require brokers trading in
Waldencast plc Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Waldencast plc’s securities;
|
•
|
a limited amount of news and analyst coverage; and
|
•
|
a decreased ability to issue additional securities or obtain additional financing in the future.
|
•
|
The applicable U.S. courts had jurisdiction over the case, as recognized under Jersey law;
|
•
|
the judgment is given on the merits and is final, conclusive and non-appealable;
|
•
|
the judgment relates to the payment of a sum of money, not being taxes, fines or similar governmental penalties;
|
•
|
the defendant is not immune under the principles of public international law;
|
•
|
the same matters at issue in the case were not previously the subject of a judgment or disposition in a separate court;
|
•
|
the judgment was not obtained by fraud; and
|
•
|
the recognition and enforcement of the judgment is not contrary to public policy in Jersey.
|
•
|
changes in the industries in which Waldencast plc and its customers operate;
|
•
|
developments involving Waldencast plc’s competitors;
|
•
|
changes in laws and regulations affecting its business;
|
•
|
variations in its operating performance and the performance of its competitors in general;
|
•
|
actual or anticipated fluctuations in Waldencast plc’s quarterly or annual operating results;
|
•
|
publication of research reports by securities analysts about Waldencast plc or its competitors or its industry;
|
•
|
the public’s reaction to Waldencast plc’s press releases, its other public announcements and its filings with the SEC;
|
•
|
actions by stockholders, including the sale by the Beauty Ventures of any of their shares of our common stock;
|
•
|
additions and departures of key personnel;
|
•
|
commencement of, or involvement in, litigation involving the combined company;
|
•
|
changes in its capital structure, such as future issuances of securities or the incurrence of additional debt;
|
•
|
the volume of shares of Waldencast plc Class A ordinary shares available for public sale; and
|
•
|
general economic and political conditions, such as the effects of the COVID-19 outbreak, recessions, interest rates, local
and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
|
•
|
providing for a classified board of directors with staggered, three-year terms;
|
•
|
the ability of the Waldencast plc Board to issue shares of preferred stock, and to determine the price and other terms of
those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
the Waldencast plc Board will have the exclusive right to elect directors to fill a vacancy created by the expansion of the
Waldencast plc Board or the resignation, death or removal of a director, which will prevent shareholders from being able to fill vacancies on the Waldencast plc Board; and
|
•
|
the limitation of the liability of, and the indemnification of, the directors and officers of Waldencast plc.
|
•
|
will not have any fiduciary duty to refrain from (i) engaging in and possessing interests in other business ventures of every
type and description, including those engaged in the same or similar business activities or lines of business in which Waldencast plc or any of its subsidiaries now engages or proposes to engage or (ii) competing with Waldencast plc or
any of its affiliates, subsidiaries or representatives, on its own account, or in partnership with, or as an employee, officer, director or shareholder of any other Person (other than Waldencast plc or any of its subsidiaries);
|
•
|
will have no duty to communicate or present such transaction or matter to Waldencast plc or any of its subsidiaries, as the
case may be; and
|
•
|
will not be liable to Waldencast plc or its shareholders or to any subsidiary of Waldencast plc for breach of any duty
(fiduciary, contractual or otherwise) as a shareholder or director of Waldencast plc by reason of the fact that such Person, directly or indirectly, pursues or acquires such opportunity for itself, herself or himself, directs such
opportunity to another Person or does not present such opportunity to Waldencast plc or any of its subsidiaries, affiliates or representatives.
|
•
|
consider and vote upon a proposal to approve by ordinary resolution and adopt the Obagi Merger Agreement attached to this
proxy statement/prospectus statement as Annex A, pursuant to which, among other things, following the Domestication of Waldencast to Jersey, the merger of Merger Sub with and into Obagi, with Obagi surviving the merger as a wholly owned
subsidiary of Holdco 2 and an indirect wholly owned subsidiary of Waldencast plc in accordance with the terms and subject to the conditions of the Obagi Merger Agreement, as more fully described elsewhere in this proxy
statement/prospectus (the “Obagi Merger Proposal”);
|
•
|
consider and vote upon a proposal to approve by ordinary resolution and adopt the Milk Equity Purchase Agreement attached to
this proxy statement/prospectus statement as Annex B, pursuant to which, among other things, following the Domestication of Waldencast to Jersey, the purchase of 100% of the issued and outstanding membership interests of Milk by the
Milk Purchasers in accordance with the terms and subject to the conditions of the Milk Equity Purchase Agreement, as more fully described elsewhere in this proxy statement/prospectus (the “Milk Transaction Proposal” and, together with
the Obagi Merger Proposal, the “BCA Proposal”);
|
•
|
consider and vote upon a proposal to approve by special resolution, assuming the BCA Proposal is approved and adopted, the
change of Waldencast’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a public limited company under the laws of Jersey;
|
•
|
consider and vote upon the following four separate proposals to approve by special resolution in the case of Organizational
Documents Proposals A and D and by ordinary resolution in the case of Organizational Documents Proposals B and C:
|
•
|
to authorize the change in the authorized share capital of Waldencast from 500,000,000 Class A ordinary shares, par value
$0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 5,000,000 preferred shares, par value $0.0001 per share, to Class A ordinary shares, par value $0.0001 per share, of Waldencast plc, Class B
ordinary shares, par value $0.0001 per share, of Waldencast plc and preference shares of a par value of $0.0001 per share of Waldencast plc;
|
•
|
to provide that the Waldencast plc Board be divided into three classes, with each class made up of, as nearly as may be
possible, one-third of the total number of directors constituting the entire Waldencast plc Board, with only one class of directors being elected in each year and each class serving a three-year term;
|
•
|
to provide that certain provisions of the Proposed Constitutional Document will be subject to the Investor Rights Agreement,
including provisions governing the appointment, removal and replacement of directors, with respect to which Cedarwalk will have certain rights pursuant to the Investor Rights Agreement;
|
•
|
to authorize all other changes in connection with the replacement of Cayman Constitutional Documents with the Proposed
Constitutional Document in connection with the consummation of the Business Combination (a copy of which is attached to this proxy statement/prospectus as Annex H, respectively), including (1) changing the corporate name from
“Waldencast Acquisition Corp.” to “Waldencast plc”, (2) making Waldencast plc’s existence for an unlimited duration and (3) removing certain provisions related to Waldencast plc’s status as a blank check company that will no longer be
applicable upon consummation of the Business Combination, all of which Waldencast’s board of directors believes is necessary to adequately address the needs of Waldencast plc after the Business Combination;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution of the holders of Waldencast Class B ordinary shares, to
elect nine directors who, upon consummation of the Business Combination, will be the directors of Waldencast plc;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions
of The Nasdaq Stock Market Listing Rule 5635, the issuance of (a) Waldencast plc Class A ordinary shares to the PIPE Investors, pursuant to the PIPE Investment and the Obagi Shareholders, pursuant to the Obagi Merger Agreement and (b)
Waldencast plc Units to the Forward Purchasers, pursuant to the Forward Purchase Transaction;
|
•
|
consider and vote upon a proposal to approve the issuance of the Waldencast plc Non-Economic ordinary shares and the
reservation for issue of Waldencast plc Class A ordinary shares in exchange for Waldencast LP Common Units, in each case, to the Milk Members (as defined herein) pursuant to the Milk Equity Purchase Agreement;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution, the Waldencast plc 2022 Incentive Award Plan; and
|
•
|
consider and vote upon a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates,
if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.
|
•
|
You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed
on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Waldencast’s board
“FOR” the Obagi Merger Proposal, “FOR” the Milk Transaction Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance
Proposal, “FOR” the Milk Issuance Proposal, “FOR” the Incentive Award Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon
at the extraordinary general meeting will not be counted.
|
•
|
You can attend the extraordinary general meeting and vote in person or online. You will receive a ballot when you arrive.
However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way Waldencast can be sure that the broker, bank or nominee
has not already voted your shares.
|
•
|
you may send another proxy card with a later date;
|
•
|
you may notify Waldencast’s Secretary in writing before the extraordinary general meeting that you have revoked your proxy;
or
|
•
|
you may attend the extraordinary general meeting and vote in person or online, as indicated above, in which case your proxy
will be revoked without further action being required.
|
•
|
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying
public shares and public warrants prior to exercising your redemption rights with respect to the public shares;
|
•
|
submit a written request to Continental, Waldencast’s transfer agent, that Waldencast plc redeem all or a portion of your
public shares for cash; and
|
•
|
deliver your public shares to Continental, Waldencast’s transfer agent, physically or electronically through DTC.
|
(In millions, except share data)
|
| |
Assuming
No Redemptions
|
| |
Assuming 30%
Redemptions
|
| |
Assuming
Maximum
Redemptions(1)
|
| |
Assuming
90% Redemptions
|
Cash to Obagi Shareholders
|
| |
$380.0
|
| |
$380.0
|
| |
$327.5
|
| |
$282.2
|
Waldencast plc Class A Shares to Obagi Shareholders
|
| |
22,851,564
|
| |
22,851,564
|
| |
28,101,564
|
| |
32,634,659
|
1)
|
Assumes that 21,984,625 Class A ordinary shares are redeemed in connection with the Business Combination, which is the maximum
number of shares that may be redeemed without causing the Minimum Cash Condition to the closing of the Business Combination to be unsatisfied.
|
(a)
|
all Obagi Options, whether vested or unvested, will be assumed by Waldencast and converted automatically at the Obagi Merger
Effective Time into Waldencast plc Options, exclusive of any Obagi Options that have
|
(b)
|
all Obagi RSUs (or portion thereof), whether vested or unvested, will be assumed by Waldencast and converted at the Obagi
Merger Effective Time into corresponding restricted stock units in respect of Waldencast plc Class A ordinary shares. Subject to the terms of the Obagi Merger Agreement, each Waldencast plc RSU will relate to the whole number of shares
of Waldencast plc Class A ordinary shares (rounded down to the nearest whole share) equal to the number of shares of Obagi common stock subject to the applicable Obagi RSU in effect immediately prior to the Obagi Merger Effective Time,
multiplied by the Obagi Exchange Ratio. The terms of each Waldencast RSU will otherwise be substantially the same as the Obagi RSU for which it is substituted.
|
(i)
|
any change in applicable laws or GAAP or any interpretation thereof following the date of the Obagi Merger Agreement;
|
(ii)
|
any change in interest rates or economic, political, business or financial market conditions generally;
|
(iii)
|
the taking of any action required by the Obagi Merger Agreement;
|
(iv)
|
any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar
occurrences), pandemic (including COVID-19, or any COVID-19 Measures (as defined herein) or any change in such COVID-19 Measures following the date of the Obagi Merger Agreement) or change in climate;
|
(v)
|
any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or
international political conditions;
|
(vi)
|
any failure of Obagi to meet any projections or forecasts (provided that clause (vi) shall not prevent a determination that
any Event not otherwise excluded from the definition of Obagi Material Adverse Effect underlying such failure to meet projections or forecasts has resulted, or would reasonably be expected to result, in an Obagi Material Adverse
Effect);
|
(vii)
|
any Events generally applicable to the industries or markets in which Obagi and its subsidiaries operate (including increases
in the cost of products, supplies, materials or other goods purchased from third-party suppliers);
|
(viii)
|
the announcement of the Obagi Merger Agreement or the Milk Equity Purchase Agreement and consummation of the transactions
contemplated thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any
landlords, customers, suppliers, distributors, partners or employees of Obagi and its subsidiaries (it being understood that this clause (viii) shall be disregarded for purposes of the representation and warranty set forth in Section
4.4 of the Obagi Merger Agreement and the condition to the Obagi Closing with respect thereto);
|
(ix)
|
any matter set forth on Obagi’s disclosure letter (the “Obagi Disclosure Letter”); or
|
(x)
|
any action taken by, or at the written request of, Waldencast or Merger Sub.
|
•
|
change or amend the Governing Documents (as defined herein) of Obagi or any of Obagi’s subsidiaries, except as otherwise
required by law, or form or cause to be formed any new subsidiary of Obagi;
|
•
|
make or declare any dividend or distribution to shareholders of Obagi or make any other distributions in respect of any of
Obagi’s or any of its subsidiaries’ capital stock or equity interests, other than with respect to the Obagi Pre-Closing Restructuring;
|
•
|
split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of Obagi’s or any of its
subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly-owned subsidiary of Obagi that remains a wholly-owned subsidiary of Obagi after consummation of such transaction;
|
•
|
purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital
stock, membership interests or other equity interests of Obagi or its subsidiaries, other than with respect to (i) the Obagi Pre-Closing Restructuring and (ii) the acquisition by Obagi or any of its subsidiaries of any shares of capital
stock, membership interests or other equity interests of Obagi or its subsidiaries in connection with the forfeiture of any Obagi Awards;
|
•
|
enter into, modify in any material respect or terminate (other than expiration in accordance with its terms) any material
contract or real property lease, other than modification of or entry into such agreements in the ordinary course of business consistent with past practice or as required by law;
|
•
|
sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of Obagi or its
subsidiaries, except for (i) dispositions of obsolete or worthless equipment, (ii) transactions in the ordinary course of business consistent with past practice in an aggregate amount not exceeding $0.5 million, except that any such
transaction with Obagi Hong Kong and its subsidiaries, Clinactiv and its subsidiaries or any other related party (other than in connection with the Obagi Pre-Closing Restructuring) shall be excluded, or (iii) actions taken in connection
with the Obagi Pre-Closing Restructuring;
|
•
|
acquire any ownership interest in any real property;
|
•
|
except as otherwise required by law, or the terms of any benefit plan as in effect on the date of the Obagi Merger Agreement,
(i) grant any severance, retention, change in control or termination or similar pay, except (A) with respect to retention of any individual with annual base pay not in excess of $0.15 million, in the ordinary course of business
consistent with past practice, (B) in connection with hiring of any individual with annual base pay not in excess of $0.205 million, (C) in connection with promotion of any individual with annual base pay not in excess of $0.15 million
and (D) with respect to severance, termination, or similar pay, to any employee with annual base pay not in excess of $0.15 million and whose employment terminates after the date of the Obagi Merger Agreement, in the ordinary course of
business consistent with past practice, (ii) terminate, adopt, enter into or materially amend any benefit plan, (iii) materially increase the cash compensation, bonus opportunity or employee benefits of any employee, officer, director
or other individual service provider, except in the ordinary course of business consistent with past practice in respect of any individual with annual base pay not in excess of $0.15 million, (iv) establish any trust or take any other
action to secure the payment of any compensation payable by Obagi or any of Obagi’s subsidiaries or (v) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment or vesting of any
compensation or benefit payable by Obagi or any of Obagi’s subsidiaries in the case of any individual with annual base pay not in excess of $0.15 million, except in the ordinary course of business consistent with past practice in
respect of any individuals with annual base pay not in excess of $0.15 million;
|
•
|
(i) make any material change in the selling, distribution, advertising, terms of sale or collection practices that is
inconsistent with past practice, (ii) enter into any material business practices, programs or long term allowances not previously used in the ordinary course of business, or (iii) engage in the practice of “channel stuffing” or any
similar program, activity or other action that, in each case, is intended or would reasonably be expected to result in acquisition of products or services from Obagi and its subsidiaries that is materially in excess of normal customer
purchasing patterns consistent with past course of dealing during the twelve (12) months prior to the date hereof;
|
•
|
acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of
the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;
|
•
|
make any material loans or material advances to any person, except for (i) advances to employees, officers or independent
contractors of Obagi or any of Obagi’s subsidiaries for indemnification, attorneys’ fees, travel and other expenses incurred in the ordinary course of business consistent with past practice or (ii) extended payment terms for customers
in the ordinary course of business;
|
•
|
(i) make or change any material election in respect of material taxes, (ii) materially amend, modify or otherwise change any
filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreements” as described in Section 7121 of the Code (or any
similar provision of state, local, or foreign law) with any Governmental Authority in respect of material taxes, (v) settle any claim or assessment in respect of material taxes, (vi) affirmatively surrender or allow to expire any right
to claim a refund of material taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect of any material tax attribute that would give rise
to any claim or assessment of taxes (other than pursuant to extensions of time to file tax returns obtained in the ordinary course of business);
|
•
|
(i) incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Obagi or any subsidiary of Obagi or guaranty any debt securities of another person, other than any indebtedness or guarantee incurred in the ordinary course of business and in
an aggregate amount not to exceed $0.25 million, or (ii) discharge any secured or unsecured obligations or liabilities (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate exceed $0.25 million,
except as otherwise contemplated by the Obagi Merger Agreement or as such obligations become due;
|
•
|
issue any additional securities, including shares of Obagi common stock or securities exercisable for or convertible into
Obagi common stock, other than issuances of equity securities upon the exercise or settlement of Obagi Awards outstanding as of the date of the Obagi Merger Agreement;
|
•
|
adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of Obagi or its subsidiaries (other than the Obagi Merger and the Obagi Pre-Closing Restructuring);
|
•
|
waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, action, litigation or other legal
proceedings, except in the ordinary course of business or where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $0.25 million in the aggregate;
|
•
|
grant to or acquire from, or agree to grant to or acquire from any Person rights to any intellectual property that is
material to Obagi and its subsidiaries, or dispose of, abandon or permit to lapse any rights to any intellectual property except (i) for the expiration of patents and copyrights that are Obagi registered intellectual property in
accordance with the applicable statutory term or (ii) as reasonably necessary in the ordinary course of business;
|
•
|
disclose or agree to disclose to any person (other than Waldencast or any of its representatives) any trade secret or any
other material confidential or proprietary information, know-how or process of Obagi or any of its subsidiaries, in each case, other than in the ordinary course of business consistent with past practice and pursuant to obligations to
maintain the confidentiality thereof;
|
•
|
make or commit to make capital expenditures other than in an amount not in excess of the amount disclosed in the Obagi
Disclosure Letter, in the aggregate;
|
•
|
manage Obagi’s and its subsidiaries’ working capital in a manner other than in the ordinary course of business consistent
with past practice;
|
•
|
waive the restrictive covenant obligations of any current or former employee of Obagi or any of Obagi’s subsidiaries;
|
•
|
(i) limit the right of Obagi or any of Obagi’s subsidiaries to engage in any line of business or in any geographic area, to
develop, market or sell products or services, or to compete with any person or (ii) other than with respect to Obagi’s intellectual property, grant any exclusive or similar rights to any person, in
|
•
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terminate without replacement, amend in a manner materially detrimental to Obagi or any of Obagi’s subsidiaries, permit to
lapse or fail to use reasonable best efforts to maintain, reinstate or replace any material governmental authorization or material permit required for the conduct of the business of Obagi or any of Obagi’s subsidiaries;
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terminate (without replacement with similar or better coverage) or amend in a manner materially detrimental to Obagi or any
of Obagi’s subsidiaries any material insurance policy insuring the business of Obagi or any of Obagi’s subsidiaries; or
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enter into any agreement to do any action prohibited under Section 6.1 of the Obagi Merger Agreement.
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seek any approval from Waldencast’s shareholders to change, modify or amend the Investment Management Trust Agreement dated
as of March 15, 2021, between Waldencast and Continental, as trustee (the “Trust Agreement”), or the Governing Documents of Waldencast or Merger Sub, except (i) as contemplated by the Condition Precedent Proposals or the Adjournment
Proposal (collectively, the “Transaction Proposals”) or (ii) as otherwise required by law;
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except as contemplated by the Transaction Proposals, (i) make or declare any dividend or distribution to the shareholders of
Waldencast or make any other distributions in respect of any of Waldencast’s or Merger Sub’s capital stock, share capital or equity interests, (ii) split, combine, reclassify or otherwise amend any terms of any shares or series of
Waldencast’s or Merger Sub’s capital stock or equity interests or (iii) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership
interests, warrants or other equity interests of Waldencast or Merger Sub, other than a redemption of shares of Waldencast Class A ordinary shares effected in connection with the Obagi Merger;
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(i) make or change any material election in respect of material taxes, (ii) materially amend, modify or otherwise change any
filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreements” as described in Section 7121 of the Code (or any
similar provision of state, local, or foreign law) with any Governmental Authority in respect of material taxes, (v) settle any claim or assessment in respect of material taxes, (vi) affirmatively surrender or allow to expire any right
to claim a refund of material taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect of any material tax attribute that would give rise
to any claim or assessment of taxes (other than pursuant to extensions of time to file tax returns obtained in the ordinary course of business);
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other than as expressly required by the Obagi Sponsor Support Agreement, enter into, renew or amend in any material respect,
any transaction or contract with an affiliate of Waldencast or Merger Sub (including, for the avoidance of doubt, (i) the Sponsor and (ii) any person in which the Sponsor has a direct or indirect legal, contractual or beneficial
ownership interest of 5% or greater);
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issue or sell any debt securities or warrants or other rights to acquire any debt securities of Obagi or any of its
subsidiaries, or guaranty any debt securities of another person, other than any indebtedness for borrowed money or guarantee (i) incurred in the ordinary course of business consistent with past practice and in an aggregate amount not to
exceed $0.1 million or (ii) incurred between Waldencast and Merger Sub;
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incur, assume or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness, or guarantee any
indebtedness of another person, or otherwise knowingly and purposefully incur, assume, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness or otherwise knowingly and purposefully
incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations, other than fees and expenses for professional services incurred in support of the
transactions contemplated by the Obagi Merger Agreement and the Obagi Ancillary Agreements or in support of the ordinary course operations of Waldencast (which the parties agree shall include any indebtedness in respect of any working
capital loan incurred in the ordinary course of business in an aggregate amount not to exceed $3.5 million, including amounts under working capital loans outstanding as of the date of the Obagi Merger Agreement);
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(i) issue any securities of Waldencast or securities exercisable for or convertible into securities of Waldencast, other than
the issuance of the Obagi Stock Consideration, (ii) grant any options, warrants or other equity-based awards with respect to securities of Waldencast not outstanding on the date of the Obagi Merger Agreement or (iii) amend, modify or
waive any of the material terms or rights set forth in any Waldencast warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein;
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enter into any agreement to do any action prohibited under Section 7.5 of the Obagi Merger Agreement; or
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amend or waive any provision of the Milk Equity Purchase Agreement, including the exhibits attached thereto, or any Milk
Ancillary Documents, or enter into any new agreements with Milk, the equityholders of Milk, or any of their respective affiliates, in a manner that is materially adverse to Obagi or any of its subsidiaries.
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provide to Obagi and its subsidiaries any information obtained by Waldencast from Milk, in each case (i) to the extent
permitted by applicable law and solely as is necessary to determine if all closing conditions in the Milk Equity Purchase Agreement have been satisfied prior to, or will occur substantially concurrently with or immediately following,
the Closing, and the transactions contemplated under the Milk Equity Purchase Agreement will occur immediately following the Closing, and (ii) subject to confidentiality obligations that may be applicable to information furnished to
Milk or any of Milk’s subsidiaries by third parties that may be in Milk or any of its subsidiaries’ possession from time to time, and except for any information that is subject to attorney-client privilege;
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as soon as reasonably practicable following the date of the Obagi Merger Agreement and in any event prior to the effective
date of the Registration Statement, approve, adopt and submit for shareholder approval the Waldencast plc 2022 Incentive Award Plan in a form determined by Waldencast;
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as soon as practicable following the date that is 60 days after the Obagi Closing and subject to applicable securities laws,
file an effective registration statement on Form S-8 (or other applicable form) with respect to Waldencast plc’s common stock issuable under the Waldencast plc 2022 Incentive Award Plan and use commercially reasonable efforts to
maintain the effectiveness of such registration statement(s) (and maintain the current status of the prospectus or prospectuses contained therein) for so long as awards granted pursuant to the Waldencast plc 2022 Incentive Award Plan
remain outstanding;
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for a period of twelve (12) months following the date on which the Obagi Closing actually occurs (the “Obagi Closing Date”)
provide, or cause its affiliates to provide, each Obagi employee continuing employment with Waldencast plc or Obagi with (i) an annual base salary or hourly wage rate, as applicable, that is no less favorable than the annual base salary
or hourly wage rate, as applicable, provided to such employee immediately prior to the Obagi Closing Date, (ii) target cash incentive opportunity that is no less favorable than the target cash incentive opportunity provided to such
employee immediately prior to the Obagi Closing Date and (iii) health, retirement, welfare and other employee and fringe benefits that are no less favorable, in the aggregate, than those provided to such employee immediately prior to
the Obagi Closing Date;
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credit each Obagi employee continuing employment with Waldencast plc or Obagi with his or her years of service with Obagi
prior to the Obagi Closing Date to the same extent as such employee was (or would have been) entitled prior to the Obagi Closing Date;
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cause (i) each Obagi employee continuing employment with Waldencast plc or Obagi to be immediately eligible to participate in
any and all Waldencast plc benefit plans; (ii) all pre-existing condition exclusions and actively-at-work requirements of such Waldencast plc benefit plan to be waived for such employee and his or her covered dependents; and (iii) any
co-payments, deductibles and other eligible expenses incurred by such employee to be credited for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan year of each comparable Waldencast plc benefit plan;
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not make any grants under the Obagi Global Holdings Limited 2021 Stock Incentive Plan (the “Obagi Stock Plan”);
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take certain actions so that the amounts held in the Trust Account will be released from the Trust Account and so that the
Trust Account will terminate thereafter, in each case, pursuant to the terms and subject to the terms and conditions of the Trust Agreement;
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until the Obagi Merger Effective Time, ensure Waldencast remains listed as a public company on Nasdaq, and prepare and submit
to Nasdaq a listing application, if required under Nasdaq rules, covering the shares of the Waldencast plc Class A ordinary shares and warrants issuable in the Obagi Merger and the Domestication, and use reasonable best efforts to
obtain approval for the listing of such shares of and warrants for the Waldencast plc Class A ordinary shares;
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during the Obagi Interim Period, not, and cause its subsidiaries, affiliates and their respective representatives not to,
make any proposal or offer regarding, initiate any discussions or negotiations in respect of, or enter into any agreement for certain alternative transactions and terminate any such negotiations that were ongoing as of the date of the
Obagi Merger Agreement;
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subject to the terms of Waldencast’s Governing Documents, take all such action within its power as may be necessary or
appropriate such that immediately following the Obagi Merger Effective Time the Waldencast plc Board shall consist of up to nine directors, which shall initially include (i) Mr. Simon Dai as a designee of Cedarwalk, in its sole
discretion, who shall serve in the class of Waldencast directors having the longest prospective term immediately following the Closing, (ii) Mr. Michel Brousset, who shall be the Chief Executive Officer of Waldencast plc as of the Obagi
Closing, (iii) Mr. Felipe Dutra, who shall be the Executive Chairman of the Board of Directors of Waldencast plc as of the Obagi Closing, (iv) Mr. Cristiano Souza, (v) Ms. Sarah Brown, (vi) Ms. Juliette Hickman, (vii) Ms. Lindsay
Pattison, (viii) Mr. Zack Werner, and (ix) Mr. Aaron Chatterley, (as the eight director nominees of Waldencast);
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subject to approval of Waldencast’s shareholders, cause the Domestication to become effective prior to the Obagi Merger
Effective Time (see the section entitled “Domestication Proposal”);
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from and after the Obagi Merger Effective Time, as more fully set forth in the Obagi Merger Agreement, Waldencast and Obagi
will indemnify and hold harmless each present and former director and officer of Obagi and Waldencast and each of their respective subsidiaries against any costs, expenses, judgments, fines, losses, claims, damages or liabilities
incurred in connection with any legal proceeding arising out of or pertaining to matters existing or occurring at or prior to the Obagi Merger Effective Time, to the fullest extent that would have been permitted under applicable law and
the applicable Governing Documents to indemnify such person;
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Waldencast shall or shall cause Obagi following the Obagi Merger to (i) maintain, and cause its Subsidiaries to maintain for
a period of not less than six years from the Obagi Merger Effective Time provisions in its Governing Documents and those of its subsidiaries concerning the indemnification and exoneration (including provisions relating to expense
advancement) of its and its subsidiaries’ former and current officers, directors and employees, no less favorable to those persons than the provisions of the Governing Documents of Obagi, Waldencast or their respective subsidiaries, as
applicable, in each case, as of the date of the Obagi Merger Agreement and (ii) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those persons thereunder, in each;
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for a period of six years from the Obagi Merger Effective Time, Waldencast shall or shall cause Obagi following the Obagi
Merger to maintain in effect directors’ and officers’ liability, employment practices liability and fiduciary liability insurance covering those persons who are currently covered by Waldencast’s, Obagi’s or their respective
subsidiaries’ directors’ and officers’ liability, employment practices liability and fiduciary liability insurance policies on terms not less favorable to the insureds than the terms of such current insurance coverage, except that in no
event will Waldencast be required to pay an annual aggregate premium for such insurance in excess of 300% of the aggregate annual premium payable by Waldencast or Obagi, as applicable, for such insurance policy(ies) in effect on the
date of the Obagi Merger Agreement;
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on the Obagi Closing Date, enter into customary indemnification agreements reasonably satisfactory to each of Obagi and
Waldencast with the post-Obagi Closing directors and officers of Waldencast plc, which indemnification agreements will continue to be effective following the Obagi Closing;
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except as otherwise contemplated in Waldencast’s disclosure letter in respect of the Obagi Merger, from the date of the Obagi
Merger Agreement through the Obagi Merger Effective Time, keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under
applicable law;
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except as otherwise approved in writing by Obagi (which approval shall not be unreasonably withheld, conditioned or delayed)
and except for any of the following actions that would not increase conditionality, reduce the subscription amount under any Subscription Agreement, reduce the per share price under the Subscription Agreement, or reduce or impair the
rights of Waldencast under any Subscription Agreement, not permit any amendment or modification to be made to any waiver (in whole or in part) of, or provide consent to modify (including consent to terminate) any provision or remedy
under, or any replacements of, or any assignment or transfer of any of the Initial Subscription Agreements, in each case, other than any assignment or transfer contemplated therein or not expressly prohibited thereby;
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use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it deems to be
proper or advisable to consummate the transaction contemplated by the Subscription Agreements on the terms described therein, including using its reasonable best efforts to enforce its rights under the Subscription Agreements to cause
the PIPE Investors to pay to (or as directed by) Waldencast the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms;
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except as otherwise approved in writing by Obagi (which approval shall not be unreasonably withheld, conditioned or delayed)
and except for any of the following actions that would not increase conditionality, reduce the subscription amount under any Forward Purchase Agreement, reduce the per share price under any Forward Purchase Agreement, or reduce or
impair the rights of Waldencast under any Forward Purchase Agreement, Waldencast shall not permit any amendment or modification to be made to, any waiver (in whole or in part) of, or provide consent to modify (including consent to
terminate), any provision or remedy under, or any replacements of, or any assignment or transfer of, any of the Forward Purchase Agreements, in each case, other than any assignment or transfer contemplated therein (without any further
amendment, modification or waiver to such assignment or transfer provision);
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use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it deems to be
proper or advisable to consummate the transaction contemplated by each Forward Purchase Agreement on the terms described therein, including using its reasonable best efforts to enforce its rights under such Forward Purchase Agreement in
accordance with its terms;
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use reasonable best efforts to comply in all material respects with its obligations under the Milk Equity Purchase Agreement,
subject to the terms and conditions thereof, and to ensure the consummation of the Milk Transaction; and
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promptly notify and keep Obagi reasonably informed of the status of any litigation brought or, to Waldencast’s knowledge,
threatened in writing against Waldencast or its board of directors by any of Waldencast’s shareholders in connection with the Obagi Merger Agreement, Milk Equity Purchase Agreement, any Obagi or Milk Ancillary Agreement or the
transactions contemplated therein, and will give due consideration to Obagi’s advice with respect to such litigation.
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subject to confidentiality obligations that may be applicable to information furnished to Obagi or any of its subsidiaries by
third parties that may be in the possession of Obagi or its subsidiaries and except for any information that is subject to attorney-client privilege, and to the extent permitted by applicable law, afford Waldencast and its accountants,
counsel and other representatives reasonable access during the Obagi Interim Period, during normal business hours and with reasonable advance notice, in such manner as to not materially interfere with the ordinary course of business of
Obagi and its subsidiaries, to all of their properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and furnish such representatives with all financial and operating data and other
information concerning the affairs of Obagi and its subsidiaries as such representatives may reasonably request;
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provide to Waldencast and, if applicable, its accountants, counsel or other representatives, (i) such information and such
other materials and resources relating to any legal proceeding initiated, pending or threatened during the Obagi Interim Period, or to the compliance and risk management operations and activities of Obagi and its subsidiaries during the
Obagi Interim Period, in each case, as Waldencast or such representative may reasonably request, (ii) prompt written notice of any status updates in connection with any such legal proceedings or otherwise relating to any material
compliance and risk management matters or decisions of Obagi or its subsidiaries, and (iii) copies of any material written communications sent or received by Obagi or its subsidiaries in connection with such legal proceedings;
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deliver to Waldencast, as soon as reasonably practicable following the date of the Obagi Merger Agreement, the audited
consolidated balance sheets and the related consolidated statements of operations and comprehensive loss, and changes in shareholders’ equity and cash flows of Obagi and its subsidiaries (together with the auditor’s reports thereon and
notes thereto) as of and for the years ended December 31, 2020 and December 31, 2019;
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if the Obagi Merger Effective Time has not occurred prior to February 14, 2022, then as soon as reasonably practicable
following February 14, 2022, and in no event later than March 31, 2022, deliver to Waldencast the audited consolidated balance sheets and statements of operations and comprehensive loss, changes in shareholders’ equity (deficit), and
cash flows of Obagi and its subsidiaries (including all notes thereto) as of and for the year ended December 31, 2021;
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at or prior to Obagi Closing, terminate or settle all Affiliate Agreements (as defined herein), other than those set forth in
the applicable section of the Obagi Disclosure Letter, without further liability to Waldencast, Obagi or any of its subsidiaries;
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prior to the Obagi Closing, and as soon as reasonably practicable after the date of the Obagi Merger Agreement, cooperate
with Waldencast, and cause shareholders or holders of other equity interests of Obagi and/or any of their respective directors, members, partners, officers, employees or affiliates (other than Obagi)(“the Obagi Group”), and instruct its
and their respective representatives to cooperate with Waldencast, with respect to any reasonable requests made by Waldencast to obtain an additional amendment to the Obagi Existing Credit Agreement not otherwise expressly contemplated
by the consent to the Financing Agreement, dated as of the date of Obagi Merger Agreement, by and among, inter alia, the lenders party thereto, TCW Asset Management Company LLC, as collateral agent and administrative agent, Obagi
Holdings, as parent, and Obagi Cosmeceuticals, as borrower (the “Obagi Existing Credit Agreement Consent”);
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prior to the Obagi Closing, instruct, and cause the members of the Obagi Group to instruct, its and their respective
representatives to, in each case, use their reasonable best efforts to provide to Waldencast with all customary cooperation or assistance as reasonably requested by Waldencast in connection with any other Debt Financing (as defined in
the Obagi Merger Agreement);
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if requested by Waldencast, no later than ten (10) business days prior to the Obagi Closing Date, deliver to Waldencast an
executed payoff letter in respect of the Obagi Existing Credit Agreement, together with any applicable related lien release documentation and instruments, in each case, in customary form; provided that Waldencast shall not make such
request unless and until it has obtained alternative Debt Financing in an amount equal to or greater than the amount under the Obagi Existing Credit Agreement (“Obagi Alternative Debt Financing”). Notwithstanding the foregoing, under no
circumstances will Obagi be obligated to pay any Obagi Payoff Amount prior to the later of (i) Obagi Closing and (ii) the effective date of the Obagi Alternative Debt Financing;
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substantially contemporaneously with the Obagi Closing, Obagi and Waldencast shall, and each shall cause its respective
subsidiaries to, use reasonable best efforts to enter into the amendments to the Obagi Existing Credit Agreement contemplated by the Obagi Existing Credit Agreement Consent;
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prior to the Obagi Closing, subject to applicable law and solely in the case of the distribution of all of the outstanding
equity interests of Clinactiv to Cedarwalk in accordance with a distribution agreement in a customary form by and among Obagi, Cedarwalk and Waldencast (the “Clinactiv Distribution”), and the receipt of any consent required under the
Obagi Existing Credit Agreement in order for Obagi to consummate the Clinactiv Distribution without causing an event of default or mandatory prepayment event occurring thereunder (“Clinactiv Consent”) effect, or cause its subsidiaries
or affiliates to effect, all distributions and take all such actions as are necessary so that the Obagi Pre-Closing Restructuring will be consummated prior to the Obagi Closing. If the Obagi board of directors determine in good faith
that the Obagi Pre-Closing Restructuring may not be completed pursuant to applicable law, then , subject to the approval of Waldencast, Obagi will use reasonable best efforts to effect the intent of the Obagi Pre-Closing Restructuring
in an alternative manner permitted under applicable law that does not subject Waldencast to any material tax;
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prior to the Obagi Closing, use, or cause its subsidiaries or affiliates to use, reasonable best efforts to obtain the
Clinactiv Consent;
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to the extent the Clinactiv Distribution is not completed prior to the Obagi Closing, (i) continue to use reasonable best
efforts to obtain the Clinactiv Consent, and (ii) immediately following receipt of the Clinactiv Consent or upon the Clinactiv Consent no longer being required to consummate the Clinactiv Distribution, subject to applicable law,
distribute all of the outstanding equity interests of Clinactiv to Cedarwalk on substantially similar terms as proposed in the Clinactiv Distribution;
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during the Obagi Interim Period, not, and to instruct and use its commercially reasonable efforts to cause its subsidiaries,
affiliates and representatives to not, (i) solicit, initiate or knowingly participate in any negotiations with any person with respect to alternative transactions, or knowingly provide any non-public information or data concerning Obagi
or any of its subsidiaries to any person relating to such alternative transactions, (ii) enter into an agreement with respect to any such alternative transactions or proposed transactions, (iii) grant any waiver, amendment or release
under any confidentiality agreement executed in connection with such alternative transactions, or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any inquiries, proposals, discussions, or negotiations or any
effort or attempt by any person to make a proposal with respect to an alternative transaction. From and after the date of the Obagi Merger Agreement, Obagi will, and will instruct and use its reasonable best efforts to cause its
officers, directors, representatives, subsidiaries and affiliates and their respective representatives to, immediately cease and terminate all discussions and negotiations with any persons that may be ongoing with respect to certain
alternative transactions (other than Waldencast and its representatives). Obagi will promptly notify Waldencast if any person makes any written proposal, offer or inquiry with respect to an alternative transaction and provide Waldencast
with a description of the material terms and conditions thereof to the extent that such disclosure would not result in a breach of Obagi’s confidentiality obligations that are in existence as of the date of the Obagi Merger Agreement;
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cause the shareholders, officers and employees of Obagi listed in the Obagi Disclosure Letter (the “Obagi Lock-Up
Shareholders”) to deliver, or cause to be delivered, to Waldencast copies of the Obagi Lock-Up Agreements (as described further under the heading “– Related Agreements – Related Agreements to the Obagi
Merger and the Milk Transaction – Lock-Up Agreement”) duly executed by all such parties in form and substance reasonably satisfactory to Waldencast; and
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following the date of the Obagi Merger Agreement, and in all events prior to the Obagi Closing, use its reasonable best
efforts to obtain approval or waiver, as applicable, of any “excess parachute payments” (within the meaning of Section 280G of the Code and the regulations thereunder).
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each of Waldencast and Obagi will (and, to the extent required, will cause its Affiliates to) comply promptly, but in no
event later than ten business days after the date of the Obagi Merger Agreement, with the notification and reporting requirements of the HSR Act;
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each of Waldencast and Obagi will substantially comply with any information or document requests with respect to antitrust
matters as contemplated by the Obagi Merger Agreement;
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each of Waldencast and Obagi will (and, to the extent required, will cause its Affiliates to) request early termination of
any waiting period or periods under the HSR Act and exercise its reasonable best efforts to (i) obtain termination or expiration of the waiting period or periods under the HSR Act and (ii) prevent the entry, in any legal proceeding
brought by the Antitrust Division of the U.S. Department of Justice, the U.S. Federal Trade Commission or the antitrust or competition law authorities of any other jurisdiction (whether the U.S., foreign or multinational) (the
“Antitrust Authorities”) or any other person, of any Governmental Order that would prohibit, make unlawful or delay the consummation of the transactions contemplated by the Obagi Merger Agreement;
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Waldencast will cooperate in good faith with the Antitrust Authorities and undertake promptly any and all action required to
complete lawfully the transactions contemplated by the Obagi Merger Agreement as soon as practicable and any and all action necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of any
proceeding in any forum by or on behalf of any Antitrust Authority or the issuance of any Governmental Order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Obagi Merger, including, with Obagi’s
prior written consent (which consent shall not be unreasonably withheld, conditioned, delayed or denied), (i) proffering and consenting and/or agreeing to a Governmental Order or other agreement providing for (A) the sale, licensing or
other disposition, or the holding separate, of particular assets, categories of assets or lines of business of Obagi or Waldencast or (B) the termination, amendment or assignment of existing relationships and contractual rights and
obligations of Obagi or Waldencast and (ii) promptly effecting the disposition, licensing or holding separate of assets or lines of business or the termination, amendment or assignment of existing relationships and contractual rights,
in each case, at such time as may be necessary to permit the lawful consummation of the transactions contemplated by the Obagi Merger Agreement;
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each of Waldencast and Obagi will (and, to the extent required, shall cause its controlled Affiliates to) (i) diligently and
expeditiously defend and use reasonable best efforts to obtain any necessary waiver, clearance, approval, consent, permits, orders, authorization or governmental authorization under laws prescribed or enforceable by any Governmental
Authority, for the transactions contemplated by the Obagi Merger Agreement and to resolve any objections as may be asserted by any Governmental Authority with respect to the transactions contemplated by the Obagi Merger Agreement; and
(ii) cooperate fully with each other in the defense of such matters;
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to the extent not prohibited by law, Obagi will promptly furnish to Waldencast, and Waldencast will promptly furnish to
Obagi, copies of any notices or written communications received by such party or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated by the Obagi Merger Agreement, and
each party shall permit counsel to the other parties an
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to the extent not prohibited by law, each of the parties agree to provide the other party and its respective counsel, the
opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, whether in person, by telephone, video conference, or otherwise, between such party and/or any of its affiliates, agents or advisors,
on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated by the Obagi Merger Agreement;
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each of the parties agree that Obagi shall be responsible for and pay 33% and Waldencast shall be responsible for and pay
50%, in each case, of the filing fees payable to the Antitrust Authorities in connection with the transactions contemplated by the Obagi Merger Agreement and the Milk Equity Purchase Agreement;
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(i) Waldencast and Obagi will jointly prepare and Waldencast will, after receipt of the required PCAOB financial statements,
file with the SEC mutually acceptable materials, including the proxy statement and (ii) Waldencast will prepare and file with the SEC the Registration Statement (as defined below) in connection with the registration under the Securities
Act of (a) the shares of Waldencast plc Class A ordinary shares and (b) the Waldencast plc warrants to be issued in connection with the Domestication;
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each of Waldencast and Obagi will use its reasonable best efforts to cause the proxy statement/Registration Statement to
comply with the rules and regulations promulgated by the SEC, to have the proxy statement/Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration
Statement effective as long as is necessary to consummate the transactions contemplated by the Obagi Merger Agreement;
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Waldencast will use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and
approvals required to carry out the transactions contemplated by the Obagi Merger Agreement, and Obagi will furnish all information concerning Obagi, its subsidiaries and any of their respective members or shareholders as may be
reasonably requested in connection with any such action;
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each of Waldencast and Obagi will furnish to the other party all information concerning itself, its subsidiaries, officers,
directors, managers, shareholders, and other equityholders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the proxy statement/Registration
Statement, a Current Report on Form 6-K pursuant to the Exchange Act in connection with the transactions contemplated by the Obagi Merger Agreement, or any other statement, filing, notice or application made by or on behalf of
Waldencast, Obagi or their respective subsidiaries to any regulatory authority (including Nasdaq) in connection with the Obagi Merger;
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Waldencast will, as promptly as practicable after the Registration Statement is declared effective under the Securities Act,
(i) disseminate the Registration Statement to shareholders of Waldencast, (ii) give notice, convene and hold a meeting of the shareholders to vote on the Transaction Proposals, in each case in accordance with its Governing Documents
then in effect and Nasdaq Listing Rule 5620(b) (such meeting to be held on a date no later than 30 business days following the date the Registration Statement is declared effective), (iii) solicit proxies from the holders of public
shares of Waldencast to vote in favor of each of the Transaction Proposals, and (iv) provide its shareholders with the opportunity to elect to effect a redemption;
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upon the terms set forth in the Obagi Merger Agreement, Obagi will (i) use its best efforts to solicit and obtain approval of
the Obagi Merger (“Obagi Shareholder Approval”) in the form of an irrevocable written consent (the “Written Consent”) of Cedarwalk (pursuant to the Stockholder Support Agreement) promptly following the time at which the Registration
Statement shall have been declared effective under the Securities Act and delivered or otherwise made available to shareholders, but in any event no later than two (2) business days after the Registration Statement is declared effective
under the Securities Act and delivered or otherwise made available to shareholders, or (ii) in the event Obagi determines it is not able to obtain the Written Consent, Obagi shall duly convene a meeting of the shareholders of Obagi for
the purpose of voting solely upon the adoption of the Obagi Merger Agreement, and the other agreements contemplated thereby, including the Obagi Merger, promptly after the Registration Statement is declared
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•
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each of Waldencast and Obagi will, and each will cause their respective subsidiaries to, (i) use reasonable best efforts to
obtain all material consents and approvals of third parties that any of Waldencast, Obagi, or their respective Affiliates are required to obtain in order to consummate the Obagi Merger and (ii) take such other action as may be
reasonably necessary or reasonably requested by another party to satisfy the conditions to the Obagi Closing set forth in the Obagi Merger Agreement or otherwise to comply with the Obagi Merger Agreement or to consummate the
transactions contemplated thereby;
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•
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each of Waldencast and Obagi will, prior to the Obagi Merger Effective Time, take all such steps as may be required (to the
extent permitted under applicable law) to cause any dispositions of the Obagi common stock or acquisitions of shares of Waldencast plc Class A ordinary shares (including, in each case, securities deliverable upon exercise, vesting or
settlement of any derivative securities) resulting from the transactions contemplated by the Obagi Merger Agreement by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in
connection with the transactions contemplated thereby to be exempt under Rule 16b-3 promulgated under the Exchange Act;
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•
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each of Waldencast and Obagi will, and will each cause their respective subsidiaries and Affiliates (as applicable), and its
and their officers, directors, managers, employees, consultants, counsel, accounts, agents and other representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the parties mutually agree to
seek in connection with the transactions contemplated by the Obagi Merger Agreement, including the PIPE Investment;
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•
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Waldencast will instruct its financial advisors to, keep Obagi and its financial advisors reasonably informed with respect to
the PIPE Investment and any changes in the rotation of Waldencast Class A ordinary shares and Waldencast Class B ordinary shares during such period, including by (i) providing regular updates and (ii) reasonably consulting and
cooperating with, and considering in good faith any feedback from, Obagi or its financial advisors with respect to such matters during the period commencing on the date of announcement of the Obagi Merger Agreement or the transactions
contemplated thereby until the Obagi Closing Date; and
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•
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each of Obagi and Waldencast shall use commercially reasonable efforts (and cause any of their respective subsidiaries to use
commercially reasonable efforts) to cooperate to restructure the transactions contemplated hereby upon (i) a change in facts or circumstances or (ii) a change in tax law occurring after the date hereof that, in either case, together
with the transactions contemplated by the Obagi Merger Agreement or by the Milk Equity Purchase Agreement, could reasonably be expected to result in Waldencast being treated as an entity classified as a domestic corporation for U.S.
federal income tax purposes by reason of Section 7874 of the Code.
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•
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the approval of the Transaction Proposals by Waldencast’s shareholders will have been obtained (the “Waldencast Shareholder
Approval”);
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•
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the Obagi Shareholder Approval will have been obtained;
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•
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the Registration Statement will have become effective under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement will have been issued and no proceedings for that purpose will have been initiated or threatened by the SEC and not withdrawn;
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•
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the waiting period or periods under the HSR Act applicable to the transactions contemplated by the Obagi Merger Agreement and
the (i) Obagi Sponsor Support Agreement, (ii) Stockholder Support Agreement, (iii) Registration Rights Agreement, (iv) Obagi Confidentiality Agreement, (v) Obagi Lock-Up Agreements, (vi) Distribution Agreements, (vii) Transition
Services Agreement, (viii) IP License Agreement, (ix) Supply Agreement, and (x) Investor Rights Agreement (clauses (i) to (x), collectively, the “Obagi Ancillary Agreements”) will have been obtained, expired or been terminated, as
applicable;
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•
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there will not (i) be in force any Governmental Order, in each case, to the extent such Governmental Authority has
jurisdiction over the parties to the Obagi Merger Agreement and the transactions contemplated thereby, enjoining or otherwise prohibiting the consummation of the Obagi Merger in certain specified governing jurisdictions, and (ii) have
been adopted any law or regulation in such governing jurisdictions that would result in the consummation of the Obagi Merger being illegal or otherwise prohibited;
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•
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all closing conditions in the Milk Equity Purchase Agreement shall have been satisfied prior to, or will occur substantially
concurrently with or immediately following, the Obagi Closing;
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•
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Waldencast will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Exchange Act and inclusive of the PIPE Investment Amount and the Forward Purchase Amount, in each case, actually received by Waldencast prior to or substantially concurrently with the Obagi Closing);
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•
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the shares of Waldencast plc Class A ordinary shares to be issued in connection with the Obagi Merger will have been approved
for listing on Nasdaq; and
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•
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the Obagi China Distribution will have been completed.
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•
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certain of the representations and warranties of Merger Sub pertaining to the capitalization of Obagi will be true and
correct in all but de minimis respects as of the Obagi Closing Date as though made on and as of such date (or in the case of representations and warranties that address matters only as of a
particular date, as of such date);
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•
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each of the Company Fundamental Representations (disregarding any qualifications and exceptions contained therein relating to
materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects, in each case, as of the Obagi Closing Date as though made on and as of such date (or in the case of
representations and warranties that address matters only as of a particular date, as of such date);
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•
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each of the other representations and warranties of Obagi contained in the Obagi Merger Agreement (except for as to absence
of changes) (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct as of the date of the Obagi Closing Date
as though made on and as of such date (or in the case of representations
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•
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each of the covenants of Obagi to be performed or complied with as of or prior to the Obagi Closing will have been performed
or complied with in all material respects; and
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•
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since the date of the Obagi Merger Agreement, there shall not have occurred an Obagi Material Adverse Effect that is
continuing.
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•
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each of the representations and warranties of Waldencast regarding the capitalization of Waldencast (other than the
representations and warranties contained in Section 5.12(e) and Section 5.12(f) of the Obagi Merger Agreement), will be true and correct in all but de minimis respects as of the Obagi Closing Date as though made on and as of such date
(or in the case of representations and warranties that address matters only as of a particular date, as of such date);
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•
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each of the Waldencast Fundamental Representations (disregarding any qualifications and exceptions contained therein relating
to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects, in each case as of the Obagi Closing Date as though made on and as of such date (or in the case of
representations and warranties that address matters only as of a particular date, as of such date);
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•
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each of the other representations and warranties of Waldencast contained in the Obagi Merger Agreement (disregarding any
qualifications and exceptions contained therein relating to materiality and material adverse effect or any similar qualification or exception) will be true and correct as of the Obagi Closing Date as though made on and as of such date
(or in the case of representations and warranties that address matters only as of a particular date, as of such date), except for, in each case, inaccuracies or omissions that have not had, and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Waldencast or Waldencast’s ability to consummate the transactions contemplated by the Obagi Merger Agreement;
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•
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each of the covenants of Waldencast to be performed or complied with as of or prior to the Obagi Closing will have been
performed and complied with in all material respects; and
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•
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the Domestication will have been completed, including that the deregistration of Waldencast in the Cayman Islands will have
been filed with the Cayman Registrar of Companies under the Companies Act (As Revised) of the Cayman Islands (“the Cayman Registrar”) and a copy of the certificate of continuance issued by the the Registrar of Companies in Jersey under
the Jersey Companies Law (the “Jersey Registrar”) in relation thereto will have been delivered to Obagi.
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by the mutual written consent of Obagi and Waldencast;
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•
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by Obagi or Waldencast if any Governmental Order has become final and non-appealable and has the effect of making the
consummation of the Obagi Merger illegal or otherwise prohibiting consummation of the Obagi Merger in certain governing jurisdictions, or if there shall be adopted following the date of the Obagi Merger Agreement any law or regulation
that would result in the consummation of the Obagi Merger being illegal or otherwise prohibited in such governing jurisdictions;
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by Obagi or Waldencast if the Waldencast Shareholder Approval has not been obtained by reason of the failure to obtain the
required vote at a meeting of Waldencast’s shareholders duly convened therefor or at any adjournment thereof;
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•
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by Obagi if there has been a modification in recommendation of the board of directors of Waldencast with respect to any of
the Transaction Proposals;
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•
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by Waldencast or Obagi if the Milk Equity Purchase Agreement is terminated;
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•
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by written notice to Obagi from Waldencast in the event of certain uncured breaches on the part of Obagi or if the Obagi
Closing has not occurred on or before August 15, 2022 (the “Obagi Agreement End Date”), unless Waldencast is in material breach of the Obagi Merger Agreement, provided, however, that if, as of the Obagi Agreement End Date, all of the conditions, other than those relating to certain regulatory approvals having been obtained, and those conditions that by their nature are to be satisfied
at the Obagi Closing, are satisfied or, if permissible, waived, then Waldencast shall have the right to, by providing written notice to Obagi prior to the Obagi Agreement End Date, extend the Obagi Agreement End Date for one period of
three months;
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•
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by Waldencast if the Obagi Shareholder Approval has not been obtained within two business days after the Registration
Statement has been declared effective by the SEC and delivered or otherwise made available to shareholders; or
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by written notice to Waldencast from Obagi in the event of certain uncured breaches on the part of Waldencast or Merger Sub
or if the Obagi Closing has not occurred on or prior to the Obagi Agreement End Date, unless Obagi is in material breach of the Obagi Merger Agreement, provided, however, that if, as of the Obagi Agreement End Date, all of the conditions, other than those relating to certain regulatory approvals having been obtained, and those conditions that by their nature are to be satisfied
at the Obagi Closing, are satisfied or, if permissible, waived, then Obagi shall have the right to, by providing written notice to Waldencast prior to the Obagi Agreement End Date, extend the Obagi Agreement End Date for one period of
three months.
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(i)
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at the Milk Closing, upon the terms and subject to the conditions of the Milk Equity Purchase Agreement, the Milk Purchasers
will acquire from the Milk Members and the Milk Members will sell to the Milk Purchasers all of the issued and outstanding Milk Membership Units in exchange for the Milk Cash Consideration, and the Milk Equity Consideration, which
consist of partnership units of Waldencast LP that are redeemable at the option of the holder of such units and, if such option is exercised, exchangeable at the option of Waldencast plc for Waldencast plc Class A ordinary shares or
cash in accordance with the terms of the amended and restated limited partnership agreement of Waldencast LP (the “Amended and Restated Waldencast Partners LP Agreement”) and the Waldencast plc Non-Economic ordinary shares; and
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(ii)
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as a result of the Milk Transaction, among other things, (i) Holdco 1 will purchase from the Milk Members a percentage of the
outstanding Milk Membership Units in exchange for the Milk Cash Consideration and the Waldencast plc Non-Economic ordinary shares equal to the Milk Equity Consideration and (ii) Waldencast LP will purchase from the Milk Members the
remainder of the outstanding Milk Membership Units in exchange for the Milk Equity Consideration.
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(In millions, except share data)
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| |
Assuming
No Redemptions
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Assuming
30%
Redemptions
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Assuming
Maximum
Redemptions
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Assuming
90% Redemptions
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Cash to Milk Members
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$140.0
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$140.0
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$120.3
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$82.8
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Waldencast LP Common Units to Milk Members
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18,343,883
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| |
18,343,883
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20,314,508
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24,068,228
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Waldencast plc Non-Economic ordinary shares
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18,343,883
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18,343,883
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20,314,508
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24,068,228
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(a)
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all Milk Options (or portion thereof), whether vested or unvested, will be released at the Milk Transaction Effective Time in
exchange for Waldencast plc Options, exclusive of any Milk Options that have an exercise price per share that is equal to or greater than the Milk Per Unit Transaction Consideration, which will be cancelled without consideration.
Subject to the terms of the Milk Equity Purchase Agreement, each Waldencast plc Option will relate to the number of whole shares of Waldencast plc Class A ordinary shares (rounded down to the nearest whole share) equal to (i) the number
of shares of Milk common stock subject to the applicable Milk Option in effect immediately prior to the Milk Transaction Effective Time multiplied by (ii) the ratio equal to (i) the number of
Waldencast ordinary shares equal to the number of Waldencast LP Common Units constituting the Total Implied Milk Equity Consideration divided by (ii) the number of Aggregate Fully Diluted Milk
Common Units (the “Milk Exchange Ratio”). The exercise price for each Waldencast plc Option will equal (i) the exercise price of the applicable Milk Option divided by (ii) the Milk Exchange
Ratio, rounded up to the nearest full cent. The terms of each Waldencast plc Option will otherwise be substantially the same as the Milk Option for which it is substituted; and
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(b)
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all Milk UARs (or portion thereof), whether vested or unvested, will be assumed by Waldencast and converted at the Milk
Transaction Effective Time into corresponding Waldencast plc SARs, exclusive of any Milk UARs that have a strike price per share that is equal to or greater than the Milk Per Unit Transaction Consideration, which will be cancelled
without consideration. Subject to the terms of the Milk Equity Purchase Agreement, (i) each Waldencast plc SAR will relate to the whole number of shares of Waldencast plc Class A ordinary shares (rounded down to the nearest whole share)
equal to the number of shares of Milk common stock subject to the applicable Milk UAR in effect immediately prior to the Milk Transaction Effective Time, multiplied by the Milk Exchange Ratio,
and (ii) the strike price per share for each Waldencast plc SAR will be equal to the strike price per share of the applicable Milk UAR in effect immediately prior to the Milk Transaction Effective Time, divided by the Milk Exchange Ratio (the strike price per share, as so determined, being rounded up to the nearest full cent). The terms of each Waldencast plc SAR will otherwise be substantially the same as the Milk
UAR for which it is substituted.
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(i)
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any change in applicable laws or GAAP or any interpretation thereof following the date of the Milk Equity Purchase Agreement;
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(ii)
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any change in interest rates or economic, political, business or financial market conditions generally;
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(iii)
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the taking of any action required by the Milk Equity Purchase Agreement;
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(iv)
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any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar
occurrences), pandemic (including COVID-19, or any COVID-19 Measures (as defined herein) or any change in such COVID-19 Measures following the date of the Milk Equity Purchase Agreement) or change in climate;
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(v)
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any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or
international political conditions;
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(vi)
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any failure of Milk to meet any projections or forecasts (provided that clause (vi) shall not prevent a determination that
any Event not otherwise excluded from the definition of Milk Material Adverse Effect underlying such failure to meet projections or forecasts has resulted, or would reasonably be expected to result, in a Milk Material Adverse Effect);
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(vii)
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any Events generally applicable to the industries or markets in which Milk and its subsidiaries operate (including increases
in the cost of products, supplies, materials or other goods purchased from third-party suppliers);
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(viii)
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the announcement of the Milk Equity Purchase Agreement or the Obagi Merger Agreement and consummation of the transactions
contemplated thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any
landlords, customers, suppliers, distributors, partners or employees of Milk and its subsidiaries (it being understood that this clause (viii) shall be disregarded for purposes of the representation and warranty set forth in Section 4.3
of the Milk Equity Purchase Agreement and the condition to the Milk Closing with respect thereto);
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(ix)
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any matter set forth on the Milk Members’ disclosure letter (the “Milk Members Disclosure Letter”); or
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(x)
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any action taken by, or at the written request of, Waldencast or the Milk Purchasers.
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•
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change or amend the Governing Documents of Milk or any of Milk’s Subsidiaries, except as otherwise required by law, or form
or cause to be formed any new subsidiary of Milk;
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•
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make or declare any dividend or distribution to the Milk Members or make any other distributions in respect of any of Milk’s
or any of its subsidiaries’ capital stock or equity interests, other than tax distributions consistent with past practice;
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•
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split, combine, reclassify, recapitalize or otherwise amend any terms of any equity interest or series of Milk’s or any of
its subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly-owned subsidiary of Milk that remains a wholly-owned subsidiary of Milk after consummation of such transaction;
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•
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purchase, repurchase, redeem or otherwise acquire any issued and outstanding equity capital, outstanding shares of capital
stock, membership interests or other equity interests of Milk or its subsidiaries;
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•
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enter into, modify in any material respect or terminate (other than expiration in accordance with its terms) any material
contract or real property lease, other than entry into such agreements in the ordinary course of business consistent with past practice or as required by law;
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•
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sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of Milk or its
subsidiaries, except for (i) dispositions of obsolete or worthless equipment or (ii) transactions in the ordinary course of business consistent with past practice in an aggregate amount not exceeding $0.5 million;
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•
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acquire any ownership interest in any real property;
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•
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except as otherwise required by law, or the terms of any benefit plan as in effect on the date of the Milk Equity Purchase
Agreement, (i) grant any severance, retention, change in control or termination or similar pay, except (A) with respect to retention of any individual with annual base pay not in excess of $0.13 million, in the ordinary course of
business consistent with past practice, (B) in connection with promotion or hiring of any individual with annual base pay not in excess of $0.13 million and (C) with respect to severance, termination, or similar pay, to any employee
with annual base pay not in excess of $0.13 million and whose employment terminates after the date of the Milk Equity Purchase Agreement, in the ordinary course of business consistent with past practice, (ii) terminate, adopt, enter
into or materially amend any benefit plan, (iii) materially increase the cash compensation, bonus opportunity or employee benefits of any employee, officer, director or other individual service provider, except in the ordinary course of
business consistent with past practice in respect of any individual with annual base pay not in excess of $0.13 million, (iv) establish any trust or take any other action to secure the payment of any compensation payable by Milk or any
of Milk’s subsidiaries or (v) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment or vesting of any compensation or benefit payable by Milk or any of Milk’s subsidiaries except in
the ordinary course of business in the case of any individual with annual base pay not in excess of $0.13 million;
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•
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with respect to the business of Milk and its subsidiaries (i) make any material change in the selling, distribution,
advertising, terms of sale or collection practices that is inconsistent with past practice; or (ii) engage in the practice of “channel stuffing” or any similar program, activity or other action that, in each case, is intended or would
reasonably be expected to result in acquisition of products or services from Milk and its subsidiaries that is materially in excess of normal customer purchasing patterns consistent with past course of dealing during the twelve (12)
months prior to the date hereof;
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•
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acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of
the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;
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•
|
make any material loans or material advances to any person, except for (i) advances to employees, officers or independent
contractors of Milk or any of Milk’s subsidiaries for indemnification, attorneys’ fees, travel and other expenses incurred in the ordinary course of business consistent with past practice or (ii) extended payment terms for customers in
the ordinary course of business;
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•
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(i) make or change any material election in respect of material taxes, (ii) materially amend, modify or otherwise change any
filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreements” as described in Section 7121 of the Code (or any
similar provision of state, local, or foreign law) with any Governmental Authority in respect of material taxes, (v) settle any claim or assessment in respect of material taxes, (vi) affirmatively surrender or allow to expire any right
to claim a refund of material taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect of any material tax attribute that would give rise
to any claim or assessment of taxes (other than pursuant to extensions of time to file tax returns obtained in the ordinary course of business);
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•
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(i) incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Milk or any subsidiary of Milk or guaranty any debt securities of another person, other than any indebtedness or guarantee incurred in the ordinary course of business and in an
aggregate amount not to exceed $0.5 million, or (ii) discharge any secured or unsecured obligations or liabilities (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate exceed $0.5 million, except
as otherwise contemplated by the Milk Equity Purchase Agreement or as such obligations become due;
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•
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issue any additional securities, including Milk Membership Units or securities exercisable for or convertible into Milk
Membership Units, other than issuances of equity securities upon the exercise or settlement of Milk Options or Milk UARs (“Milk Awards”) outstanding as of the date of the Milk Equity Purchase Agreement;
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•
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adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of Milk or its subsidiaries;
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•
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waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, action, litigation or other legal
proceedings, except in the ordinary course of business or where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $0.5 million in the aggregate;
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•
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grant to or acquire from, or agree to grant to or acquire from, except as would be granted on a non-exclusive basis or
acquired in the ordinary course of business consistent with past practice any person rights to any intellectual property that is material to Milk and its subsidiaries, or dispose of, abandon or permit to lapse any rights to any
intellectual property except for (i) the expiration of patents and copyrights that are Milk’s registered intellectual property in accordance with the applicable statutory term or (ii) as reasonably necessary in the ordinary course of
business consistent with past practice;
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•
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disclose or agree to disclose to any person (other than Waldencast or any of its representatives) any trade secret or any
other material confidential or proprietary information, know-how or process of Milk or any of its subsidiaries, in each case, other than in the ordinary course of business consistent with past practice and pursuant to obligations to
maintain the confidentiality thereof;
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•
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make or commit to make capital expenditures other than in an amount not in excess of the amount disclosed in the Milk Members
Disclosure Letter, in the aggregate;
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•
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manage Milk’s and its subsidiaries’ working capital in a manner other than in the ordinary course of business consistent with
past practice;
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•
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waive the restrictive covenant obligations of any current or former employee of Milk or any of Milk’s subsidiaries;
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•
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(i) limit the right of Milk or any of Milk’s subsidiaries to engage in any line of business or in any geographic area, to
develop, market or sell products or services, or to compete with any person or (ii) grant any exclusive or similar rights to any person, in each case, except where such limitation or grant does not, and would not be reasonably likely
to, individually or in the aggregate, adversely affect, or materially disrupt, the ordinary course operation of the businesses of Milk and its subsidiaries, taken as a whole;
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•
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terminate without replacement, amend in a manner materially detrimental to Milk or any of Milk’s subsidiaries, permit to
lapse or fail to use reasonable best efforts to maintain, reinstate or replace any material governmental authorization or material permit required for the conduct of the business of Milk or any of Milk’s subsidiaries;
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•
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terminate (without replacement with similar or better coverage) or amend in a manner materially detrimental to Milk or any of
Milk’s subsidiaries any material insurance policy insuring the business of Milk or any of Milk’s subsidiaries; or
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•
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enter into any agreement to do any action prohibited under Section 6.1 of the Milk Equity Purchase Agreement.
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•
|
seek any approval from Waldencast’s shareholders to change, modify or amend the Trust Agreement or the Governing Documents of
Waldencast or the Milk Purchasers, except (i) as contemplated by the Transaction Proposals or (ii) as otherwise required by applicable law;
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•
|
except as contemplated by the Transaction Proposals, (i) make or declare any dividend or distribution to the shareholders of
Waldencast or make any other distributions in respect of any of Waldencast’s or the Milk Purchasers’ capital stock, share capital or equity interests, (ii) split, combine, reclassify or otherwise amend any terms of any shares or series
of Waldencast’s or the Milk Purchasers’ capital stock or equity interests or (iii) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or
membership interests, warrants or other equity interests of Waldencast or the Milk Purchasers, other than a redemption of shares of Waldencast Class A ordinary shares effected in connection with the Milk Transaction;
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•
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(i) make or change any material election in respect of material taxes, (ii) materially amend, modify or otherwise change any
filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreements” as described in Section 7121 of the Code (or any
similar provision of state, local, or foreign law) with any Governmental Authority in respect of material taxes, (v) settle any claim or assessment in respect of material taxes, (vi) affirmatively surrender or allow to expire any right
to claim a refund of material taxes
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•
|
other than as expressly required by the Milk Sponsor Support Agreement, enter into, renew or amend in any material respect,
any transaction or contract with an Affiliate of Waldencast or the Milk Purchasers (including, for the avoidance of doubt, (i) the Sponsor and (ii) any person in which the Sponsor has a direct or indirect legal, contractual or
beneficial ownership interest of 5% or greater);
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•
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issue or sell any debt securities or warrants or other rights to acquire any debt securities of Milk or any of its
subsidiaries, or guaranty any debt securities of another person, other than any indebtedness for borrowed money or guarantee (i) incurred in the ordinary course of business consistent with past practice and in an aggregate amount not to
exceed $0.5 million or (ii) incurred between Waldencast and the Milk Purchasers;
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•
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incur, assume or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness, or guarantee any
indebtedness of another person, or otherwise knowingly and purposefully incur, assume, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness or otherwise knowingly and purposefully
incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations, other than fees and expenses for professional services incurred in support of the
transactions contemplated by the Milk Equity Purchase Agreement and the Milk Ancillary Agreements or in support of the ordinary course operations of Waldencast (which the parties agree shall include any indebtedness in respect of any
working capital loan incurred in the ordinary course of business in an aggregate amount not to exceed $3.5 million, including amounts under working capital loans outstanding as of the date of the Milk Equity Purchase Agreement);
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•
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(i) issue any securities of Waldencast or securities exercisable for or convertible into securities of Waldencast, (ii) grant
any options, warrants or other equity-based awards with respect to securities of Waldencast not outstanding on the date of the Milk Equity Purchase Agreement or (iii) amend, modify or waive any of the material terms or rights set forth
in any Waldencast warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein;
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enter into any agreement to do any action prohibited under Section 7.5 of the Milk Equity Purchase Agreement; or
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amend or waive any provision of the Obagi Merger Agreement or any Obagi Ancillary Documents in a manner that is materially
adverse to Milk or any of its subsidiaries.
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provide to Milk and its subsidiaries any information obtained by Waldencast and the Milk Purchasers from Obagi, in each case,
(i) to the extent permitted by applicable law and solely as is necessary to determine if all closing conditions in the Obagi Merger Agreement shall have been satisfied and the transactions contemplated thereunder shall have occurred
prior to the Closing, and (ii) subject to confidentiality obligations that may be applicable to information furnished to Obagi or any of Obagi’s subsidiaries by third parties that may be in Obagi’s or any of its subsidiaries’ possession
from time to time, and except for any information that is subject to attorney-client privilege;
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as soon as reasonably practicable following the date of the Milk Equity Purchase Agreement and in any event prior to the
effective date of the Registration Statement, approve, adopt and submit for stockholder approval the Waldencast plc 2022 Incentive Award Plan in a form determined by Waldencast;
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as soon as practicable following the date that is 60 days after the Milk Closing and subject to applicable securities laws,
file an effective registration statement on Form S-8 (or other applicable form) with respect
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for a period of twelve (12) months following the date on which the Milk Closing actually occurs (“Milk Closing Date”)
provide, or cause its Affiliates to provide, each employee continuing employment with Waldencast or Milk with (i) an annual base salary or hourly wage rate, as applicable, that is no less favorable than the annual base salary or hourly
wage rate, as applicable, provided to such employee immediately prior to the Milk Closing Date, (ii) target cash incentive opportunity that is no less favorable than the target cash incentive opportunity provided to such employee
immediately prior to the Milk Closing Date and (iii) health, retirement, welfare and other employee and fringe benefits that are no less favorable, in the aggregate, than those provided to such employee immediately prior to the Milk
Closing Date;
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for the purposes of determining eligibility, vesting, participation and benefit accrual under Waldencast and its Affiliate’s’
plans and programs providing employee benefits (including, without limitation, severance), credit each Milk continuing employee with his or her years of service with Milk prior to the Milk Closing Date to the same extent as such
employee was (or would have been) entitled;
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cause (i) each Milk continuing employee to be immediately eligible to participate, without any waiting time, in any and all
Waldencast benefit plans; (ii) all pre-existing condition exclusions and actively-at-work requirements of such Waldencast benefit plan to be waived for such employee and his or her covered dependents; and (iii) any co-payments,
deductibles and other eligible expenses incurred by such employee and/or his or her covered dependents during the plan year ending on the Milk Closing Date to be credited for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year of each comparable Waldencast benefit plan;
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not make any grants under the the Milk Makeup LLC Appreciation Rights Plan (the “Milk Appreciation Rights Plan”);
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take certain actions so that the amounts held in the Trust Account will be released from the Trust Account and so that the
Trust Account will terminate thereafter, in each case, pursuant to the terms and subject to the terms and conditions of the Trust Agreement;
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until the Milk Transaction Effective Time, ensure Waldencast remains listed as a public company on Nasdaq, and prepare and
submit to Nasdaq a listing application, if required under Nasdaq rules, covering the shares of the Waldencast plc Class A ordinary shares and warrants issuable in the Milk Transaction and the Domestication and use commercially
reasonable efforts to obtain approval for the listing of such shares of and warrants for the Waldencast plc Class A ordinary shares;
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during the Milk Interim Period, not, and cause its subsidiaries not, and instruct its and their representatives not, make any
proposal or offer regarding, initiate any discussions or negotiations in respect of, or enter into any agreement for certain alternative transactions and terminate any such negotiations that were ongoing as of the date of the Milk
Equity Purchase Agreement;
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subject to approval of Waldencast’s shareholders, cause the Domestication to become effective prior to the Milk Transaction
Effective Time (see the section entitled “Domestication Proposal”), including by (i) completing and making and procuring all filings to be made with the Cayman Registrar in connection with the
Domestication, (ii) obtain a certificate of de-registration from the Cayman Registrar, (iii) completing and making and procuring all filings required to be made with the Jersey Registrar in connection with the Domestication and
(iv) obtaining a certificate of continuance from the Jersey Registrar;
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from and after the Milk Transaction Effective Time, as more fully set forth in the Milk Equity Purchase Agreement, Waldencast
and Milk will indemnify and hold harmless each present and former director and officer of Milk and Waldencast and each of their respective subsidiaries against any costs, expenses, judgments, fines, losses, claims, damages or
liabilities incurred in connection with any legal proceeding arising out of or pertaining to matters existing or occurring at or prior to the Milk Transaction Effective Time, to the fullest extent that would have been permitted under
applicable law and the applicable Governing Documents to indemnify such person;
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Waldencast shall or shall cause Milk to (i) maintain, and cause its subsidiaries to maintain for a period of not less than
six years from the Milk Transaction Effective Time provisions in its Governing Documents and those of its subsidiaries concerning the indemnification and exoneration (including provisions relating to expense advancement) of its and its
subsidiaries’ former and current officers, directors and employees, no less favorable to those persons than the provisions of the Governing Documents of Milk, Waldencast or their respective subsidiaries, as applicable, in each case, as
of the date of the Milk Equity Purchase Agreement and (ii) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those persons thereunder, in each;
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for a period of six years from the Milk Transaction Effective Time, Waldencast shall or shall cause Milk following the Milk
Transaction to maintain in effect directors’ and officers’ liability, employment practices liability and fiduciary liability insurance covering those persons who are currently covered by Waldencast’s, Milk’s or their respective
subsidiaries’ directors’ and officers’ liability, employment practices liability and fiduciary liability insurance policies on terms not less favorable to the insureds than the terms of such current insurance coverage, except that in no
event will Waldencast be required to pay an annual aggregate premium for such insurance in excess of 300% of the aggregate annual premium payable by Waldencast or Milk, as applicable, for such insurance policy(ies) in effect on the date
of the Milk Equity Purchase Agreement;
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on the Milk Closing Date, enter into customary indemnification agreements reasonably satisfactory to each of Milk and
Waldencast with the post-Milk Closing directors and officers of Waldencast plc, which indemnification agreements will continue to be effective following the Milk Closing;
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except as otherwise contemplated in Waldencast’s disclosure letter in respect of the Milk Transaction, from the date of the
Milk Equity Purchase Agreement through the Milk Transaction Effective Time, keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting
obligations under applicable law;
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except as otherwise approved in writing by Milk (which approval shall not be unreasonably withheld, conditioned or delayed)
and except for any of the following actions that would not increase conditionality, reduce the subscription amount under any Subscription Agreement, reduce the per share price under the Subscription Agreement, or reduce or impair the
rights of Waldencast under any Subscription Agreement, not permit any amendment or modification to be made to any waiver (in whole or in part) of, or provide consent to modify (including consent to terminate) any provision or remedy
under, or any replacements of, or any assignment or transfer of any of the Initial Subscription Agreements, in each case, other than any assignment or transfer contemplated therein or not expressly prohibited thereby;
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use its commercially reasonable efforts to take, or to cause to be taken, all actions required, necessary or that it deems to
be proper or advisable to consummate the transaction contemplated by the Subscription Agreements on the terms described therein, including using its commercially reasonable efforts to enforce its rights under the Subscription Agreements
to cause the PIPE Investors to pay to (or as directed by) Waldencast the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms;
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use reasonable best efforts to comply in all material respects with its obligations under the Obagi Merger Agreement, subject
to the terms and conditions thereof, and to ensure the consummation of the Obagi Merger;
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promptly notify and keep Milk reasonably informed of the status of any litigation brought or, to Waldencast’s knowledge,
threatened in writing against Waldencast or its board of directors by any of Waldencast’s shareholders in connection with the Milk Equity Purchase Agreement, Obagi Merger Agreement, any Milk or Obagi Ancillary Agreement or the
transactions contemplated therein, and will give due consideration to Milk’s advice with respect to such litigation; and
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except as otherwise approved in writing by Milk (prior to the Milk Closing) (which approval shall not be unreasonably
withheld, conditioned or delayed) and except for any of the following actions that would not increase conditionality, reduce the subscription amount under any Forward Purchase Agreement, reduce the per share price under any Forward
Purchase Agreement, or reduce or impair the rights of Waldencast under any Forward Purchase Agreement, Waldencast shall not permit any amendment or modification to be made
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subject to confidentiality obligations that may be applicable to information furnished to Milk or any of its subsidiaries by
third parties that may be in the possession of Milk or its subsidiaries and except for any information that is subject to attorney-client privilege, and to the extent permitted by applicable law, afford Waldencast and its accountants,
counsel and other representatives reasonable access during the Milk Interim Period, during normal business hours and with reasonable advance notice, in such manner as to not materially interfere with the ordinary course of business of
Milk and its subsidiaries, to all of their properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and furnish such representatives with all financial and operating data and other
information concerning the affairs of Milk and its subsidiaries as such representatives may reasonably request;
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provide to Waldencast and, if applicable, its accountants, counsel or other representatives, (i) such information and such
other materials and resources relating to any legal proceeding initiated, pending or threatened during the Milk Interim Period, or to the compliance and risk management operations and activities of Milk and its subsidiaries during the
Milk Interim Period, in each case, as Waldencast or such representative may reasonably request, (ii) prompt written notice of any status updates in connection with any such legal proceedings or otherwise relating to any material
compliance and risk management matters or decisions of Milk or its subsidiaries, and (iii) copies of any material written communications sent or received by Milk or its subsidiaries in connection with such legal proceedings;
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deliver to Waldencast, as soon as reasonably practicable following the date of the Milk Equity Purchase Agreement, (i) the
audited consolidated balance sheets and the related consolidated statements of operations and members’ equity and cash flows of Milk and its subsidiaries (together with the auditor’s reports thereon and notes thereto) as of and for the
years ended December 31, 2020 and December 31, 2019 and (ii) the auditor reviewed consolidated balance sheets and the related consolidated statements of operations and members’ equity and cash flows of Milk and its subsidiaries
(including all notes thereto) as of and for the nine-month period ended September 30, 2021;
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if the Milk Transaction Effective Time has not occurred prior to February 14, 2022, then as soon as reasonably practicable
following February 14, 2022, deliver to Waldencast the audited consolidated balance sheets and statements of operations and comprehensive loss, changes in stockholders’ equity (deficit), and cash flows of Milk and its subsidiaries
(including all notes thereto) as of and for the year ended December 31, 2021;
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at or prior to the Milk Closing, terminate or settle all Affiliate Agreements (as defined in the Milk Equity Purchase
Agreement), other than those set forth in the applicable section of the Milk Members Disclosure Letter, without further liability to Waldencast, Milk or any of its subsidiaries;
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prior to the Milk Closing, instruct its and their respective representatives to, in each case, use their reasonable best
efforts to provide to Waldencast with all customary cooperation or assistance as reasonably requested by Waldencast in connection with the Debt Financing (as defined in the Milk Equity Purchase Agreement);
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no later than three business days prior to the Milk Closing Date, deliver to Waldencast an executed payoff letter in respect
of the Milk Existing Credit Agreement, together with any applicable related lien release documentation and instruments, in each case, in customary form. Notwithstanding the foregoing, under no circumstances will Milk be obligated to pay
any Milk Payoff Amount prior to the Milk Closing;
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during the Milk Interim Period, not, and cause its subsidiaries and representatives to not, (i) solicit, initiate or
knowingly participate in any negotiations with any person with respect to alternative transactions, or
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cause the Milk Members and officers and employees of Milk listed in the Milk Members Disclosure Letter (the “Lock-Up
Members”, and together with the Obagi Lock-Up Shareholders, the “Lock-Up Holders”) to deliver, or cause to be delivered, to Waldencast copies of the Milk Lock-Up Agreements (as described further under the heading “BCA Proposal — Related Agreements — Related Agreements to the Obagi Merger and the Milk Transaction — Lock-Up Agreement”) duly executed by all such parties in form and substance reasonably
satisfactory to Waldencast.
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each of Waldencast, the Milk Members and Milk will (and, to the extent required, will cause its Affiliates to) comply
promptly, but in no event later than ten business days after the date of the Milk Equity Purchase Agreement, with the notification and reporting requirements of the HSR Act;
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each of Waldencast, the Milk Members and Milk will substantially comply with any information or document requests with
respect to antitrust matters as contemplated by the Milk Equity Purchase Agreement;
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each of Waldencast, the Milk Members and Milk will (and, to the extent required, will cause its Affiliates to) request early
termination of any waiting period or periods under the HSR Act and exercise its reasonable best efforts to (i) obtain termination or expiration of the waiting period or periods under the HSR Act and (ii) prevent the entry, in any legal
proceeding brought by an Antitrust Authority or any other person, of any governmental order which would prohibit, make unlawful or delay the consummation of the transactions contemplated by the Milk Equity Purchase Agreement;
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Waldencast will cooperate in good faith with the Antitrust Authorities and undertake promptly any and all action required to
complete lawfully the transactions contemplated by the Milk Equity Purchase Agreement as soon as practicable and any and all action necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of
any proceeding in any forum by or on behalf of any Antitrust Authority or the issuance of any governmental order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Milk Transaction, including, with
Milk’s prior written consent (which consent shall not be unreasonably withheld, conditioned, delayed or denied), (i) proffering and consenting and/or agreeing to a governmental order or other agreement providing for (A) the sale,
licensing or other disposition, or the holding separate, of particular assets, categories of assets or lines of business of Milk or Waldencast or (B) the termination, amendment or assignment of existing relationships and contractual
rights and obligations of Milk or Waldencast and (ii) promptly effecting the disposition, licensing or holding separate of assets or lines of business or the termination, amendment or assignment of existing relationships and contractual
rights, in each case, at such time as may be necessary to permit the lawful consummation of the transactions contemplated by the Milk Equity Purchase Agreement;
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each of Waldencast, the Milk Members and Milk will (and, to the extent required, shall cause its controlled affiliates to)
(i) diligently and expeditiously defend and use reasonable best efforts to obtain any necessary
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to the extent not prohibited by law, Milk will promptly furnish to Waldencast, and Waldencast will promptly furnish to Milk,
copies of any notices or written communications received by such party or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated by the Milk Equity Purchase Agreement, and
each party shall permit counsel to the other parties an opportunity to review in advance, and each party shall consider in good faith the views of such counsel in connection with, any proposed written communications by such party and/or
its Affiliates to any Governmental Authority concerning the transactions contemplated by the Milk Equity Purchase Agreement;
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Milk shall be responsible for and pay 17% and Waldencast shall be responsible for and pay 50%, in each case, of the filing
fees payable to the Antitrust Authorities in connection with the transactions contemplated by the Milk Equity Purchase Agreement and the Obagi Merger Agreement;
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(i) Waldencast will, and the Milk Members will cause Milk to, jointly prepare and Waldencast will, after receipt of the
required PCAOB financial statements, file with the SEC mutually acceptable materials, including the proxy statement and (ii) Waldencast will prepare and file with the SEC the Registration Statement in connection with the registration
under the Securities Act of (a) the shares of Waldencast plc Class A ordinary shares and (b) the Waldencast plc warrants to be issued in connection with the Domestication;
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each of Waldencast and the Milk Members will, and the Milk Members will cause Milk to, use its reasonable best efforts to
cause the proxy statement/Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the proxy statement/Registration Statement declared effective under the Securities Act as promptly as practicable
after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions contemplated by the Milk Equity Purchase Agreement;
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Waldencast will use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and
approvals required to carry out the transactions contemplated by the Milk Equity Purchase Agreement, and the Milk Members will, and will cause Milk to, furnish all information as may be reasonably requested in connection with any such
action;
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each of Waldencast and the Milk Members agree to, and the Milk Members will cause Milk to, furnish to the other party all
information concerning itself, its subsidiaries, officers, directors, managers, stockholders, and other equityholders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably
requested in connection with the proxy statement/Registration Statement, a Current Report on Form 6-K pursuant to the Exchange Act in connection with the transactions contemplated by the Milk Equity Purchase Agreement, or any other
statement, filing, notice or application made by or on behalf of Waldencast, the Milk Members or their respective subsidiaries to any regulatory authority (including Nasdaq) in connection with the Milk Transaction;
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Waldencast will, as promptly as practicable after the Registration Statement is declared effective under the Securities Act,
(i) disseminate the Registration Statement to shareholders of Waldencast, (ii) give notice, convene and hold a meeting of the shareholders to vote on the Transaction Proposals, in each case in accordance with its Governing Documents
then in effect and Nasdaq Listing Rule 5620(b) (such meeting to be held on a date no later than 30 business days following the date the Registration Statement is declared effective), (iii) solicit proxies from the holders of public
shares of Waldencast to vote in favor of each of the Transaction Proposals, and (iv) provide its shareholders with the opportunity to elect to effect a redemption;
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each of Waldencast and the Milk Members will, and the Milk Members will cause Milk to, and each will cause their respective
subsidiaries to (i) use reasonable best efforts to obtain all material consents and approvals of third parties that any of Waldencast, the Milk Members, Milk, or their respective Affiliates are
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each of Waldencast and the Milk Members will, and the Milk Members will cause Milk to, prior to the Milk Transaction
Effective Time, take all such steps as may be required (to the extent permitted under applicable law) to cause any dispositions of the Milk Membership Units or acquisitions of shares of Waldencast plc Class A ordinary shares (including,
in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated by the Milk Equity Purchase Agreement by each individual who may become subject to the
reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated thereby to be exempt under Rule 16b-3 promulgated under the Exchange Act;
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each of Waldencast and the Milk Members will, and the Milk Members will cause Milk to, and will each cause their respective
subsidiaries and Affiliates (as applicable), and its and their officers, directors, managers, employees, consultants, counsel, accounts, agents and other representatives to, reasonably cooperate in a timely manner in connection with any
financing arrangement the parties mutually agree to seek in connection with the transactions contemplated by the Milk Equity Purchase Agreement, including the PIPE Investment; and
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Waldencast will instruct its financial advisors to, keep Milk and its financial advisors reasonably informed with respect to
the PIPE Investment and any changes in the rotation of Waldencast Class A ordinary shares and Waldencast Class B ordinary shares during such period, including by (i) providing regular updates and (ii) reasonably consulting and
cooperating with, and considering in good faith any feedback from, Milk or its financial advisors with respect to such matters during the period commencing on the date of announcement of the Milk Equity Purchase Agreement or the
transactions contemplated thereby until the Milk Closing Date.
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the Waldencast Shareholder Approval will have been obtained;
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the Registration Statement will have become effective under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement will have been issued and no proceedings for that purpose will have been initiated or threatened by the SEC and not withdrawn;
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the waiting period or periods under the HSR Act and any other required regulatory approval set forth on the Milk Members
Disclosure Letter applicable to the transactions contemplated by the Milk Equity Purchase Agreement and the (i) Milk Sponsor Support Agreement, (ii) Confidentiality Agreement, dated as
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there will not (i) be in force any Governmental Order, in each case, to the extent such Governmental Authority has
jurisdiction over the parties to the Milk Equity Purchase Agreement and the transactions contemplated thereby, enjoining or otherwise prohibiting the consummation of the Milk Transaction, and (ii) have been adopted any law or regulation
that would result in the consummation of the Milk Transaction being illegal or otherwise prohibited;
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all closing conditions in the Obagi Merger Agreement shall have been satisfied and the transactions contemplated thereunder
shall have occurred prior to the Milk Closing;
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Waldencast will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Exchange Act and inclusive of the PIPE Investment Amount and the Forward Purchase Amount, in each case, actually received by Waldencast prior to or substantially concurrently with the Milk Closing); and
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the shares of Waldencast plc Class A ordinary shares to be issued in connection with the Milk Transaction will have been
approved for listing on Nasdaq.
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certain of the representations and warranties of the Milk Members and Milk pertaining to the ownership of equity and
capitalization of Milk will be true and correct in all but de minimis respects as of the Milk Closing Date as though made on and as of such date (or in the case of representations and warranties
that address matters only as of a particular date, as of such date);
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each of the Milk Members Fundamental Representations (other than the ownership of equity and capitalization representations
referenced above) (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects, in each
case, as of the Milk Closing Date as though made on and as of such date (or in the case of representations and warranties that address matters only as of a particular date, as of such date);
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each of the other representations and warranties of the Milk Members contained in the Milk Equity Purchase Agreement
(disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct as of the Milk Closing Date as though made on and as
of such date (or in the case of representations and warranties that address matters only as of a particular date, as of such date), except for, in each case, inaccuracies or omissions that have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Milk Material Adverse Effect;
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each of the covenants of Milk to be performed or complied with as of or prior to the Milk Closing will have been performed or
complied with in all material respects; and
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since the date of the Milk Equity Purchase Agreement, there shall not have occurred a Milk Material Adverse Effect that is
continuing.
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each of the representations and warranties of Waldencast and the Milk Purchasers regarding the capitalization of Waldencast
(other than the representations and warranties contained in Section 5.12(g) and
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each of the Waldencast Fundamental Representations (other than the capitalization representations referenced above)
(disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects, in each case as of the Milk
Closing Date as though made on and as of such date (or in the case of representations and warranties that address matters only as of a particular date, as of such date);
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each of the other representations and warranties of Waldencast contained in the Milk Equity Purchase Agreement (disregarding
any qualifications and exceptions contained therein relating to materiality and material adverse effect or any similar qualification or exception) will be true and correct as of the Milk Closing Date as though made on and as of such
date (or in the case of representations and warranties that address matters only as of a particular date, as of such date), except for, in each case, inaccuracies or omissions that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Waldencast or Waldencast’s ability to consummate the transactions contemplated by the Milk Equity Purchase Agreement;
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each of the covenants of Waldencast and the Milk Purchasers to be performed or complied with as of or prior to the Milk
Closing will have been performed and complied with in all material respects; and
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the Domestication will have been completed, including that the deregistration of Waldencast in the Cayman Islands will have
been filed with the Cayman Registrar and a copy of the certificate of continuance issued by the Jersey Registrar in relation thereto will have been delivered to Milk.
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by the mutual written consent of Milk and Waldencast;
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by Milk or Waldencast if any Governmental Order has become final and non-appealable and has the effect of making the
consummation of the Milk Transaction illegal or otherwise prohibiting consummation of the Milk Transaction, or if there shall be adopted following the date of the Milk Equity Purchase Agreement any law or regulation that would result in
the consummation of the Milk Transaction being illegal or otherwise prohibited;
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by Milk or Waldencast if the Waldencast Shareholder Approval has not been obtained by reason of the failure to obtain the
required vote at a meeting of Waldencast’s shareholders duly convened therefor or at any adjournment thereof;
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by Milk if there has been a modification in recommendation of the board of directors of Waldencast with respect to any of the
Transaction Proposals;
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by Waldencast or Milk if the Obagi Merger Agreement is terminated;
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by written notice to Milk from Waldencast in the event of certain uncured breaches on the part of Milk or if the Closing has
not occurred on or before August 15, 2022 (the “Milk Agreement End Date”), unless Waldencast is in material breach of the Milk Equity Purchase Agreement, provided, however, that if, as of the Milk Agreement End Date, all of the
conditions, other than those relating to certain regulatory approvals having been obtained, and those conditions that by their nature are to be satisfied at the Milk Closing, are satisfied or, if permissible, waived, then Waldencast
shall have the right to, by providing written notice to Milk prior to the Milk Agreement End Date, extend the Milk Agreement End Date for one period of three months;
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by written notice to Waldencast from Milk in the event of certain uncured breaches on the part of Waldencast or the Milk
Purchasers or if the Milk Closing has not occurred on or prior to the Milk Agreement End Date, unless Milk is in material breach of the Milk Equity Purchase Agreement, provided, however, that if, as of the Milk Agreement End Date, all
of the conditions, other than those relating to
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Obagi Hong Kong shall promptly refrain from using the Product Information File, the Specifications and the Confidential
Information of Obagi Cosmeceuticals (each as defined in the Supply Agreement);
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Obagi Hong Kong shall return to Obagi Cosmeceuticals all documents relating to the Product Information File, Specifications
and Confidential Information of Obagi Cosmeceuticals. The relevant costs shall be borne by the party who is responsible for the termination or the non-renewal of the Supply Agreement; and
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unless the Supply Agreement is terminated by Obagi Hong Kong due to Obagi Cosmeceuticals’ breach of its obligations related
to the quality of the products, Obagi Cosmeceuticals shall complete the manufacturing of all products covered by firm orders and deliver them to the applicable recipient.
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Waldencast indicated that it was prepared to offer to acquire Milk at an enterprise value of $380.0 million. The initial
valuation with respect to Milk reflected in the Milk Initial LOI was consistent with Waldencast management’s evaluation of the business, which was based on Waldencast management’s analysis of the projected revenue and earnings/losses to
be generated by the business, as projected by Milk’s management, Waldencast’s comparable companies analysis and the business plan and other materials provided by Milk’s management.
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Waldencast was prepared for its offer to be substantially in cash, financed through a combination of cash on hand and cash
from the Forward Purchasers, with Milk Members having the flexibility to receive a mix of cash and equity consideration. However, the expectation was for the founders and certain key employees of Milk to agree to roll a certain
percentage of their Milk ownership into shares of the new Waldencast public company.
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Due diligence would commence immediately upon agreement between the parties on the principal terms of the proposed merger
transaction.
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The proposal was subject to, among other things, Milk’s agreement to negotiate with Waldencast on an exclusive basis for a
90-day period following a management presentation and access to a substantially populated data room.
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Waldencast indicated that it was prepared to offer to acquire Obagi at an enterprise value of approximately $850.0 million,
excluding 100% of the Obagi China Business, which Waldencast proposed be distributed to the Dai Family prior to consummation of the proposed business combination transaction. A determination was made by Waldencast not to pursue the
acquisition of the Obagi China Business for a variety of reasons, including but not limited to, differences in value attributed to Obagi China Business and regulatory issues.
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The consideration for the acquisition would be $380.0 million in cash (subject to the substitution of an amount of Waldencast
stock, in the event of redemptions of Waldencast stock, with such substituted stock subject to a lock-up period of up to six months) and $275.0 million in Waldencast plc Class A ordinary shares.
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Cedarwalk would appoint one director to Waldencast plc’s board of directors.
|
•
|
Due diligence would commence immediately upon agreement between the parties on the principal terms of the proposed business
combination transaction.
|
•
|
The proposal was subject to, among other things, Obagi’s agreement to negotiate with Waldencast on an exclusive basis for a
period of 45 days, subject to one automatic 45-day extension in the event that, prior to the expiry of the then-applicable exclusivity period, Waldencast certified in writing to Obagi its continued commitment to the proposed business
combination transaction upon the terms set forth in the Obagi LOI.
|
•
|
The proposed terms of the Obagi China Business distribution included, among other things, that:
|
•
|
Cedarwalk, as the owner of the Obagi China Business, had the sole right to sell Obagi products in the China Region, and
Obagi, as part of Waldencast, had the sole right to sell in all countries outside of the China Region.
|
•
|
In the event a transaction was considered whereby Cedarwalk ceased to control more than 51% of the equity of the Obagi China
Business entities, Obagi, as part of Waldencast, would have a right of first offer and a right of first refusal on any offer that would result in such change of control. In the event the transaction considered would involve less than
49% of the equity of the Obagi China Business entities, Obagi, as part of Waldencast, would have only a right of first offer.
|
•
|
Cedarwalk, as the owner of the Obagi China Business, and Obagi, as part of Waldencast, would enter into various agreements to
document the go-forward relationship of the parties, including (a) a perpetual licensing agreement, pursuant to which Cedarwalk, as the owner of the Obagi China Business, would be required to pay a royalty of 5.5% of the Obagi China
Business sales to Obagi, with certain exclusions and adjustments, (b) a supply chain agreement, and (c) a transition services agreement.
|
•
|
Waldencast indicated that it was prepared to offer to acquire Milk at an enterprise value of $379.0 million.
|
•
|
The consideration for the acquisition would be $140.0 million in cash and $200.0 million in Waldencast plc Class A ordinary
shares.
|
•
|
Due diligence would commence immediately upon agreement between the parties on the principal terms of the proposed business
combination transaction.
|
•
|
The proposal contemplated Milk’s agreement to negotiate with Waldencast on an exclusive basis for a 90-day period following
the date of the management presentation and receipt of access to a substantially populated data room.
|
(i)
|
Strong brand identity and enduring brand equity: purpose-driven brand with
high-quality products and values such as authenticity, social consciousness, inclusiveness, sustainability, and transparency with respect to clean ingredients and responsible sourcing practices;
|
(ii)
|
High level of consumer affinity: established an active and engaged community of
users with a high degree of loyalty and emotional connection to the brand;
|
(iii)
|
Differentiated offering and market positioning: unique innovation capabilities or
formulations, a defensible strategic moat, and a modern business model aimed at disrupting the category in which it plays;
|
(iv)
|
Multiple levers for long-term sustainable growth: ability to increase penetration in
existing markets, categories, and consumer segments, capitalize on untapped opportunities with respect to international expansion, channel diversification, and thoughtful product line expansions which augment consumer segments;
|
(v)
|
Benefit from online acceleration and omni-channel access: potential to rapidly scale
through a combination of online acceleration and diversification to appropriate offline channels;
|
(vi)
|
Long-term sustainable business model: strong unit economics, gross margin profile
that is aligned with or above industry standard, positive operating profits, or clear path to profitability;
|
(vii)
|
Leverage management team’s extensive operating expertise and network: leverage over
five decades of direct beauty and consumer goods operating and investing experience at the world’s leading consumer companies and benefit from hands-on guidance to optimize operations to extract operational efficiencies; and
|
(viii)
|
Attractive value creation opportunity: potential combination targets with the
appropriate risk and reward profile that can generate attractive returns for our shareholders based on our rigorous strategic, operational, and financial assessment.
|
•
|
Obagi, Milk and the Business Combination. The Waldencast board of directors
considered the following factors relating to Obagi, Milk and the Business Combination, which are based on diligence conducted by or at the direction of Waldencast and its advisors, and on information that Obagi and Milk have provided to
Waldencast:
|
•
|
Large and Resilient Addressable Market. The global skincare and color cosmetics
markets were valued at approximately $155 billion and $66 billion, respectively, in 2020, accounting for approximately 30% and 13% of the global beauty, personal care and wellness market, according to industry sources. Going forward,
these two markets are expected to grow at a CAGR of 7.9% and 7.0%, respectively, from 2021 to 2023. We believe the key drivers of growth include the shift in desire for quality over price, increased appetite for clean, natural, and
higher-performance products, emerging market expansion, and adaptability to e-commerce channels, particularly by skincare and makeup consumers. The beauty, personal care and wellness market has proven to be resilient through economic
cycles and, in particular, is expected to maintain strong momentum in its growth following the COVID-19 lockdowns, with estimated year-on-year growth of 8.4% in 2021, and 6.4% for 2022 and 2023, according to industry sources.
|
•
|
Highly Fragmented Market with Growth Driven by Independent Brands. The top five
brands in the global beauty, personal care and wellness market, being Colgate-Palmolive, The Estee Lauder Companies, Inc., Unilever, P&G, and L’Oreal S.A, account for only 32% of the market share. Of these, Colgate-Palmolive,
Unilever and P&G experienced reductions in their market shares over the period from 2015 to 2020, according to industry sources. New consumer trends and technology are driving the gain in market share of disruptor brands that
account for the other 68% of the global beauty, personal care and wellness market. These emerging brands are driving sector growth and the Waldencast board of directors believes there is a clear opportunity to aggregate these brands
under a new platform to accelerate growth and scale.
|
•
|
Obagi is a Market Leader within the Professional Skincare Market. Obagi is a market
leader in the global professional skincare market, ranked first in independent brands in this market, and first, compared to brands (more generally) in this market, in product portfolio, innovation, and marketing based on perception and
satisfaction among U.S. physicians, according to independent research conducted in 2020. It was second in sales in 2019 in this segment of U.S. professional skincare products companies. The skincare market is the fastest growing segment
in the global beauty, personal care and wellness market, with the expectation for the global skincare market to grow in revenue from $62 billion in 2021 to $209 billion by 2025, according to industry sources.
|
•
|
Obagi’s Robust, Science-Based Product Portfolio. Obagi currently holds over 80
patents worldwide in respect of its treatments, which are developed by a world class research and development team, and undergo rigorous product efficacy testing from panels comprising leading dermatologists from universities and
research organizations across the U.S. Over 90% of Obagi’s sales are derived from medical skincare products, ranging in price from $22.00 to $471.00.
|
•
|
Obagi’s Experienced Management Team of Dermo-Cosmetics Experts. The Waldencast board
of directors believes that Obagi’s management team has extensive experience in key aspects of the
|
•
|
Milk’s Leading Clean Make-Up Brand. Milk is a leading clean make-up brand with a
strong following among Gen-Z consumers, known for its cultural relevance and iconic products. The brand is anchored by this strong community following and the Waldencast board of directors believe there are significant growth
opportunities.
|
•
|
Milk’s Strong Community Engagement and Portfolio of Unique Products. We believe Milk
has an exciting portfolio of innovative and iconic products and a strong community following attracted to its brand values of “good for you, good for the planet, and good for our community.” As of November 22, 2021, Milk had
approximately 1,900,000 Instagram followers, 8,600,000 likes and 122,000,000 hash-tagged video views on TikTok, 653,000 monthly views on Pinterest, 99,000 Facebook followers, 89,000 YouTube subscribers and 62,000 Twitter followers. The
Waldencast board of directors believes Milk has the potential to grow through innovation and launches from its current portfolio of cosmetic products to other segments of the beauty, personal care and wellness market, such as skincare,
haircare, bath and shower, and fragrance.
|
•
|
Milk’s Strong Partnership with Sephora. Milk has an established presence in the U.S.
and Canada through its partnership with Sephora, with Milk’s products featured in all 1,335 physical Sephora retail stores in the U.S., and all 82 physical Sephora retail stores in Canada. However, milkmakeup.com currently only ships to
the U.S. and the Waldencast board of directors believes there is an opportunity to increase Milk’s presence in high-growth international markets, through increasing Milk’s presence in Sephora’s non-North American brick and mortar
stores, as well as partnerships with other beauty retail stores worldwide.
|
•
|
Milk’s Experienced Management Team of Make-Up and Cosmetic Industry Experts. The
Waldencast board of directors believes that Milk’s management team has extensive experience in key aspects of the beauty, personal care and wellness sectors, particularly the make-up and cosmetics sectors. Milk’s management team is led
by Tim Coolican, who serves as Chief Executive Officer, and executives with experience from leading companies such as L’Oréal, Unilever, Bliss and Benefit. We expect that Milk executives will continue with the combined company following
the Business Combination. For additional information regarding Milk’s executive officers, see the section entitled “Management of Waldencast plc Following the Business Combination — Executive Officers.”
|
•
|
Attractive Entry Valuations. The Waldencast board of directors determined that (a)
the pro forma enterprise valuations of Obagi and Milk were reasonable in comparison to certain comparable, publicly traded companies and (b) Waldencast plc will have an anticipated initial pre-transaction enterprise value of $1,200.0
million, implying a 4.8x multiple of 2022 projected revenue. The final agreed valuations for each of Obagi and Milk were the result of negotiation between the parties and judgment by the Waldencast board of directors, and were not
specifically based on the information provided with respect to certain comparable companies set out below.
|
•
|
Best Available Opportunity. The Waldencast board of directors determined, after a
thorough review of other business combination opportunities reasonably available to Waldencast, that the proposed Business Combination represents the optimal potential business combination available in the market for Waldencast based
upon the process utilized to evaluate and assess other potential acquisition targets, and the Waldencast board of directors’ belief that such processes had not presented a better alternative. In particular, it was determined that the
proposed Business Combination with two target entities was the best available proposal for furthering Waldencast’s objective of establishing a global, multi-brand beauty and wellness platform. The Waldencast board of directors
considered the possibility that there may not be another opportunity available to achieve Waldencast’s objectives if the proposed Business Combination did not proceed.
|
•
|
Continued Ownership by Sellers. The Waldencast board of directors considered that
Obagi and Milk’s existing stockholders would be receiving a significant amount of Waldencast plc’s common stock in the proposed Business Combination and that the existing stockholders of Obagi and Milk are “rolling over” a significant
portion of their existing equity interests in Obagi and Milk into equity interests in Waldencast plc which would represent approximately 30.8% of the pro forma fully diluted share ownership of the combined company after Closing, based
on Obagi’s capitalization as of September 30, 2021, and Milk’s capitalization as of September 30, 2021, assuming that none of Waldencast’s shareholders elect to redeem their Class A ordinary shares for a pro rata portion of cash in the
Trust Account, and thus the full amount of the approximately $345.0 million held in the Trust Account is available for the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained
by Obagi and Milk’s existing stockholders in the combined company will be different. See “Beneficial Ownership of Securities” for additional information.
|
•
|
Results of Due Diligence. In addition to conducting legal, financial, tax and
accounting due diligence, the Waldencast board of directors considered the scope of the due diligence investigation conducted by Waldencast’s senior management, and outside legal, tax, and accounting advisors and evaluated the results
thereof and information available to it related to Obagi and Milk, including:
|
•
|
extensive virtual meetings, office tours and calls with Obagi and Milk’s management team regarding its operations,
projections and the proposed transaction; and
|
•
|
review of materials related to Obagi and Milk and their businesses, made available by Obagi and Milk, including financial
statements, material contracts, key metrics and performance indicators, benefit plans, employee compensation and labor matters, intellectual property matters, real property matters, information technology, privacy and personal data,
litigation information, environmental matters, export control matters, regulatory and compliance matters and other legal and business diligence.
|
•
|
Terms of the Transaction Agreements. The Waldencast board of directors reviewed and
considered the terms of the Transaction Agreements and the related agreements including the parties’ conditions to their respective obligations to complete the transactions contemplated therein and their ability to terminate such
agreements under the circumstances described therein. See the sections entitled “BCA Proposal — Obagi Merger Proposal — The Obagi Merger Agreement” and “BCA
Proposal — Milk Transaction Proposal — The Milk Equity Purchase Agreement” for detailed discussions of the terms and conditions of these agreements.
|
•
|
Arm’s-Length Negotiations.The terms of the Transaction Agreements and the related
agreements were vigorously negotiated on an arms-length basis by Waldencast’s management and its outside legal advisors, with input from its financial advisors, with Obagi and Milk, and each of their legal and financial advisors.
|
•
|
The Role of the Independent Directors. In connection with the Business Combination,
Waldencast’s independent directors, Ms. Sarah Brown, Ms. Juliette Hickman, Ms. Lindsay Pattison and Mr. Zack Werner evaluated the proposed terms of the Business Combination, including the Obagi Merger Agreement, Milk Equity Purchase
Agreement and the related agreements, and unanimously approved, as members of the Waldencast board of directors, the Obagi Merger Agreement, Milk Equity Purchase Agreement and the related agreements and the transactions contemplated
thereby, including the Business Combination.
|
•
|
Potential Inability to Complete the Obagi Merger and Milk Transaction. The
Waldencast board of directors considered the possibility that the Obagi Merger and/or the Milk Transaction and, thereby, the Business Combination, may not be completed and the potential adverse consequences to Waldencast if the Business
Combination is not completed, in particular the expenditure of time and resources in pursuit of the Business Combination and the loss of the opportunity to participate in the transaction. They considered the uncertainty related to the
Closing, including due to closing conditions primarily outside of the control of the parties to the transaction (such as the need for shareholder and antitrust approval). The Transaction Agreements and the Sponsor Support Agreements
also include exclusivity provisions that limit Waldencast,
|
•
|
Obagi and Milk’s Business Risks. The Waldencast board of directors considered that
Waldencast shareholders would be subject to the execution risks associated with Waldencast plc if they retained their public shares following the Closing, which were different from the risks related to holding public shares of
Waldencast prior to the Closing. In this regard, the Waldencast board of directors considered that there were risks associated with successful implementation of Waldencast plc’s long-term business plan and strategy and Waldencast plc
realizing the anticipated benefits of the Business Combination on the timeline expected or at all, including due to factors outside of the parties’ control such as the potential negative impact of the COVID-19 pandemic and related
macroeconomic uncertainty. The Waldencast board of directors considered that the failure of any of these activities to be completed successfully may decrease the actual benefits of the Business Combination and that Waldencast
shareholders may not fully realize the anticipated benefits to the extent that they expected to retain the public shares following the completion of the Business Combination. For additional description of these risks, please see the
section entitled “Risk Factors.”
|
•
|
Implementation Complexities. Although a simultaneous business combination with two
target entities is consistent with Waldencast’s objective of establishing a global, multi-brand beauty and wellness platform, the Waldencast board of directors considered the potential added complexity of implementation of the proposed
Business Combination.
|
•
|
Post-Business Combination Corporate Governance. The Waldencast board of directors
considered the corporate governance provisions of the Transaction Agreements, the Investor Rights Agreement and the Proposed Constitutional Documents and the effect of those provisions on the governance of Waldencast plc following the
Closing. Cedarwalk will have the right to designate one director to the Waldencast plc Board for as long as Cedarwalk owns 5% of the then outstanding Waldencast plc common stock. The Waldencast board of directors was aware that this
right is not generally available to shareholders of Waldencast, including shareholders that may hold a large number of shares. See the sections entitled “BCA Proposal — Obagi Merger Proposal — The Obagi Merger Agreement,” “BCA Proposal — Milk Transaction Proposal — The Milk Equity Purchase Agreement” and “BCA Proposal — Related Agreements — Related
|
•
|
No Survival of Remedies for Breach of Representations, Warranties or Covenants of Obagi or
Milk. The Waldencast board of directors considered that the terms of the Transaction Agreements provide that Waldencast will not have any surviving remedies against Obagi, Milk or their stockholders after the Closing to
recover for losses as a result of any inaccuracies or breaches of the Obagi and Milk representations, warranties or covenants set forth in the Transaction Agreements. The Waldencast board of directors determined that this structure was
appropriate and customary in light of the fact that several similar transactions include similar terms and the current stockholders of Obagi and Milk will be stockholders in Waldencast plc.
|
•
|
Litigation. The Waldencast board of directors considered the possibility of
litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could enjoin consummation of the Business Combination.
|
•
|
Fees and Expenses. The Waldencast board of directors considered the fees and
expenses associated with completing the Business Combination.
|
•
|
Diversion of Management. The Waldencast board of directors considered the potential
for diversion of management and employee attention during the period prior to the completion of the Business Combination, and the potential negative effects on Obagi and Milk’s businesses.
|
•
|
Interests of Waldencast’s Directors and Executive Officers. Waldencast’s directors
and executive officers may have interests in the Business Combination as individuals that are in addition to, and may be different from, the interests of Waldencast’s shareholders, as described in the section entitled “BCA Proposal — Interests of Waldencast’s Directors and Executive Officers in the Business Combination.” However, Waldencast’s board of directors concluded that the potentially disparate interests
would be mitigated because (i) these interests were disclosed in the prospectus for Waldencast’s initial public offering and are included in this proxy statement/prospectus, (ii) most of these disparate interests would exist with
respect to a business combination by Waldencast with any other target business or businesses, and (iii) Waldencast’s directors and executive officers hold equity interests in Waldencast with value that, after the Closing, will be based
on the future performance of Waldencast plc’s common stock. In addition, Waldencast’s independent directors reviewed and considered these interests during their evaluation of the Business Combination and in unanimously approving, as
members of the Waldencast board of directors, the Transaction Agreements and the related agreements and the transactions contemplated thereby, including the Business Combination.
|
|
| |
Waldencast(1)
|
| |
L’Oreal
Company
|
| |
The Estee
Lauder
Companies,
Inc.
|
| |
e.l.f.
Beauty,
Inc.
|
| |
Olaplex
Holdings,
Inc.
|
| |
The Beauty
Health
Company
(hydrafacial)
|
| |
lululemon
athletica
inc.
|
| |
Align
Technology
Inc.
|
| |
FIGS,
Inc.
|
| |
Peer
Group
Average
|
2022E FV/ Revenue
|
| |
4.8x
|
| |
6.2x
|
| |
6.7x
|
| |
4.7x
|
| |
29.0x
|
| |
14.0x
|
| |
8.3x
|
| |
11.5x
|
| |
15.0x
|
| |
11.9x
|
2023E FV/Revenue
|
| |
3.9x
|
| |
5.8x
|
| |
6.2x
|
| |
4.3x
|
| |
23.2x
|
| |
11.0x
|
| |
7.3x
|
| |
9.5x
|
| |
11.3x
|
| |
9.8x
|
2022E FV/EBITDA
|
| |
24.7x*
|
| |
25.3x
|
| |
28.0x
|
| |
24.2x
|
| |
46.6x
|
| |
96.4x
|
| |
32.6x
|
| |
37.4x
|
| |
74.9x
|
| |
45.7x
|
2023E FV/EBITDA
|
| |
16.5x*
|
| |
23.6x
|
| |
25.2x
|
| |
20.5x
|
| |
38.8x
|
| |
61.8x
|
| |
27.8x
|
| |
29.7x
|
| |
54.4x
|
| |
35.2x
|
*
|
EBITDA reflects deduction of $5.0 million for public company costs
|
(1)
|
Waldencast implied multiple at $10.00/share
|
|
| |
Obagi Financial Forecast*
|
||||||
|
| |
Forecast Year Ending
December 31
|
||||||
(in millions)
|
| |
2021E
|
| |
2022E(2)
|
| |
2023E(2)
|
|
| |
(unaudited)
|
||||||
Net Sales
|
| |
$168
|
| |
$190
|
| |
$213
|
Gross Profit
|
| |
127
|
| |
150
|
| |
168
|
Adjusted EBITDA(1)
|
| |
42
|
| |
50
|
| |
63
|
*
|
Obagi financials exclusive of the Obagi China Business.
|
(1)
|
Adjusted EBITDA is a non-GAAP measure.
|
(2)
|
Obagi financials inclusive of 5.5% royalty.
|
•
|
Net Sales
|
•
|
U.S. increases in revenue due to:
|
•
|
growth of the U.S. professional skincare market;
|
•
|
geographic expansion, including adding new accounts in existing territories and entering new territories;
|
•
|
increases in the prices of Obagi Medical® products; and
|
•
|
new product launches, including product expansions into new categories.
|
•
|
International increases in revenue due to:
|
•
|
growth of the skincare markets in international territories where it operates (outside of China);
|
•
|
international expansion, including entering new territories and using new distributers;
|
•
|
increases in the price of its products in international markets (outside of China);
|
•
|
new product launches; and
|
•
|
commencement of Skintrinsiq™ device sales in international markets (outside of China).
|
•
|
Gross Profit
|
•
|
increase in net sales as described above;
|
•
|
historical gross margin performance for Obagi’s products and channels remaining consistent; and
|
•
|
the success of Obagi’s initiatives to negotiate and reduce costs with manufacturers and freight carriers.
|
•
|
Adjusted EBITDA
|
•
|
increase in sales and marketing expenses to drive increased net sales growth, including sales force expansion;
|
•
|
increase in research and development expenses due to continued design, development, and testing, including in-market clinical
studies, of current and future Obagi products;
|
•
|
increase in personnel and general and administrative expenses to support Obagi’s growing operations; and
|
•
|
gross profits growing at a rate higher than the increase in operating expenses as a result of efforts to control costs across
functional areas.
|
|
| |
Milk Financial Forecast
|
||||||
|
| |
Forecast Year Ending December 31
|
||||||
(in millions)
|
| |
2021E
|
| |
2022E
|
| |
2023E
|
|
| |
(unaudited)
|
||||||
Net Sales
|
| |
$47
|
| |
$66
|
| |
$101
|
Gross Profit
|
| |
23
|
| |
39
|
| |
63
|
Adjusted EBITDA(1)
|
| |
(3)
|
| |
6
|
| |
17
|
(1)
|
Adjusted EBITDA is a non-GAAP measure.
|
•
|
Net Sales
|
•
|
increase in revenue due to the relaunch of the Milk brand’s Shopify platform;
|
•
|
increase in revenue due to the growth in certain key franchises representing the Milk business, including Milk’s Hydro Grip
Primer and Lip and Cheek families of products;
|
•
|
increase in revenue due to distribution in the U.S. via Sephora at Kohl’s expansion; and
|
•
|
increase in revenue from increasing customer awareness and distribution internationally.
|
•
|
Gross Profit
|
•
|
increase in retail price on certain existing franchises and new launches; and
|
•
|
increase in weight of direct-to-consumer as a business channel.
|
•
|
Adjusted EBITDA
|
•
|
increase in net sales as described above.
|
|
| |
Waldencast plc Financial Forecast*
|
||||||
|
| |
Forecast Year Ending December 31
|
||||||
(in millions)
|
| |
2021E
|
| |
2022E(2)(3)(4)
|
| |
2023E(2)(3)
|
|
| |
(unaudited)
|
||||||
Net Sales
|
| |
$215
|
| |
$256
|
| |
$314
|
Gross Profit
|
| |
150
|
| |
189
|
| |
231
|
Adjusted EBITDA(1)
|
| |
39
|
| |
60
|
| |
75
|
*
|
Obagi financials exclusive of the Obagi China Business.
|
(1)
|
Adjusted EBITDA is a non-GAAP measure.
|
(2)
|
Total combined company adjusted EBITDA reflects deduction of $5mm for public company costs.
|
(3)
|
Obagi financials inclusive of 5.5% royalty.
|
(4)
|
Discrepancies in arithmetic are due to rounding.
|
•
|
In January 2021, the Sponsor purchased 7,187,500 Waldencast Class B ordinary shares for an aggregate purchase price of
$0.025 million, or approximately $0.003 per share. In February 2021, the Sponsor transferred 20,000 Waldencast Class B ordinary shares to each of the Investor Directors, who are our independent directors, resulting in the Sponsor
holding 7,107,500 Waldencast Class B ordinary shares. In March 2021, we effected a share capitalization resulting in the Sponsor holding an aggregate of 8,545,000 Waldencast Class B ordinary shares. As such, the Sponsor and the Investor
Directors collectively own 20% of our issued and outstanding shares.
|
•
|
The 8,545,000 Waldencast Class B ordinary shares owned by Sponsor, if valued based on the closing price of $10.00 per public
share on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $85.5 million (after
giving effect to the conversion of such Waldencast Class B ordinary shares into shares of Waldencast plc Class A ordinary shares in connection with the Obagi Merger and the Milk Transaction, including after giving effect to the
Domestication). If Waldencast does not consummate a business combination by March 18, 2023 (or during any Extension Period) it would cease all operations
|
•
|
The 80,000 Waldencast Class B ordinary shares collectively owned by the Investor Directors, if valued based on the closing
price of $10.00 per public share on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of
$0.8 million (after giving effect to the conversion of such Waldencast Class B ordinary shares into shares of Waldencast plc Class A ordinary shares in connection with the Transactions, including after giving effect to the
Domestication). If Waldencast does not consummate a business combination by March 18, 2023 (or during any Extension Period), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public
shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of
creditors and the requirements of other applicable law. In such event, the 80,000 Waldencast Class B ordinary shares owned by the Investor Directors would be worthless because following the redemption of the public shares, Waldencast
would likely have few, if any, net assets and because the Sponsor and Waldencast’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any Waldencast
Class A ordinary shares and Waldencast Class B ordinary shares held by it or them, as applicable, if Waldencast fails to complete a business combination within the required period.
|
•
|
The Sponsor purchased an aggregate of 5,933,333 private placement warrants from Waldencast simultaneously with the
consummation of Waldencast’s initial public offering for an aggregate purchase price of $8.9 million, which will automatically convert into 5,933,333 Waldencast plc warrants in connection with the Transactions (including after giving
effect to the Domestication). The 5,933,333 private placement warrants, if valued based on the closing price of $0.80 per public warrant on the Nasdaq on February 10, 2022, the most recent practicable date prior to the date of this
proxy statement/prospectus, and if unrestricted and freely tradable, would have an aggregate market value of $4.7 million, but may expire and become worthless if Waldencast fails to complete a business combination by March 18, 2023. As
a result of Sponsor’s interest in the Waldencast Class B ordinary shares and private placement warrants, Sponsor and its Affiliates have an incentive to complete an initial business combination and may have a conflict of interest in the
transaction, including without limitation, in determining whether a particular business is an appropriate business with which to effect Waldencast’s initial business combination.
|
•
|
The Sponsor and Dynamo Master Fund (a member of the Sponsor) initially entered into the Sponsor Forward Purchase Agreement
with us that provides for the purchase of an aggregate of 16,000,000 Waldencast plc Units comprised of 16,000,000 Waldencast Class A ordinary shares and 5,333,333 redeemable warrants, for an aggregate purchase price of $160.0 million,
or $10.00 per one Waldencast Class A ordinary shares and one-third of one redeemable warrant, in a private placement to close substantially concurrently with the Closing. On December 20, 2021, the Sponsor and Burwell Mountain Trust (a
member of the Sponsor) entered into an assignment and assumption agreement, pursuant to which the Sponsor assigned, and Burwell Mountain Trust assumed, all of the Sponsor’s rights and benefits as purchaser under the Sponsor Forward
Purchase Agreement. Additionally, the Beauty Ventures entered into the Third-Party Forward Purchase Agreement with us that provides for the purchase of an aggregate of 17,300,000 Waldencast plc Units comprised of 17,300,000 Waldencast
Class A ordinary shares and 5,766,666 redeemable warrants, for an aggregate purchase price of $173.0 million, or $10.00 per one Waldencast Class A ordinary share and one-third of one redeemable warrant, in a private placement to close
substantially concurrently with the Closing. In addition, pursuant to the Third-Party Forward Purchase Agreement, members of the Sponsor or their Affiliates will begin to receive a twenty percent (20%)
|
•
|
In the event that Waldencast fails to consummate a business combination within the prescribed time frame (pursuant to the
Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Waldencast will be required to provide for payment of claims of creditors that were not waived that may be brought
against Waldencast within the ten years following such redemption. In order to protect the amounts held in Waldencast’s trust account, the Sponsor has agreed that it will be liable to Waldencast if and to the extent any claims by a
third party (other than Waldencast’s independent auditors) for services rendered or products sold to Waldencast, or a prospective target business with which Waldencast has discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any
claims under the indemnity of the underwriters of Waldencast’s initial public offering against certain liabilities, including liabilities under the Securities Act.
|
•
|
In order to finance transaction costs in connection with a Business Combination, the Sponsor has advanced funds to Waldencast
for working capital purposes, including $1.5 million as of February 8, 2022. These outstanding advances have been documented in the Promissory Note issued by Waldencast to the Sponsor, pursuant to which Waldencast may borrow up to $1.5
million from the Sponsor (including those amounts which are currently outstanding). The Promissory Note is non-interest bearing, unsecured and due and payable in full on the earlier of (x) March 18, 2023 and (y) the date Waldencast
consummates its initial business combination. If Waldencast does not complete the initial business combination within the required period, Waldencast may use a portion of the working capital held outside the trust account to repay such
advances and any other working capital advances made to Waldencast, but no proceeds held in the trust account would be used to repay such advances and any other working capital advances made to Waldencast, and Sponsor may not be able to
recover the value it has loaned to Waldencast and any other working capital advances it may make.
|
•
|
Waldencast’s officers and directors, and their Affiliates are entitled to reimbursement of out-of-pocket expenses incurred by
them in connection with certain activities on Waldencast’s behalf, such as identifying and investigating possible business targets and business combinations, as well as repayment of any working capital advances. However, if Waldencast
fails to consummate a business combination by March 18, 2023, they will not have any claim against the trust account for reimbursement or repayment. Accordingly, Waldencast may not be able to reimburse such expenses or repay such
advances if the Business Combination or another business combination, is not completed by such date. As of December 31, 2021, Waldencast’s officers and directors and their affiliates are entitled to approximately $1.5 million in
reimbursable out-of-pocket expenses. As of February 8, 2022, there were approximately $0.25 million of unpaid reimbursable expenses or working capital advances outstanding (which includes funds advanced to Waldencast by Sponsor pursuant
to the Promissory Note).
|
•
|
As noted above, the Sponsor purchased 7,187,500 Waldencast Class B ordinary shares for an aggregate purchase price of $0.025
million, or approximately $0.003 per share (after taking into account the forfeiture by Sponsor of 937,500 Waldencast Class B ordinary shares, as a result of the underwriter’s exercise of the over-allotment option) and now holds an
aggregate of 8,545,000 Waldencast Class B ordinary shares taking into account the Sponsor’s transfer of 80,000 shares to the Investor Directors and our share capitalization. As a result, Sponsor will have a rate of return on its
investment which differs from the rate of return of Waldencast shareholders who purchased Waldencast shares at various other prices, including Waldencast shares included in Waldencast units that were sold at $10.00 per unit in
Waldencast’s initial public offering.
|
•
|
The Sponsor (including its representatives and Affiliates) and Waldencast’s directors and officers may in the future become,
affiliated with entities that are engaged in a similar business to Waldencast. The Sponsor and Waldencast’s directors and officers are not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check
companies prior to Waldencast completing its initial business combination. Waldencast’s directors and officers also may become aware of business opportunities that may be appropriate for presentation to Waldencast, and the other
entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be
resolved in Waldencast’s favor and such potential business opportunities may be presented to other entities prior to their presentation to Waldencast, subject to applicable fiduciary duties under Cayman Islands Companies Act.
Waldencast’s Cayman Constitutional Documents provide that Waldencast renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter that may be a corporate opportunity
for Waldencast, on the one hand, and one of its officers or directors, on the other, or that may be a corporate opportunity for both Waldencast and one of its officers or directors. Waldencast does not believe, however, that the
fiduciary duties or contractual obligations of its officers or directors or waiver of corporate opportunity materially affected its search for an acquisition target or will materially impact its ability to complete the Business
Combination. While certain of Waldencast’s directors and officers (Michel Brousset, Hind Sebti and Tassilo Festetics) serve as officers or directors of Waldencast Ventures, no opportunity was presented to Waldencast that was also
presented to Waldencast Ventures or any Affiliate of Waldencast and no opportunity that would have been appropriate for presentation to Waldencast was also presented to Waldencast Ventures. There have been no new investments by
Waldencast Ventures since Waldencast’s initial public offering. Waldencast’s board of directors has implemented guidelines, pursuant to which, unless and until Waldencast and Waldencast Ventures merge or otherwise become affiliated
entities, Mr. Brousset and Mr. Festetics will spend on average at least 90% and Ms. Sebti at least 80% of their monthly average working time providing services to Waldencast, and such directors and officers will not be separately
compensated by Waldencast Ventures, other than their equity interests in Waldencast Ventures already in place.
|
•
|
Waldencast’s existing directors and officers will be eligible for continued indemnification and continued coverage under
Waldencast’s directors’ and officers’ liability insurance after the Transactions and pursuant to the Transaction Agreements.
|
•
|
Pursuant to the Registration Rights Agreement, the Sponsor and the holders of the Waldencast Class B ordinary shares, private
placement warrants and any warrants that may be issued on conversion of working capital loans will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect
to the shares of Waldencast plc Class A ordinary shares and warrants held by such parties following the consummation of the Business Combination.
|
•
|
Following the consummation of the Business Combination, certain of Waldencast's directors and executive officers will
continue to serve as directors or executive officers (as applicable) of Waldencast plc. Waldencast intends to enter into employment agreements with certain of its executive officers who will serve as executive officers of Waldencast
plc. The material features of any such executive employment agreements or the non-employee director compensation policy have not yet been determined. See the section entitled “Management of Waldencast
plc Following the Business Combination — Executive Officers” for a further discussion of the Waldencast plc Board and the executive officers of Waldencast plc.
|
•
|
Waldencast Ventures and Burwell Mountain Trust, controlled by certain of our directors (Michel Brousset and Felipe Dutra,
respectively), and Dynamo Master Fund, are members of the Sponsor. Each of Michel Brousset, Felipe Dutra and Dynamo Master Fund disclaims any beneficial ownership of the Waldencast shares held by the Sponsor.
|
•
|
is founded on the same underlying principles as English company law and, therefore, Jersey companies are very familiar to
investors and counterparties who regularly deal with English companies
|
•
|
applies a flexible capital maintenance regime focused on cashflow-based solvency requirements for a variety of corporate
actions (see below);
|
•
|
preserves creditor protection in relation to distributions (dividend etc.) the making of which is not dependent on any sort
of distributable profits/distributable reserves concept, but is instead based on a requirement for the directors who authorize the distribution to make a 12-month, forward-looking, cashflow-based solvency statement in a statutorily
prescribed form;
|
•
|
provides that share capital can be denominated in any currency, which need not be the company’s functional currency for the
preparation of accounts;
|
•
|
does not impose any restrictions on financial assistance in connection with the acquisition of shares in the relevant company
or on the ability of a Jersey company to pay commissions or give discounts in connection with the issue of its shares;
|
•
|
enables tailored or bespoke share rights to be incorporated into the articles of association (constitutive document) of a
Jersey company to reflect the respective rights of shareholders;
|
•
|
contains the ability to have different thresholds for different types of special resolution, meaning the threshold to amend
certain provisions of the articles may be different;
|
•
|
incorporates a creditor friendly regime for creating security over Jersey lex situs
assets of Jersey companies which is considered modern and fit for purpose for a wide range of global credit arrangements;
|
•
|
facilitates direct electronic trading of certificated shares on certain designated markets, which means that Jersey companies
may be eligible for direct registration and electronic trading on a wide range of markets;
|
•
|
permits what would be referred to in many civil law jurisdictions as ‘capital contributions’, where contributions from
shareholders can be credited to capital (share premium) without issuing shares; and
|
•
|
allows Jersey companies to domesticate or migrate (that is, change jurisdiction of incorporation/corporate seat without
breaking corporate existence) to another jurisdiction that permits the same and also allows for the tax residence of the company (via changes made to the location of board meetings and the place of central management of control) to
change to reflect the needs of the business of the company.
|
|
| |
The Cayman Constitutional Documents
|
| |
The Proposed Constitutional Document
|
Authorized Shares (Organizational Documents Proposal A)
|
| |
The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of
500,000,000 Waldencast Class A ordinary shares, 50,000,000 Waldencast Class B ordinary shares and 5,000,000 Waldencast preferred shares.
|
| |
The Proposed Constitutional Document authorizes shares, consisting of
Waldencast plc Class A ordinary shares, Waldencast plc Non-Economic ordinary shares and Waldencast plc preferred shares.
|
|
| |
|
| |
|
|
| |
See paragraph 5 of the Existing Memorandum.
|
| |
See paragraph 5 of the Proposed Memorandum.
|
|
| |
|
| |
|
Classified Board (Organizational Documents Proposal B)
|
| |
The Cayman Constitutional Documents provide that Waldencast’s board of
directors shall be composed of one class.
|
| |
The Proposed Constitutional Document provides that the Waldencast plc Board be
divided into three classes, with each class made up of, as nearly as may be possible, one-third of the total number of directors constituting the entire Waldencast plc Board, with only one class of directors being elected in each year
and each class serving a three-year term.
|
|
| |
|
| |
|
|
| |
See Article 29 of the Existing Articles.
|
| |
See Article 26 of the Proposed Articles.
|
|
| |
|
| |
|
Changes Relating to the Investor Rights Agreement
(Organizational Documents Proposal C)
|
| |
The Cayman Constitutional Documents do not contain any provisions subject to
any investor rights agreement.
|
| |
The Proposed Constitutional Document provides that certain provisions will be
subject to the Investor Rights Agreement, including provisions governing the appointment, removal and replacement of directors, with respect to
|
|
| |
The Cayman Constitutional Documents
|
| |
The Proposed Constitutional Document
|
|
| |
|
| |
which Cedarwalk will have certain rights pursuant to the Investor Rights
Agreement.
|
|
| |
|
| |
|
|
| |
|
| |
See Article 26 of the Proposed Articles.
|
|
| |
|
| |
|
Corporate Name (Organizational Documents Proposal D)
|
| |
The Cayman Constitutional Documents provide that the name of the company is
“Waldencast Acquisition Corp.”
|
| |
The Proposed Constitutional Document provides that the name of the company will
be “Waldencast plc.”
|
|
| |
|
| |
|
|
| |
See paragraph 1 of the Existing Memorandum.
|
| |
See paragraph 1 of the Proposed Memorandum.
|
|
| |
|
| |
|
Existence for Unlimited Duration (Organizational Documents
Proposal D)
|
| |
The Cayman Constitutional Documents provide that if Waldencast does not
consummate a business combination (as defined in the Cayman Constitutional Documents) by March 18, 2023, Waldencast will cease all operations except for the purposes of winding up and will redeem the public shares and liquidate
Waldencast’s trust account.
|
| |
The Proposed Constitutional Document provides that Waldencast plc is to have
existence for an unlimited duration.
|
|
| |
|
| |
|
|
| |
See Article 49 of the Existing Articles.
|
| |
See paragraph 3 of the Proposed Memorandum.
|
|
| |
|
| |
|
Provisions Related to Status as Blank Check Company
(Organizational Documents Proposal D)
|
| |
The Cayman Constitutional Documents include various provisions related to
Waldencast’s status as a blank check company prior to the consummation of a business combination.
|
| |
The Proposed Constitutional Document does not include such provisions related
to Waldencast plc’s status as a blank check company, which no longer will apply upon consummation of the Business Combination, as Waldencast plc will cease to be a blank check company at such time.
|
|
| |
|
| |
|
|
| |
See for example Articles 29, 49 and 50 of the Existing
Articles.
|
| |
|
(i)
|
one director nominee to be designated by Cedarwalk, in its sole discretion, prior to the Closing, and will thereafter be
designated, nominated and elected as contemplated by the Proposed Constitutional Document; and
|
(ii)
|
up to eight director nominees to be designated by Waldencast, in its sole discretion, prior to the Closing, one of whom will
be an ordinary resident in Jersey, Channel Islands, and will thereafter be designated, nominated and elected as contemplated by the Proposed Constitutional Document.
|
•
|
the Sponsor or Waldencast’s officers or directors;
|
•
|
financial institutions or financial services entities;
|
•
|
broker-dealers;
|
•
|
taxpayers that are subject to the mark-to-market accounting rules;
|
•
|
tax-exempt entities;
|
•
|
governments or agencies or instrumentalities thereof;
|
•
|
insurance companies;
|
•
|
regulated investment companies or real estate investment trusts;
|
•
|
expatriates or former long-term residents of the U.S.;
|
•
|
persons that actually or constructively own five percent or more of our voting shares or five percent or more of the total
value of any class of our shares;
|
•
|
persons that acquired our ordinary shares pursuant to an exercise of employee share options, in connection with employee
share incentive plans or otherwise as compensation or in connection with the performance of services;
|
•
|
persons that hold our ordinary shares as part of a straddle, constructive sale, hedging, conversion or other integrated or
similar transaction; or
|
•
|
persons whose functional currency is not the U.S. dollar.
|
1.
|
an individual citizen or resident of the U.S.,
|
2.
|
a corporation (or other entity that is treated as a corporation for U.S. federal income tax purposes) that is created or
organized (or treated as created or organized) in or under the laws of the U.S. or any state thereof or the District of Columbia,
|
3.
|
an estate whose income is subject to U.S. federal income tax regardless of its source, or
|
4.
|
a trust if (i) a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in place to be treated as a U.S. person.
|
•
|
any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares; and
|
•
|
any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of
the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of its ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S.
Holder’s holding period for such ordinary shares).
|
•
|
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for its
ordinary shares (taking into account the relevant holding period of the Waldencast Class A ordinary share exchanged therefor);
|
•
|
the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the
excess distribution, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which Waldencast was or Waldencast plc is a PFIC, will be taxed as ordinary income;
|
•
|
the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder and included in such U.S.
Holder’s holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
|
•
|
an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S.
Holder in respect of the tax attributable to each such other taxable year of such U.S. Holder.
|
•
|
its business is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any
company may be charged to tax on any part of its income is 10% or higher; and
|
•
|
the company is resident for tax purposes in that country or territory.
|
•
|
Assuming No Redemptions — This scenario assumes that none of Waldencast’s shareholders elect to redeem their Class A ordinary
shares for a pro rata portion of cash in the Trust Account, and thus the full amount of the approximately $345.0 million held in the Trust Account is available for the Business Combination.
|
•
|
Assuming Maximum Redemptions — There is no specified Maximum Redemptions threshold; however, the Closing is conditioned upon
minimum closing available cash of $565.0 million (calculated as the cash in the trust account after giving effect to redemptions, plus the PIPE Investment, the FPA proceeds and the cash and cash equivalents of Waldencast prior to
closing) which does not result in 100% redemptions. Hence, this scenario assumes that Waldencast’s shareholders will redeem 21,984,625 Class A ordinary shares for aggregate redemption payments of $219.9 million. The number of public
redemption shares of 21,984,625 shares was calculated based on the estimated per share redemption value of $10.00 ($345.0 million of cash from trust account divided at September 30, 2021, by 34,500,000 outstanding Waldencast public
shares).
|
•
|
The owners of Waldencast will have the largest voting interest in the combined company under the no and maximum redemption
scenarios;
|
•
|
The Sponsor and its affiliates have the right to nominate the majority of the initial members who will serve on the board of
directors of Waldencast (Obagi will have 1 nomination, and Milk will have 0); and
|
•
|
Waldencast’s existing management will hold executive management roles for the post-combination company whilst Obagi and Milk
management team members will report into the current Waldencast executive team.
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
Maximum Redemptions(1)
|
||||||
|
| |
Shares
|
| |
Ownership
%(9)
|
| |
Shares
|
| |
Ownership
%(9)
|
Waldencast public shareholders
|
| |
34,500,000
|
| |
27.0%
|
| |
12,515,375
|
| |
11.0%
|
Burwell Mountain Trust and Dynamo Master Fund(2)
|
| |
16,000,000
|
| |
12.5%
|
| |
16,000,000
|
| |
14.1%
|
Beauty Ventures(3)
|
| |
17,300,000
|
| |
13.5%
|
| |
17,300,000
|
| |
15.3%
|
Founder Shares(4)
|
| |
8,625,000
|
| |
6.7%
|
| |
8,625,000
|
| |
7.6%
|
PIPE Investors(5)
|
| |
10,500,000
|
| |
8.2%
|
| |
10,500,000
|
| |
9.3%
|
Cumulative Waldencast shareholders
|
| |
86,925,000
|
| |
67.8%
|
| |
64,940,375
|
| |
57.3%
|
Existing Obagi Owners interest in Waldencast(6)
|
| |
22,851,564
|
| |
17.8%
|
| |
28,101,564
|
| |
24.8%
|
Existing Milk Owners interest in Waldencast(7)
|
| |
18,343,883
|
| |
14.3%
|
| |
20,314,508
|
| |
17.9%
|
Shares from Milk Warrants(8)
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
128,144,607
|
| |
100.0%
|
| |
113,380,607
|
| |
100.0%
|
1)
|
Assumes that 21,984,625 Class A ordinary shares are redeemed in connection with the Business Combination which is the maximum
number of shares that may be redeemed without causing the Minimum Cash Condition to the Closing of the Business Combination to be unsatisfied. The net cash consideration payable to the existing Obagi owners would decrease from
$380.0 million to $327.5 million and to the existing Milk owners from $140.0 million to $120.3 million, and the economic ownership and voting power via shares of the existing Obagi and Milk owners would increase proportionally following
the Business Combination.
|
2)
|
16,000,000 Class A ordinary shares acquired pursuant to the Sponsor Forward Purchase Agreement for an investment of
$160.0 million by Burwell Mountain Trust and Dynamo Master Fund (members of our Sponsor), in exchange for a portion of the Forward Purchase Amount.
|
3)
|
17,300,000 Class A ordinary shares acquired pursuant to the Third-Party Forward Purchase Agreement for an investment of
$173.0 million by the Beauty Ventures in exchange for a portion of the Forward Purchase Amount.
|
4)
|
8,625,000 Class A ordinary shares including 80,000 shares held by the Investor Directors, issued upon conversion of the
existing Waldencast Class B ordinary shares. Waldencast Class A ordinary shares are issued upon the automatic conversion of the Waldencast Class B ordinary shares concurrently with the consummation of the Business Combination.
|
5)
|
Represents the private placement pursuant to which Waldencast entered into Subscription Agreements with certain PIPE Investors
whereby such investors have agreed to subscribe for Class A ordinary shares at a purchase price of $10.00 per share. The PIPE Investors participating in the PIPE Investment, have agreed to purchase an aggregate of 10,500,000 Class A
ordinary shares.
|
6)
|
Represents Obagi owners’ interest in 22,851,564 shares of Waldencast plc Class A ordinary shares, which will increase in the
Maximum Redemption scenario to 28,101,564 due to the reduction in net cash consideration payable.
|
7)
|
Represents the Milk Members’ noncontrolling economic interest in Waldencast LP Common Units, which are redeemable at the
option of the holder of such units, and if such option is exercised, are exchangeable, at the option of Waldencast plc, for Waldencast plc Class A ordinary shares on a 1 for 1 basis or cash (together with the cancellation of an equal
number of shares of voting, Waldencast plc Non-Economic ordinary shares), and if exchanged for such Waldencast plc Class A ordinary shares, which will increase in the Maximum Redemption scenario due to the reduction in net cash
consideration payable.
|
8)
|
Represents Class A ordinary shares that were converted from Milk Warrants at the Closing of the Business Combination.
|
9)
|
Note, percentage totals may not foot due to rounding.
|
|
| |
Assuming
No Redemptions
|
| |
Assuming
Maximum Redemptions
|
||||||
|
| |
Shares
|
| |
Ownership
%(6)
|
| |
Shares
|
| |
Ownership
%(6)
|
Waldencast public shareholders(1)
|
| |
51,933,333
|
| |
30.8%
|
| |
29,948,708
|
| |
19.5%
|
Burwell Mountain Trust and Dynamo Master Fund(2)
|
| |
22,333,333
|
| |
13.3%
|
| |
22,333,333
|
| |
14.5%
|
Beauty Ventures(3)
|
| |
23,066,666
|
| |
13.7%
|
| |
23,066,666
|
| |
15.0%
|
Founder Shares
|
| |
8,625,000
|
| |
5.1%
|
| |
8,625,000
|
| |
5.6%
|
PIPE Investors
|
| |
10,500,000
|
| |
6.2%
|
| |
10,500,000
|
| |
6.8%
|
Cumulative Waldencast shareholders
|
| |
116,458,332
|
| |
69.2%
|
| |
94,473,707
|
| |
61.5%
|
Existing Obagi Owners interest in Waldencast(4)
|
| |
30,788,000
|
| |
18.3%
|
| |
36,038,000
|
| |
23.5%
|
Existing Milk Owners interest in Waldencast(5)
|
| |
21,093,664
|
| |
12.5%
|
| |
23,064,289
|
| |
15.0%
|
Shares from Milk Warrants
|
| |
24,160
|
| |
0.0%
|
| |
24,160
|
| |
0.0%
|
Total
|
| |
168,364,156
|
| |
100.0%
|
| |
153,600,156
|
| |
100.0%
|
1)
|
Includes the impact of the exercise of 11,500,000 of public warrants and 5,933,333 private placement warrants.
|
2)
|
Includes the exercise of 6,333,333 of warrants (inclusive of the sponsor working capital loan warrants)
|
3)
|
Includes the exercise of 5,766,666 of warrants.
|
4)
|
Includes the exercise of rollover equity awards, consisting of 6,085,600 stock options, and 1,850,836 restricted stock units.
|
5)
|
Includes the exercise of rollover equity awards, consisting of 2,512,219 unit appreciation rights and 237,562 options.
|
6)
|
Note, percentage totals may not foot due to rounding.
|
•
|
Waldencast’s unaudited interim condensed financial statements and related notes as of and for the nine months ended
September 30, 2021, included elsewhere in this proxy statement/prospectus.
|
•
|
Waldencast’s audited financial statements and related notes as of December 31, 2020, and for the period from December 8,
2020, (inception) through December 31, 2020 included elsewhere in this proxy statement/prospectus.
|
•
|
Milk’s and Obagi’s unaudited consolidated financial statements and related notes as of and for the nine months ended
September 30, 2021 and September 30, 2020 included elsewhere in this proxy statement/prospectus.
|
•
|
Milk’s and Obagi’s audited consolidated financial statements and related notes as of and for the years ended December 31,
2020 and December 31, 2019, included elsewhere in this proxy statement/prospectus.
|
•
|
“Waldencast’s Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included elsewhere in this proxy statement/prospectus.
|
•
|
“Milk’s Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included elsewhere in this proxy statement/prospectus.
|
•
|
“Obagi’s Management Discussion and Analysis of Financial Condition and Results of
Operations” included elsewhere in this proxy statement/prospectus.
|
|
| |
As of
September 30,
2021
|
| |
|
| |
|
| |
|
| |
As of
September 30,
2021
|
| |
|
| |
|
| |
As of
September 30,
2021
|
||||||
|
| |
Waldencast
Acquisition
Corp.
(Historical)
|
| |
Obagi Global
Holdings
Limited
(Adjusted,
Note 2)
|
| |
Milk Makeup
LLC
(Historical)
|
| |
Reclassification
Adjustments
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Redeemable Series B preferred units
|
| |
—
|
| |
—
|
| |
12,705
|
| |
—
|
| |
(12,705)
|
| |
F
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Redeemable Series C preferred units
|
| |
—
|
| |
—
|
| |
26,814
|
| |
—
|
| |
(26,814)
|
| |
F
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Redeemable Series D preferred units
|
| |
—
|
| |
—
|
| |
25,513
|
| |
—
|
| |
(25,513)
|
| |
F
|
| |
—
|
| |
—
|
| |
|
| |
—
|
SHAREHOLDERS' EQUITY
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Common stock
|
| |
—
|
| |
4,000
|
| |
—
|
| |
—
|
| |
(4,000)
|
| |
H
|
| |
—
|
| |
|
| |
|
| |
—
|
Preference shares
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Class A ordinary shares
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3
|
| |
F
|
| |
11
|
| |
(2)
|
| |
L
|
| |
9
|
|
| |
|
| |
|
| |
|
| |
|
| |
1
|
| |
C
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
5
|
| |
D
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
2
|
| |
E
|
| |
|
| |
|
| |
|
| |
|
Class B ordinary shares
|
| |
1
|
| |
—
|
| |
—
|
| |
—
|
| |
(1)
|
| |
H
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Class B non-economic voting shares
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2
|
| |
E
|
| |
2
|
| |
—
|
| |
|
| |
2
|
Additional paid-in capital
|
| |
—
|
| |
95,303
|
| |
—
|
| |
—
|
| |
104,999
|
| |
C
|
| |
1,059,318
|
| |
(219,864)
|
| |
L
|
| |
897,159
|
|
| |
|
| |
|
| |
|
| |
|
| |
341,986
|
| |
D
|
| |
|
| |
72,206
|
| |
M
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
302,118
|
| |
E
|
| |
|
| |
(14,501)
|
| |
I
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
430,901
|
| |
F
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
(57,400)
|
| |
G
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
4,001
|
| |
H
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
(162,590)
|
| |
I
|
| |
|
| |
|
| |
|
| |
|
Accumulated deficit
|
| |
(35,360)
|
| |
938
|
| |
(58,338)
|
| |
—
|
| |
(49,742)
|
| |
B
|
| |
(85,102)
|
| |
—
|
| |
|
| |
(85,102)
|
|
| |
|
| |
|
| |
|
| |
|
| |
57,400
|
| |
G
|
| |
|
| |
|
| |
|
| |
—
|
Accumulated other comprehensive income (loss)
|
| |
—
|
| |
173
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
173
|
| |
—
|
| |
|
| |
173
|
Total shareholders’ equity
|
| |
(35,359)
|
| |
100,414
|
| |
(58,338)
|
| |
—
|
| |
967,685
|
| |
|
| |
974,402
|
| |
(162,161)
|
| |
|
| |
812,241
|
Noncontrolling interest
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
162,589
|
| |
I
|
| |
162,589
|
| |
14,501
|
| |
I
|
| |
177,090
|
Total Equity
|
| |
(35,359)
|
| |
100,414
|
| |
(58,338)
|
| |
—
|
| |
1,130.274
|
| |
|
| |
1,136,991
|
| |
(147,660)
|
| |
|
| |
989,331
|
Total liabilities and shareholders’
deficit
|
| |
$345,703
|
| |
$ 236,154
|
| |
$36,335
|
| |
$—
|
| |
$765,453
|
| |
|
| |
$ 1,383,645
|
| |
$(147,660)
|
| |
|
| |
$1,235,985
|
|
| |
For the Nine
Months Ended
September 30,
2021
|
| |
|
| |
|
| |
For the Nine
Months Ended
September 30,
2021
|
| |
|
| |
For the Nine
Months Ended
September 30,
2021
|
||||||||||||
|
| |
Waldencast
Acquisition
Corp.
(Historical)
|
| |
Obagi Global
Holdings
Limited
(Adjusted,
Note 2)
|
| |
Milk Makeup
LLC
(Historical)
|
| |
Reclassification
Adjustments
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemption)
|
| |
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Net revenue
|
| |
$—
|
| |
$ 134,215
|
| |
$ 39,663
|
| |
$—
|
| |
$—
|
| |
|
| |
$173,878
|
| |
$—
|
| |
|
| |
$173,878
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
—
|
| |
32,177
|
| |
17,423
|
| |
—
|
| |
—
|
| |
|
| |
49,600
|
| |
—
|
| |
|
| |
49,600
|
Formation and operating costs
|
| |
964
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
964
|
| |
—
|
| |
|
| |
964
|
Research and development
|
| |
—
|
| |
5,030
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
5,030
|
| |
—
|
| |
|
| |
5,030
|
Selling, general and administrative
|
| |
—
|
| |
67,614
|
| |
20,534
|
| |
—
|
| |
(649)
|
| |
BB
|
| |
92,901
|
| |
—
|
| |
|
| |
92,901
|
|
| |
|
| |
|
| |
|
| |
|
| |
5,402
|
| |
FF
|
| |
|
| |
|
| |
|
| ||
Depreciation and amortization
|
| |
—
|
| |
10,146
|
| |
1,460
|
| |
—
|
| |
9,572
|
| |
GG
|
| |
21,178
|
| |
—
|
| |
|
| |
21,178
|
Income (loss) from operations
|
| |
(964)
|
| |
19,248
|
| |
246
|
| |
—
|
| |
(14,325)
|
| |
|
| |
4,205
|
| |
—
|
| |
|
| |
4,205
|
Interest income on operating account
|
| |
(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
(1)
|
| |
—
|
| |
|
| |
(1)
|
Interest income on marketable securities held in Trust
Account
|
| |
(30)
|
| |
—
|
| |
—
|
| |
—
|
| |
30
|
| |
AA
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Offering expenses related to warrant issuance
|
| |
719
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
719
|
| |
—
|
| |
|
| |
719
|
Change in fair value of forward purchase agreement
liabilities
|
| |
(2,664)
|
| |
—
|
| |
—
|
| |
—
|
| |
2,664
|
| |
HH
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Change in fair value of warrant liabilities
|
| |
(4,010)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
(4,010)
|
| |
—
|
| |
|
| |
(4,010)
|
Loss on Extinguishment of Debt
|
| |
—
|
| |
2,317
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
2,317
|
| |
—
|
| |
|
| |
2,317
|
Gain on PPP Loan forgiveness
|
| |
—
|
| |
(6,824)
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
(6,824)
|
| |
—
|
| |
|
| |
(6,824)
|
Interest expense, net
|
| |
—
|
| |
8,100
|
| |
1
|
| |
—
|
| |
—
|
| |
|
| |
8,101
|
| |
—
|
| |
|
| |
8,101
|
Other expense, net
|
| |
—
|
| |
251
|
| |
61
|
| |
—
|
| |
727
|
| |
EE
|
| |
979
|
| |
—
|
| |
|
| |
979
|
|
| |
|
| |
|
| |
|
| |
|
| |
(60)
|
| |
BB
|
| |
|
| |
|
| |
|
| |
|
Total other income (expenses) net
|
| |
(5,986)
|
| |
3,844
|
| |
62
|
| |
—
|
| |
3,361
|
| |
|
| |
1,281
|
| |
—
|
| |
|
| |
1,281
|
Income (loss) before income taxes
|
| |
5,022
|
| |
15,404
|
| |
184
|
| |
—
|
| |
(17,686)
|
| |
|
| |
2,924
|
| |
—
|
| |
|
| |
2,924
|
Income tax expense (benefit)
|
| |
—
|
| |
2,112
|
| |
—
|
| |
—
|
| |
(2,481)
|
| |
CC
|
| |
(369)
|
| |
—
|
| |
|
| |
(369)
|
Net income
|
| |
$5,022
|
| |
$13,292
|
| |
$184
|
| |
$—
|
| |
$ (15,205)
|
| |
|
| |
$3,293
|
| |
$—
|
| |
|
| |
$3,293
|
Net income attributable to noncontrolling interest
|
| |
|
| |
|
| |
|
| |
|
| |
471
|
| |
DD
|
| |
471
|
| |
118
|
| |
DD
|
| |
589
|
Net income attributable to controlling interest
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
| |
|
| |
2,822
|
| |
—
|
| |
|
| |
2,704
|
Earnings per share (Note 6)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income (loss) per common share - Basic
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$0.03
|
| |
|
| |
|
| |
$0.03
|
Weighted average common shares outstanding - Basic
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
109,800,724
|
| |
|
| |
|
| |
93,066,099
|
Net income (loss) per common share - Diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$0.03
|
| |
|
| |
|
| |
$0.03
|
Weighted average common shares outstanding - Diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
130,159,863
|
| |
|
| |
|
| |
115,395,863
|
|
| |
For the Year
Ended
December 31,
2020
|
| |
|
| |
|
| |
For the Year
Ended
December 31,
2020
|
| |
|
| |
|
| |
For the Year
Ended
December 31,
2020
|
|||||||||
|
| |
Waldencast
Acquisition
Corp.
(Historical)
|
| |
Obagi Global
Holdings
Limited
(Adjusted,
Note 2)
|
| |
Milk Makeup
LLC
(Historical)
|
| |
Reclassification
Adjustments
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemption)
|
| |
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Net revenue
|
| |
$—
|
| |
$78,706
|
| |
$39,515
|
| |
$—
|
| |
$—
|
| |
|
| |
$118,221
|
| |
$—
|
| |
|
| |
$118,221
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
—
|
| |
18,632
|
| |
23,450
|
| |
—
|
| |
11,221
|
| |
GG
|
| |
53,303
|
| |
—
|
| |
|
| |
53,303
|
Formation and operating costs
|
| |
11
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
11
|
| |
—
|
| |
|
| |
11
|
Research and development
|
| |
—
|
| |
3,929
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
3,929
|
| |
—
|
| |
|
| |
3,929
|
Selling, general and administrative
|
| |
—
|
| |
48,751
|
| |
26,559
|
| |
—
|
| |
63,150
|
| |
BB
|
| |
145,663
|
| |
—
|
| |
|
| |
145,663
|
|
| |
|
| |
|
| |
|
| |
|
| |
7,203
|
| |
FF
|
| |
|
| |
|
| |
|
| |
|
Depreciation and amortization
|
| |
—
|
| |
13,051
|
| |
1,746
|
| |
—
|
| |
12,624
|
| |
GG
|
| |
27,421
|
| |
—
|
| |
|
| |
27,421
|
Income (loss) from operations
|
| |
(11)
|
| |
(5,657)
|
| |
(12,240)
|
| |
—
|
| |
(94,198)
|
| |
|
| |
(112,106)
|
| |
—
|
| |
|
| |
(112,106)
|
Interest income on operating account
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Interest income on marketable securities held in Trust
Account
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Offering expenses related to warrant issuance
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Change in fair value of forward purchase agreement
liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Change in fair value of warrant liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Interest expense, net
|
| |
—
|
| |
6,281
|
| |
301
|
| |
—
|
| |
—
|
| |
|
| |
6,582
|
| |
—
|
| |
|
| |
6,582
|
Other expense, net
|
| |
—
|
| |
12
|
| |
393
|
| |
—
|
| |
196
|
| |
EE
|
| |
661
|
| |
—
|
| |
|
| |
661
|
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
| |
GG
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
60
|
| |
BB
|
| |
|
| |
|
| |
|
| |
|
Total other income (expenses) net
|
| |
—
|
| |
6,293
|
| |
694
|
| |
—
|
| |
256
|
| |
|
| |
7,243
|
| |
—
|
| |
|
| |
7,243
|
Income (loss) before income taxes
|
| |
(11)
|
| |
(11,950)
|
| |
(12,934)
|
| |
—
|
| |
(94,454)
|
| |
|
| |
(119,349)
|
| |
—
|
| |
|
| |
(119,349)
|
Income tax benefit
|
| |
—
|
| |
(5,126)
|
| |
—
|
| |
—
|
| |
(3,629)
|
| |
CC
|
| |
(8,755)
|
| |
—
|
| |
|
| |
(8,755)
|
Net loss
|
| |
$(11)
|
| |
$(6,824)
|
| |
$(12,934)
|
| |
$—
|
| |
$(90,825)
|
| |
|
| |
$(110,594)
|
| |
$—
|
| |
|
| |
$(110,594)
|
Net loss attributable to noncontrolling interest
|
| |
|
| |
|
| |
|
| |
|
| |
(15,815)
|
| |
DD
|
| |
(15,815)
|
| |
(3,981)
|
| |
DD
|
| |
(19,796)
|
Net loss attributable to controlling interest
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
| |
|
| |
(94,779)
|
| |
—
|
| |
|
| |
(90,798)
|
Earnings per share (Note 6)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| ||
Net income (loss) per common share - Basic and Diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$(0.86)
|
| |
|
| |
|
| |
$(0.98)
|
Weighted average common shares outstanding - Basic and
Diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
109,800,724
|
| |
|
| |
|
| |
93,066,099
|
($ in thousands, except share data)
|
| |
Obagi Global
Holdings Limited
(Historical)
|
| |
China Carve-Out
Adjustments
|
| |
Obagi Global
Holdings Limited
(Adjusted)
|
ASSETS
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$24,432
|
| |
$(500)
|
| |
$23,932
|
Restricted cash
|
| |
650
|
| |
—
|
| |
650
|
Accounts and note receivable, net
|
| |
53,801
|
| |
949
|
| |
54,750
|
Inventories
|
| |
11,509
|
| |
(1,420)
|
| |
10,089
|
Prepaid expenses
|
| |
9,793
|
| |
(566)
|
| |
9,227
|
Other current assets
|
| |
352
|
| |
—
|
| |
352
|
Total current assets
|
| |
100,537
|
| |
(1,537)
|
| |
99,000
|
Property, plant equipment, net
|
| |
2,720
|
| |
—
|
| |
2,720
|
Intangible assets, net
|
| |
82,525
|
| |
(3,328)
|
| |
79,197
|
Goodwill
|
| |
44,489
|
| |
—
|
| |
44,489
|
Deferred income taxes
|
| |
8,359
|
| |
—
|
| |
8,359
|
Other assets
|
| |
2,411
|
| |
(22)
|
| |
2,389
|
Total assets
|
| |
$ 241,041
|
| |
$ (4,887)
|
| |
$236,154
|
|
| |
|
| |
|
| |
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
|
| |
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
| |
|
Accounts payable
|
| |
$9,331
|
| |
$(172)
|
| |
$9,159
|
Current portion of long-term debt, net
|
| |
14,883
|
| |
—
|
| |
14,883
|
Other current liabilities
|
| |
8,713
|
| |
(1,445)
|
| |
7,268
|
Total current liabilities
|
| |
32,927
|
| |
(1,617)
|
| |
31,310
|
Long-term debt, net
|
| |
103,877
|
| |
—
|
| |
103,877
|
Other liabilities
|
| |
553
|
| |
—
|
| |
553
|
Total liabilities
|
| |
137,357
|
| |
(1,617)
|
| |
135,740
|
|
| |
|
| |
|
| |
|
Shareholder's equity
|
| |
|
| |
|
| |
|
Common stock, $0.50 par value; 25,000,000 shares
authorized; 8,000,002 shares issued and outstanding as of September 30, 2021
|
| |
4,000
|
| |
—
|
| |
4,000
|
Additional paid-in capital
|
| |
100,113
|
| |
(4,810)
|
| |
95,303
|
Accumulated deficit
|
| |
(428)
|
| |
1,366
|
| |
938
|
Accumulated other comprehensive income (loss)
|
| |
(1)
|
| |
174
|
| |
173
|
Total shareholders’ equity (deficit)
|
| |
103,684
|
| |
(3,270)
|
| |
100,414
|
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY (DEFICIT)
|
| |
$ 241,041
|
| |
$ (4,887)
|
| |
$ 236,154
|
($ in thousands)
|
| |
Obagi Global
Holdings Limited
(Historical)
|
| |
China Carve-Out
Adjustments
|
| |
Obagi Global
Holdings Limited
(Adjusted)
|
Net revenue
|
| |
$ 152,714
|
| |
$ (18,499)
|
| |
$ 134,215
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
36,131
|
| |
(3,954)
|
| |
32,177
|
Research and development
|
| |
5,030
|
| |
—
|
| |
5,030
|
Selling, general and administrative
|
| |
80,797
|
| |
(13,183)
|
| |
67,614
|
Depreciation and amortization
|
| |
10,501
|
| |
(355)
|
| |
10,146
|
Income (loss) from operations
|
| |
20,255
|
| |
(1,007)
|
| |
19,248
|
Loss on Extinguishment of Debt
|
| |
2,317
|
| |
—
|
| |
2,317
|
Gain on PPP Loan forgiveness
|
| |
(6,824)
|
| |
—
|
| |
(6,824)
|
Interest expense, net
|
| |
8,099
|
| |
1
|
| |
8,100
|
Other expense, net
|
| |
251
|
| |
—
|
| |
251
|
Total other income (expenses) net
|
| |
3,843
|
| |
1
|
| |
3,844
|
Income (loss) before income taxes
|
| |
16,412
|
| |
(1,008)
|
| |
15,404
|
Income tax expense (benefit)
|
| |
2,112
|
| |
—
|
| |
2,112
|
Net income
|
| |
$14,300
|
| |
$(1,008)
|
| |
$13,292
|
($ in thousands)
|
| |
Obagi Global
Holdings Limited
(Historical)
|
| |
China Carve-Out
Adjustments
|
| |
Obagi Global
Holdings Limited
(Adjusted)
|
Net revenue
|
| |
$84,145
|
| |
$ (5,439)
|
| |
$78,706
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
19,969
|
| |
(1,337)
|
| |
18,632
|
Formation and operating costs
|
| |
—
|
| |
—
|
| |
—
|
Research and development
|
| |
3,929
|
| |
—
|
| |
3,929
|
Selling, general and administrative
|
| |
54,794
|
| |
(6,043)
|
| |
48,751
|
Depreciation and amortization
|
| |
13,426
|
| |
(375)
|
| |
13,051
|
Income (loss) from operations
|
| |
(7,973)
|
| |
2,316
|
| |
(5,657)
|
Interest expense, net
|
| |
6,281
|
| |
—
|
| |
6,281
|
Other expense, net
|
| |
11
|
| |
1
|
| |
12
|
Total other income (expenses) net
|
| |
6,292
|
| |
1
|
| |
6,293
|
Income (loss) before income taxes
|
| |
(14,265)
|
| |
2,315
|
| |
(11,950)
|
Income tax benefit
|
| |
(5,094)
|
| |
(32)
|
| |
(5,126)
|
Net loss
|
| |
$(9,171)
|
| |
$2,347
|
| |
$(6,824)
|
(A)
|
Reflects the reclassification of $345.0 million of cash and cash equivalents and investments held in the Trust Account that
becomes available for transaction consideration, transaction expenses, underwriting commission, redemption of Waldencast public shares, and the operating activities of Waldencast following the Business Combination, under the No
Redemptions scenario.
|
(B)
|
Reflects estimated transaction costs of approximately $63.2 million, comprised of advisory, banking, printing, legal, and
accounting fees and equity issuance costs that are expensed as a part of the Business Combination. The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash of $63.2 million. Of the
$63.2 million of transactions costs, $0.7 million was previously accrued, $12.8 million was recorded as deferred underwriting and legal fees and the remaining balance of $49.7 million is expensed through Accumulated Deficit.
|
(C)
|
Reflects the gross cash proceeds of $105.0 million generated from the PIPE Financing through the issuance of 10,500,000
shares of Class A ordinary shares to the private investors and allocated to Class A ordinary shares and Additional paid-in-capital using a par value of $0.0001 per share and a purchase price of $10.00 per share, respectively.
|
(D)
|
Reflects the gross proceeds from the Sponsor and Beauty Ventures in the amount of $160.0 million and $173.0 million,
respectively and allocated to Waldencast Class A ordinary shares and Additional paid-in capital using a par value of $0.0001 per shares and a purchase of $10.00 and the settlement of Waldencast’s related Forward Purchase Transaction
liability of $9.0 million through the issuance of Class A shares.
|
(E)
|
Represents the purchase price allocation adjustments resulting from the Business Combination. The calculation of the purchase
price and allocation to assets acquired and liabilities assumed is preliminary because the merger has not yet been completed. The preliminary allocation to assets and liabilities is based on estimates, assumptions, valuations, and other
studies that have not progressed to a stage where there is sufficient information to make a definitive calculation. Accordingly, the purchase price allocation reflected in the unaudited transaction accounting adjustments will remain
preliminary until Waldencast determines the final purchase price and the fair values of assets acquired and liabilities assumed. The final determination of the purchase price and related allocation is anticipated to be completed as soon
as practicable after the completion of the Business Combination. Potential differences may include, but are not limited to, changes in allocation to intangible assets and change in fair value of financing receivable, deferred tax
liability, and property and equipment.
|
($ in thousands)
|
| |
Milk
|
| |
Obagi
|
| |
Total
|
Cash consideration
|
| |
$ 140,000
|
| |
$ 380,000
|
| |
$ 520,000
|
Inventory fair value
|
| |
6,520
|
| |
4,701
|
| |
11,221
|
Intangibles
|
| |
141,499
|
| |
382,803
|
| |
524,302
|
Deferred Tax Asset
|
| |
—
|
| |
(8,359)
|
| |
(8,359)
|
Deferred Tax Liability
|
| |
—
|
| |
87,042
|
| |
87,042
|
Goodwill
|
| |
166,000
|
| |
215,999
|
| |
381,999
|
Additional paid-in-capital
|
| |
174,018
|
| |
128,100
|
| |
302,118
|
($ in thousands)
|
| |
No
Redemptions
|
| |
Maximum
Redemptions
|
Equity consideration
|
| |
$228,516
|
| |
$281,016
|
Cash consideration to Sellers
|
| |
380,000
|
| |
327,500
|
Fair value of vested roll-over equity awards
|
| |
—
|
| |
—
|
Total purchase consideration
|
| |
$608,516
|
| |
$608,516
|
Cash and cash equivalents
|
| |
23,932
|
| |
23,932
|
Restricted cash
|
| |
650
|
| |
650
|
Accounts and notes receivable, net
|
| |
54,750
|
| |
54,750
|
Inventories
|
| |
14,790
|
| |
14,790
|
Prepaid expenses
|
| |
9,227
|
| |
9,227
|
Other current assets
|
| |
352
|
| |
352
|
Property, plant and equipment, net
|
| |
2,720
|
| |
2,720
|
Intangible assets, net
|
| |
462,000
|
| |
462,000
|
Goodwill
|
| |
260,488
|
| |
260,488
|
Deferred income taxes
|
| |
—
|
| |
—
|
Other assets
|
| |
2,389
|
| |
2,389
|
Accounts payable
|
| |
(9,159)
|
| |
(9,159)
|
Other current liabilities
|
| |
(7,268)
|
| |
(7,268)
|
Current portion of long-term debt, net
|
| |
(14,883)
|
| |
(14,883)
|
Long-term debt, net
|
| |
(103,877)
|
| |
(103,877)
|
Deferred Tax Liability
|
| |
(87,042)
|
| |
(87,042)
|
Other liabilities
|
| |
(553)
|
| |
(553)
|
Fair value of net assets acquired from Obagi
|
| |
$608,516
|
| |
$608,516
|
($ in thousands)
|
| |
|
| |
No Redemptions
|
| |
Maximum Redemptions
|
||||||
Change in price per share
of the Waldencast’s
Ordinary Shares
|
| |
Price
per share
|
| |
Estimated
purchase
price
|
| |
Estimated
goodwill
|
| |
Estimated
purchase
price
|
| |
Estimated
goodwill
|
Increase of 10%
|
| |
$11
|
| |
$631,367
|
| |
$283,339
|
| |
$636,617
|
| |
$288,589
|
As presented in pro forma
|
| |
10
|
| |
608,516
|
| |
260,488
|
| |
608,516
|
| |
260,488
|
Decrease of 10%
|
| |
9
|
| |
585,664
|
| |
237,636
|
| |
580,414
|
| |
232,386
|
($ in thousands, except for weighted
average useful life)
|
| |
Weighted
average useful
life (years)
|
| |
Fair value
|
| |
Amortization
expense
for the nine
months ended
September 30,
2021
|
| |
Amortization
expense
for the
year ended
December 31,
2020
|
Trade name/trademark
|
| |
Indefinite
|
| |
$ 297,000
|
| |
$—
|
| |
$—
|
Licensing agreements
|
| |
10
|
| |
132,000
|
| |
9,900
|
| |
13,200
|
Formulations
|
| |
10
|
| |
10,000
|
| |
750
|
| |
1,000
|
Customer / distributor relationships
|
| |
10
|
| |
23,000
|
| |
1,725
|
| |
2,300
|
Reversal of historical balance and amortization
|
| |
N/A
|
| |
(79,197)
|
| |
(10,084)
|
| |
(13,308)
|
Total Adjustment
|
| |
|
| |
$ 382,803
|
| |
$2,291
|
| |
$3,192
|
($ in thousands)
|
| |
No
Redemptions
|
| |
Maximum
Redemptions
|
Equity consideration
|
| |
$ 183,439
|
| |
$ 203,145
|
Cash consideration to Sellers
|
| |
140,000
|
| |
120,294
|
Fair value of vested roll-over equity awards
|
| |
10,600
|
| |
10,600
|
Class B Non-economic voting shares
|
| |
—
|
| |
—
|
Equity based compensation treated as consideration (Acceleration of Awards)
|
| |
7,546
|
| |
7,546
|
Total purchase consideration
|
| |
$ 341,585
|
| |
$ 341,585
|
Cash
|
| |
7,243
|
| |
7,243
|
Accounts receivable, net
|
| |
4,229
|
| |
4,229
|
Inventories
|
| |
24,000
|
| |
24,000
|
Prepaid expenses and other current assets
|
| |
428
|
| |
428
|
Prepaid supplier
|
| |
1,694
|
| |
1,694
|
Property, plant equipment, net
|
| |
5,260
|
| |
5,260
|
Intangible assets, net
|
| |
141,500
|
| |
141,500
|
Goodwill
|
| |
166,000
|
| |
166,000
|
Accounts payable
|
| |
(5,505)
|
| |
(5,505)
|
Tenant allowance liability - current
|
| |
(132)
|
| |
(132)
|
Accrued bonuses
|
| |
(788)
|
| |
(788)
|
Other current liabilities
|
| |
(220)
|
| |
(220)
|
Warrant liabilities
|
| |
(101)
|
| |
(101)
|
Deferred rent - non-current
|
| |
(946)
|
| |
(946)
|
Tenant allowance liability - non-current
|
| |
(1,077)
|
| |
(1,077)
|
Fair value of net assets acquired from Milk
|
| |
$ 341,585
|
| |
$ 341,585
|
($ in thousands)
|
| |
|
| |
No Redemptions
|
| |
Maximum Redemptions
|
||||||
Change in price per share
of the Waldencast’s
Ordinary Shares
|
| |
Price
per share
|
| |
Estimated
purchase
price
|
| |
Estimated
goodwill
|
| |
Estimated
purchase
price
|
| |
Estimated
goodwill
|
Increase of 10%
|
| |
$11
|
| |
$359,929
|
| |
$184,344
|
| |
$351,300
|
| |
$186,315
|
As presented in pro forma
|
| |
10
|
| |
341,585
|
| |
166,000
|
| |
341,585
|
| |
166,000
|
Decrease of 10%
|
| |
9
|
| |
323,242
|
| |
147,657
|
| |
310,670
|
| |
145,686
|
($ in thousands, except for weighted
average useful life)
|
| |
Weighted
average useful
life (years)
|
| |
Fair value
|
| |
Amortization
expense
for the nine
months ended
September 30,
2021
|
| |
Amortization
expense
for the
year ended
December 31,
2020
|
Trade name/trademark
|
| |
15
|
| |
$ 126,000
|
| |
$ 6,300
|
| |
$ 8,400
|
Formulations
|
| |
6
|
| |
1,500
|
| |
187
|
| |
250
|
Customer / distributor relationships
|
| |
13
|
| |
14,000
|
| |
808
|
| |
1,077
|
Reversal of historical balance and amortization
|
| |
N/A
|
| |
(1)
|
| |
(14)
|
| |
(295)
|
Total
|
| |
|
| |
$ 141,499
|
| |
$ 7,281
|
| |
$ 9,432
|
(F)
|
Reflects the reclassification of $345.0 million of Waldencast Class A ordinary shares subject to possible redemption from
temporary equity to permanent equity and $85.9 million related to the settlement of Milk Preferred Units into additional paid in capital of the combined company.
|
(G)
|
Represents the elimination of Obagi’s historical retained earnings and Milk’s historical accumulated deficit of $0.9 million
and $58.3 million, respectively, into additional paid in capital of the combined company as part of the purchase accounting adjustments.
|
(H)
|
Reflects the settlement of Obagi’s historical equity into APIC of $4.0 million.
|
(I)
|
Represents the transaction accounting adjustments to record the noncontrolling interest in Milk LLC of $162.6 million under
the No Redemptions scenario and $177.1 million (an additional $14.5 million adjustment) under the Maximum Redemptions scenario, which is calculated based on the noncontrolling interest percentages of 14.3% and 17.9% in the respective
scenarios multiplied by the pro forma net assets of Milk LLC.
|
(J)
|
Represents the settlement of amounts due from officers of $0.8 million.
|
(K)
|
Represents $1.5 million drawn from the Working Capital Loan that was subsequently converted into warrants.
|
(L)
|
Reflects the maximum redemption of 21,984,625 public shares for aggregate redemption payments of $219.9 million allocated to
Class A ordinary shares and Additional Paid-In Capital using a par value $0.0001 per share and a redemption price of $10.00 per share, respectively. The maximum redemption was determined based on the funds available considering that the
cash consideration paid to Obagi and Milk owners would be reduced by $52.5 million and $19.7 million, respectively, under the terms of the Business Combination Agreement.
|
(M)
|
Reflects the reduction of cash consideration paid to the sellers of Obagi and Milk under the maximum redemption scenario of
$52.5 million and $19.7 million, respectively.
|
(AA)
|
Represents the elimination of investment income related to the marketable securities held in the Trust Account.
|
(BB)
|
Reflects the total estimated transaction costs expensed as a part of the Business Combination in the statement of operations
for the year ended December 31, 2020. Transaction costs are reflected as if incurred on January 1, 2020, the date the Business Combination is deemed to have occurred for the purposes of the unaudited pro forma condensed statement of
operations.
|
(CC)
|
Reflects the estimated income tax effect of the pro forma adjustments. The tax effect of the pro forma adjustments was
calculated using the historical statutory rates in effect for the periods presented. The tax effect does not reflect the income tax effects of the Milk pro forma adjustments as any deferred tax effect would be offset by an increase in
the valuation allowance given that Milk has incurred cumulative losses in recent years. Transaction costs expected to be incurred in connection with the Business Combination have not been assessed for deductibility for income tax
purposes and accordingly are assumed to be nondeductible for pro forma purposes.
|
(DD)
|
Reflects noncontrolling interest in Milk. For the nine months ended September 30, 2021, net income attributable to
noncontrolling interest was $0.5 million under the No Redemptions scenario and $0.6 million (an additional $0.1 million adjustment) under the Maximum Redemptions scenario. For the year ended December 31, 2020, net loss attributable to
noncontrolling interest was $15.8 million under the No Redemptions scenario and $19.8 million (an additional $4.0 million adjustment) under the Maximum Redemptions scenario.
|
(EE)
|
Obagi Worldwide will enter into the IP License Agreement with Obagi Hong Kong, which requires Obagi Hong Kong to pay Obagi a
royalty of 5.5% on gross sales of licensed products and services, less taxes and refunded returns. This adjustment reflects royalty income of $0.7 million and $0.2 million that would have been received for the nine-month period ending
September 30, 2021 and year ended December 31, 2020, respectively.
|
(FF)
|
Reflects the incremental fair value of unvested equity awards that will roll over into equity awards of Waldencast. The fair
value was measured and recorded using the Black-Scholes model using the assumed stock price of Waldencast shares at Closing of $10.00 and the exercise price of the original awards converted based on the contractual exchange ratios for
the rollover.
|
(GG)
|
Reflects the incremental amortization expense and cost of goods sold related to the fair value adjustments for intangible
assets and inventory for both Milk and Obagi. Refer to the tables below show the breakout of each of these adjustments:
|
|
| |
Intangible Assets Adjustments
|
|||
($ in thousands)
|
| |
Amortization expense
for the nine
months ended
September 30,
2021
|
| |
Amortization expense
for the
year ended
December 31,
2020
|
Obagi
|
| |
|
| |
|
Trade name/trademark
|
| |
$—
|
| |
$—
|
Licensing agreements
|
| |
9,900
|
| |
13,200
|
Formulations
|
| |
750
|
| |
1,000
|
Customer / distributor relationships
|
| |
1,725
|
| |
2,300
|
Reversal of historical amortization of intangible assets
|
| |
(10,084)
|
| |
(13,308)
|
Milk
|
| |
|
| |
|
Trade name/trademark
|
| |
6,300
|
| |
8,400
|
Formulations
|
| |
187
|
| |
250
|
Customer / distributor relationships
|
| |
808
|
| |
1,077
|
Reversal of historical amortization of intangible assets
|
| |
(14)
|
| |
(295)
|
Total
|
| |
$9,572
|
| |
$12,624
|
|
| |
Inventory Adjustments
|
|||
($ in thousands)
|
| |
Cost of goods sold
for the nine
months ended
September 30,
2021
|
| |
Cost of goods sold
for the
year ended
December 31,
2020
|
Milk
|
| |
$—
|
| |
$6,520
|
Obagi
|
| |
$—
|
| |
$4,701
|
Total
|
| |
$—
|
| |
$ 11,221
|
(HH)
|
Represents the elimination of the fair value adjustment as Waldencast’s Forward Purchase Transaction liability will be
settled in connection with the Business Combination.
|
|
| |
Nine months ended
September 30, 2021
|
| |
Year Ended
December 31, 2020
|
||||||
(in thousands, except share data)
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
Pro forma net income (loss) attributable to Waldencast
|
| |
$2,822
|
| |
$2,704
|
| |
$(94,779)
|
| |
$(90,798)
|
Weighted average shares of Class A ordinary shares
outstanding - basic
|
| |
109,800,724
|
| |
93,066,099
|
| |
109,800,724
|
| |
93,066,099
|
Net income (loss) per share - basic
|
| |
$0.03
|
| |
$0.03
|
| |
$(0.86)
|
| |
$(0.98)
|
|
| |
Nine months ended
September 30, 2021
|
| |
Year Ended
December 31, 2020
|
||||||
in thousands, except share data)
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
Pro forma net income attributable to Waldencast
|
| |
$2,822
|
| |
$2,704
|
| |
$(94,779)
|
| |
$(90,798)
|
Plus: additional income, net of estimated taxes, upon
conversion of noncontrolling interests and Class B non-economic voting shares
|
| |
471
|
| |
589
|
| |
—
|
| |
—
|
Pro forma net income for dilutive purposes
|
| |
$3,293
|
| |
$3,293
|
| |
$(94,779)
|
| |
$(90,798)
|
Weighted average pro forma shares of Class A ordinary
shares outstanding
|
| |
109,800,724
|
| |
93,066,099
|
| |
109,800,724
|
| |
93,066,099
|
Plus: additional shares upon conversion of noncontrolling
interests and Class B non-economic voting shares
|
| |
18,343,883
|
| |
20,314,508
|
| |
—
|
| |
—
|
Plus: dilutive effect of stock compensation awards
|
| |
2,015,256
|
| |
2,015,256
|
| |
—
|
| |
—
|
Weighted average pro forma shares of
Class A ordinary shares outstanding - diluted
|
| |
130,159,863
|
| |
115,395,863
|
| |
109,800,724
|
| |
93,066,099
|
Net income (loss) per share - diluted
|
| |
$0.03
|
| |
$0.03
|
| |
$(0.86)
|
| |
$(0.98)
|
|
| |
Nine months ended
September 30, 2021
|
| |
Year Ended
December 31, 2020
|
||||||
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
| |
Assuming No
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
Public Warrants (IPO)
|
| |
11,500,000
|
| |
11,500,000
|
| |
11,500,000
|
| |
11,500,000
|
Private Placement Warrants (Founder)
|
| |
5,933,333
|
| |
5,933,333
|
| |
5,933,333
|
| |
5,933,333
|
Warrants (Sponsor Forward Purchase Agreement)
|
| |
5,333,333
|
| |
5,333,333
|
| |
5,333,333
|
| |
5,333,333
|
Warrants (3rd Party Forward Purchase Agreement)
|
| |
5,766,666
|
| |
5,766,666
|
| |
5,766,666
|
| |
5,766,666
|
Warrants (Working Capital Loan)(1)
|
| |
1,000,000
|
| |
1,000,000
|
| |
1,000,000
|
| |
1,000,000
|
Unit appreciation rights (Milk)
|
| |
—
|
| |
—
|
| |
2,749,781
|
| |
2,749,781
|
Stock options (Obagi)
|
| |
6,085,600
|
| |
6,085,600
|
| |
6,085,600
|
| |
6,085,600
|
Restricted stock units (Obagi)
|
| |
—
|
| |
—
|
| |
1,850,836
|
| |
1,850,836
|
(1)
|
Subsequent to September 30, 2021, certain Waldencast officers and directors loaned Waldencast funds in the form of promissory
notes for working capital needs. At Closing, the notes will be converted into warrants at a price of $1.50 per warrant. Such warrants will be identical to the Private Placement Warrants. The warrants have been reflected in the pro forma
financial statements ( See adjustment K above). The warrants are anti-dilutive at Closing and do not impact dilutive EPS.
|
Michel Brousset
Founder and CEO
Waldencast Acquisition Corp.
|
| |
Hind Sebti
Founder and COO
Waldencast Acquisition Corp.
|
Name
|
| |
Age
|
| |
Title
|
Michel Brousset
|
| |
49
|
| |
Chief Executive Officer and Director
|
Felipe Dutra
|
| |
56
|
| |
Executive Chairman of the Board of Directors
|
Tassilo Festetics
|
| |
43
|
| |
Chief Financial Officer and Chief Technology Officer
|
Hind Sebti
|
| |
42
|
| |
Chief Operating Officer
|
Sarah Brown
|
| |
58
|
| |
Director
|
Juliette Hickman
|
| |
47
|
| |
Director
|
Lindsay Pattison
|
| |
47
|
| |
Director
|
Cristiano Souza
|
| |
46
|
| |
Director
|
Zack Werner
|
| |
35
|
| |
Director
|
(i)
|
at the closing of the transactions contemplated by the Obagi Merger Agreement, upon the terms and subject to the conditions
of the Obagi Merger Agreement and in accordance with the Cayman Act Merger Sub will merge with and into Obagi, the separate corporate existence of Merger Sub will cease and Obagi will be the surviving company and an indirect wholly
owned subsidiary of Waldencast;
|
(ii)
|
as a result of the Obagi Merger, among other things, each share of common stock of Obagi that is issued and outstanding
immediately prior to the effective time of the Merger (other than in respect of Excluded Shares (as defined in the Obagi Merger Agreement)) will be cancelled and converted into the right to receive (i) an amount in cash equal to (A) the
Obagi Cash Consideration, subject to substitution for Obagi Stock Consideration based on the amount of cash available to Waldencast at the Closing , taking into
|
(iii)
|
upon the effective time of the Domestication, Waldencast will immediately be renamed “Waldencast plc”.
|
(i)
|
at the Milk Closing, upon the terms and subject to the conditions of the Milk Equity Purchase Agreement, the Milk Purchasers
will acquire from the Milk Members and the Milk Members will sell to the Milk Purchasers all of the issued and outstanding Milk Membership Units in exchange for the Milk Cash Consideration and the Milk Equity Consideration, which
consist of limited partnership units of Waldencast LP that, in the case of such units issued as part of, or in respect of, the Milk Equity Consideration, are redeemable at the option of the holder of such units and, if such option is
exercised, exchangeable at the option of Waldencast plc for Waldencast plc Class A ordinary shares or cash in accordance with the terms of the Amended and Restated Waldencast Partners LP Agreement, and the Waldencast plc Non-Economic
ordinary shares;
|
(ii)
|
as a result of the Milk Transaction, among other things, (i) Holdco 1 will purchase from the Milk Members a percentage of the
outstanding membership units in exchange for the Milk Cash Consideration and the Waldencast plc Non-Economic ordinary shares equal to the Milk Equity Consideration and (ii) Waldencast LP will purchase from the Milk Members the remainder
of the outstanding membership units in exchange for the Milk Equity Consideration; and
|
(iii)
|
upon the effective time of the Domestication, Waldencast will immediately be renamed “Waldencast plc.”
|
•
|
other than with respect to Mr. Michel Brousset, Mr. Tassilo Festetics, and Ms. Hind Sebti, no employees of Waldencast will
also provide services to Waldencast Ventures and no employees of Waldencast Ventures will also provide services to Waldencast;
|
•
|
unless and until Waldencast and Waldencast Ventures merge or otherwise become affiliated entities: (a) Waldencast Ventures
will not acquire any interest in any new businesses, including, but not limited to, acquisitions and minority investments unless the disinterested directors of Waldencast approve such acquisition or investment in advance. Waldencast
Ventures may continue to develop only the following brands: Whind, Glaze, Project ESME, Project Ale, Project NAOMI, Project Dani and Project Roger; (b) Mr. Brousset and Mr. Festetics will spend on average at least 90% of their monthly
working time providing services to Waldencast and the remainder of their monthly working time on matters relating to Waldencast Ventures, including serving as officers of or on the board of directors of Waldencast Ventures, its
subsidiaries and portfolio companies. Mr. Brousset and Mr. Festetics will not be separately compensated by Waldencast Ventures but they may retain equity interests in Waldencast Ventures acquired or granted to them from arrangements put
in place prior to the date of the Waldencast Ventures Guidelines, and (c) Ms. Sebti will spend on average at least 80% of her monthly working time providing services to Waldencast and the remainder of her monthly working time on matters
relating to Waldencast Ventures, including serving as an officer of or on the board of directors of Waldencast Ventures, its subsidiaries and portfolio companies. Ms. Sebti will not be separately compensated by Waldencast Ventures but
she may retain equity interests in Waldencast Ventures acquired or granted to her from arrangements put in place prior to the date of the Waldencast Ventures Guidelines;
|
•
|
Waldencast may obtain from Waldencast Ventures any of the following services, at no cost, (a) back-office services consisting
of payment processing, miscellaneous administrative support and travel and expense processing, (b) support services consisting of usage of Waldencast Ventures’ offices in London and usage of IT infrastructure (including without
limitation technological licenses) and (c) access to Waldencast Ventures’ consumer research and monitoring tools;
|
•
|
Any other involvement between Waldencast and Waldencast Ventures, including, but not limited to, any transaction, business
combination, commingling or joint usage of assets, licensing or similar agreements or arrangements, or the provision of services or supplies, will occur on an arms’ length basis and Mr. Brousset, Mr. Festetics and Ms. Sebti will recuse
themselves for purposes of any negotiations on behalf of Waldencast, with the independent directors of Waldencast controlling such negotiations on behalf of Waldencast; and
|
•
|
The independent directors of Waldencast or, pursuant to the direction of the independent directors of Waldencast, a committee
of the Waldencast board of directors comprised solely of independent directors, shall have responsibility and authority for the interpretation, implementation and oversight of compliance with the Waldencast Ventures Guidelines.
|
•
|
Obagi Medical®—Products within our flagship brand are designed for professional
recommendation in a clinical setting. This line of scientifically-backed, clinically proven systems and products is targeted to consumers looking for the most advanced product formulations in a customized skincare regimen.
|
•
|
Obagi Clinical®—Developed to prevent and reduce the early signs of aging. We built
this line for the ‘skin-tellectual’ consumer who knows high-quality ingredients and is increasingly focused on product efficacy and quality.
|
•
|
Obagi Professional™—A new, curated portfolio of products for use in spas, we
designed this line for the aesthetician and the consumer who understands the connection between wellness and skin health.
|
•
|
Skintrinsiq™ device—Used in facial treatments offered by physicians’ offices, spas and
aestheticians.
|
|
Name of Patent
|
| |
Jurisdictions
|
| |
Expiration
Date
|
|
|
Anti-Aging Treatment Using Copper and Zinc Compositions
|
| |
Australia, Canada, Czech Republic, France, Germany, Great Britain Hungary,
Italy, Japan, Mexico, Poland, South Korea, Spain, Turkey, U,S.
|
| |
June 2026
|
|
|
Chemical Compositions and Methods of Making Them
|
| |
France, Germany, Great Britain, Italy, Japan, Mexico, Poland, South Korea,
Spain, U.S.
|
| |
Jan.2026-Feb. 2027
|
|
|
Methods for Lightening Skin Using Arbutin Compositions
|
| |
U.S.
|
| |
Nov. 2028
|
|
|
Topical Compositions and Methods of Manufacturing Them in Specifically
Treated Steel Vessels
|
| |
U.S.
|
| |
Dec. 2024
|
|
|
Skin Lightening Compositions Comprising Arbutin
|
| |
Canada
|
| |
Nov. 2028
|
|
|
Skin Treatment Compositions
|
| |
France, Germany, Great Britain, Japan, Mexico, Netherlands, Norway, Poland,
South Korea, Spain, Sweden
|
| |
Aug. 2030-Nov. 2028
|
|
|
Stable Organic Peroxide Compositions
|
| |
Belgium, Canada, Czech Repulic, Estonia, France, Germany Great Britain,
Hungary, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Mexico, Monaco, Netherlands, Romania, South Korea, Slovac Republic, Slovenia, Switzerland, U.S.
|
| |
Mar.-June 2026
|
|
|
Product
|
| |
Study
|
| |
Principal Investigator
|
|
|
Nu-Derm System
|
| |
1. Efficacy in the treatment of photodamage- 24-week study assessing
improvement in investigator determined moderate photodamage in patients with Fitzpatrick skin types I-IV.
|
| |
James H. Herndon, Jr., MD
|
|
|
2. Efficacy and safety comparison to 0.1% tretinoin, 4% hydroquinone and OTC
regimen- Study comparing the efficacy of the Nu-Derm System with 0.1% tretinoin against regimens including tetinoin with OTC products, 4% hydroquinone with OTC products and OTC products alone in improvement of moderate photodamage of
patients with Fitzpatrick skin types I-IV over 24 weeks.
|
| |
M.L. Sigler, PhD
|
| |||
|
3. Treatment with 1% retinol for improving melasma and photodamage in skin of
color -24-week study of the improvement in melasma and photodamage with use of the Nu-Derm System with retinol 1.0 in patients with Fitzpatrick skin types III-VI.
|
| |
Marta I. Rendon, MD FAAD
|
| |||
|
4. Treatment with tretinoin for melasma in skin of color-Study evaluating
clinical benefits of use of the Nu-Derm system with tretinoin .05% in patients with mild to marked melasma having Fitzpatrick skin tpes III-VI over 24 weeks.
|
| |
Michael Gold, MD
|
| |||
|
5. Treatment of marked melasma: a comparison between Asian and Caucasian
patients- 24-week study assessing the efficacy and tolerability of the Nu-Derm System with tretinoin 0.1% in Asian patients vs. Caucasian patients.
|
| |
Suzanne Bruce, MD
|
| |||
|
6. Treating epidermal melasma in darker skin with 0.025% tretinoin 12-week
study assessing the effifacy and tolerability of Nu-Derm System and .025% tretinoin in patients having mild to moderate melasma with Fitzpatrick skin types III-VI.
|
| |
Pearl Grimes, MD
|
| |||
|
7. Further enhancement in appearance in patients previously treated with
botox- Multicenter study assessing the clinical benefits of use of Nu-Derm System in patients who have been treated with botox vs. use of a placebo regimen including a cleanser, moisturizer and sunscreen.
|
| |
Joel Schelssinger, MD
|
| |||
|
8. Use of system before and after electrodessication and curettage of
superficial basal truncal carcinoma- Multicenter study assessing the benefits of use of the Nu-Derm System before and after electrodessication and curettage of superficial basal truncal carcinoma vs. a placebo regimen using cleanser and
a healing ointment.
|
| |
David Pariser, MD
|
| |||
|
9. Benefits of using in patients undergoing IPL for photorejuvenation- Study
assessing the clinical effects of using the Nu-Derm System plus .05% tretinoin in patients undergoing intense pulsed light therapy for rejuvenation vs. placebo regimen including a cleanser, moisturizer and sunscreen.
|
| |
Mitchel P Goldman, MD
|
| |||
|
10. Evaluation of Nu-Derm Fx system in improving photodamage – Study
evaluating the efficacy and tolerability of the Nu-Derm Fx system and Retinol 1.0 in patients having mild to moderate photodamage over 24 weeks.
|
| |
Suzanne Bruce, MD
|
|
|
Product
|
| |
Study
|
| |
Principal Investigator
|
|
|
Obagi-C Rx System
|
| |
1. Evaluation of system for normal to oily skin – 12 week study assessing the
efficacy and tolerability of the Obagi-C Rx System in patients with mild to moderate photodamage and normal to oily skin.
|
| |
Suzanne Bruce, MD
|
|
|
2. Evaluation of Percutaneous Absorption of L-ascorbic acid- Study assessing
the percutaneous absorption of L-ascorbic acid in Obagi-C Rx serum, Obagi Professional-C Serum and leading competitor’s Vitamin C serum.
|
| |
Paul A. Lehman, MSc
|
| |||
|
CLENZIderm System
|
| |
1. Evaluation of system in patients with normal or normal to oily skin – Study
assessing the efficacy and toleratbilty of the CLENZIderm System on patients with mild to moderate acne and normal to oily skin over 12 weeks.
|
| |
Leonard Swinyer, MD
|
|
|
2. Phototracking study evaluation clinical usefulness of system- Study
assessing the efficacy and tolerability of the CLENZIderm System on patients with at least 25 acne leisions, including at least 10 inflammatory lesions, over an 8-week period.
|
| |
Suzanne Bruce, MD
|
| |||
|
3. Comparison of CLEZIDerm System to regimen using benzoyl peroxide and
clindimyacin – 10-week multicenter study assessing the comparative efficacy and tolerability of the CLENZIderm System and an acne regimen including benzoyl peroxide and clindimyacin in patients with mild to moderate facial acne.
|
| |
|
| |||
|
ELASTIderm
|
| |
1. Clinical evaluation of cream on periorbital skin-Study of quantitative
biochemical effects of ELASTIderm eye cream on cutaneous elastin and collagen on periorbital skin on patients having at least type III skin on the Glogau Photoaging Classification (advanced photoaging including wrinkes and fine lines at
rest).
|
| |
Stacy Smith, MD
|
|
|
2. Clinical evaluation of novel bi-mineral complex -8 week study evaluating
the effect of use of the ELASTIderm eye cream on patients having photoaged periorbital skin.
|
| |
Suzanne Bruce, MD
|
| |||
|
3. Evaluation of effect on photoexposed skin- Study assessing the efficacy and
tolerability of the CLENZIderm eye cream on patients with moderate to deep periocular lines over an 8 week period.
|
| |
Toni F. Miller, PhD
|
| |||
|
4. Clinical evaluation on aged skin in Fitzpatrick Skin Types I-V- 12-week
study on the efficacy and tolerability of the ELASTIderm facial serum on patients having mild to moderate fine lines and wrinkles, crepiness and laxity on the face and decolletage with Fitzpatrick skin types I-V.
|
| |
Thomas J. Stephens, PhD
|
| |||
|
5. Effects of cream on elastin biosynthesis- 6-week study evaluating the
effect of ELASTIderm eye cream on elastin biosynthesis and elastic tissue accumulation in patients with photoaged facial skin using skin biopsies.
|
| |
My G. Mahoney
|
| |||
|
Professional-C Serum
|
| |
1. Greater stability and absorption compared with a leading competitor
formulation – Study assessing the stability and absorption of bioavailable Vitamin C using Professional Serum vs. a leading competitor’s Vitamin C serum
|
| |
Harry Agahigian, PhD
|
|
|
Obagi 360 System
|
| |
1. Eavluating the anti-aging effects of system following three months of
treatment in subjects with photodamage -3-month study assessing the efficacy and tolerability of the Obagi 360 System in patients having mild to moderate photodamage.
|
| |
Suzanne Bruce, MD
|
|
|
Blue Peel Radiance
|
| |
1. Improvement in facial appearance following use of peel- Study assessing the
efficacy and tolerability of Blue Peel Radiance Peel using a series of three peels over a six week period.
|
| |
Suzanne Bruce, MD
|
|
|
Nu-Cil Serum
|
| |
1. Evaluation of upper eyelash prominence using eyelash serum- 16-week study
evaluating the efficacy and tolerability of the Nu-Cil Eyelash serum vs. a leading competitor’s serum in patients with Fitzpatrick skin types I-VI with eyelashes scoring 1 or 2 on the global eyelash assessment scale (sparse or moderate
eyelashes)
|
| |
Deborah Serman, MD
|
|
•
|
Brand Expansion—We plan to continue building upon the highly respected reputation of
the Obagi brand by expanding the brand franchises that leverage our medical heritage. In December 2018 we introduced the science-backed Obagi Clinical brand to online consumers and plan to expand the retail channels where it is
available, thereby introducing more consumers to the Obagi brand. In addition, in July 2021 we launched the Skintrinsiq device and in the first quarter of 2022 we plan to launch our Obagi Professional brand in an effort to introduce
even more consumers who may not yet be familiar with physician-dispensed products to Obagi. As these consumers age and begin to seek medical grade skincare to address the progressive signs of skin aging, they can graduate to the Obagi
Medical line.
|
•
|
Channel Expansion—While we continue undertaking significant efforts to further our
market penetration within the physician-dispensed channel, which we estimate is currently at about 40% in the U.S. market, we intend to also focus on continuing to implement our omni-channel strategy to expand our distribution beyond
this market segment. In December 2020, in tandem with the redesign of our own website, we launched our first e-commerce store to enable us to sell our Obagi Medical OTC and cosmetic products directly to consumers. Our Obagi Clinical
line allowed us to branch into retail channels for the first time, and we expect our Obagi Professional line to enable us to start our footprint within the spa and wellness channel. The Skintrinsiq device will also allow us to expand
offerings within the spa and wellness channel and to aestheticians who are not affiliated with a physician’s office.
|
•
|
International Growth—Finally, we intend to continue expanding our international
presence. As we continue to enhance our own U.S. online web store, we plan to build and execute a global e-commerce strategy that will enable us to reach consumers in several international markets, including some in which we may not
have a distribution partner. At the same time, we will focus on growing our network of third-party distributors in key large international markets, such as Europe, Brazil, Southeast Asia and the Middle East. We also plan to drive
distribution of our products through strategic relationships in other countries, including Japan and China.
|
•
|
Market leading brand—Obagi has been a leader in the physician-dispensed market from
inception, being one of the first companies to offer skincare products in the market over 30 years ago. According to a survey conducted by an independent research firm of physicians and medical offices that dispense skincare products in
the U.S., in 2020 Obagi ranked the highest for overall performance of dermatologist credentialed skincare brands.
|
•
|
Robust portfolio of high-quality, science-based products—Our product portfolio
currently consists of over 200 products. While some of the competitors in the skincare market also offer a broad spectrum of products, only one other competitor, ZO Skin Health, offers both prescription strength and non-prescription
products. In addition, many competitors in our primary market, physician-dispensed, generally have more narrowly focused offerings, addressing only targeted skincare problems, while our portfolio addresses all of the most common visible
skin disorders.
|
•
|
Diversified, omni-channel market with global geographic coverage—We believe that our
diversified, omni-channel strategy gives us a competitive advantage over many skincare companies that choose to focus only on the physician-dispensed market. By offering a medical grade skincare line as well as curated separate product
lines for the retail, spa and wellness channels, we believe we are able to expand our brand recognition and meet the consumer where they are in their skincare journeys, with the eventual goal of graduating these consumers to the Obagi
Medical line. In addition, our global breadth into over 60 countries positions us well to achieve worldwide brand recognition. Our strategic relationship with Rohto and agreements with Obagi Hong Kong allow us to penetrate the markets
in Japan and China, which represents a large growing market for skincare, and we intend to continue expanding our network of distributors and strategic partners.
|
•
|
Specialized and efficient global sales force—Our domestic internal sales force of 95
professional representatives and education specialists allows us to develop close relationships with the physicians who dispense our products throughout the U.S. In addition, our global sales
force consists of 27 international distributors who sell our products in over 60 countries throughout the world. We believe the breadth and experience of our internal and global sales network provide us with a competitive advantage.
|
•
|
Demonstrated financial performance through disciplined execution—While growth
initiatives such as the ones we have undertaken over the last few years require significant investments, we have been able to achieve our growth through disciplined execution. Our net revenue has increased from $94.3 million for the
year ended December 31, 2018 to projected net revenue of over $190.0 million for the year ending December 31, 2021.
|
•
|
product efficacy, uniqueness, quality, reliability of performance and convenience of use;
|
•
|
brand awareness and recognition;
|
•
|
breadth of product offerings;
|
•
|
sales and marketing capabilities and methods of distribution;
|
•
|
resources devoted to product education and technical support;
|
•
|
speed of introducing new competitive products and existing product upgrades; and
|
•
|
cost-effectiveness.
|
•
|
completion of preclinical laboratory tests, animal studies and formulation studies in accordance with the FDA’s Good
Laboratory Practice requirements and other applicable regulations;
|
•
|
submission to the FDA of an Investigational New Drug application (“IND”) requesting authorization from the FDA to administer
an investigational biologic to humans which must become effective before human clinical trials may begin;
|
•
|
approval by an independent Institutional Review Board (“IRB”) or ethics committee at each clinical site before each trial may
be initiated;
|
•
|
performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (“GCPs”), to
establish the safety and efficacy of the proposed drug for its intended use. Clinical trials generally include the following:
|
○
|
Phase 1: The product is initially introduced into healthy human subjects or patients with the
target disease or condition to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early
evidence on effectiveness.
|
○
|
Phase 2: The product is administered to a limited patient population with a specified disease
or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to
beginning larger and more expensive Phase 3 clinical trials.
|
○
|
Phase 3: The product candidate is administered to an expanded patient population to further
evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish
the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.
|
○
|
In some cases, the FDA may require, or sponsors may voluntarily pursue, additional clinical
trials after a product is approved to gain more information about the product. These so-called Phase 4 studies, may be conducted after initial marketing approval, and may be used to gain additional experience from the treatment of
patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.
|
•
|
preparation of and submission to the FDA of an NDA after completion of all pivotal trials;
|
•
|
a determination by the FDA within 60 days of its receipt of an NDA to file the application for review
|
•
|
satisfactory completion of an FDA advisory committee review, if applicable;
|
•
|
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to
assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance
with GCPs; and
|
•
|
FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the
U.S..
|
•
|
establishment registration and device listing with the FDA;
|
•
|
QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing,
control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;
|
•
|
labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide
adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of
information and responding to unsolicited requests for information;
|
•
|
clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or
effectiveness or that would constitute a major change in intended use of one of our cleared devices;
|
•
|
medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have
caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;
|
•
|
correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections
and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;
|
•
|
complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain
information about each device to the FDA’s Global Unique Device Identification Database;
|
•
|
the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in
violation of governing laws and regulations; and
|
•
|
post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public
health or to provide additional safety and effectiveness data for the device.
|
•
|
Grow our consumer base: our goal is to drive more awareness and
trial of our products by reinvesting in operational efficiencies, increasing marketing spend and leveraging our owned ecosystem to drive additional awareness, trial and topline growth. Additionally, we plan on broadening our brand
footprint to recruit more Millennials while continuing to build on our strong position with Gen-Z consumers.
|
•
|
Brand expansion: our goal is to expand our make-up assortment and
entering into new categories by accelerating product innovation and building on hero products to create category champions (products in the top 3 of their respective categories) with global resonance, continuing to expand and develop
our skincare product presence, evolving our product mix to higher margin products (such as foundation and skincare) and expanding into additional make-up categories in the future.
|
•
|
Internationalize: our goal is to build global brand availability
by continuing to utilize, strengthen and maximize our distribution relationship throughout the Sephora ecosystem, while expanding further into key markets, such as the United Kingdom, and leveraging our brand success to develop a highly
efficient international direct-to-consumer model.
|
•
|
No Animal Products and Byproducts:
All of our products are Leaping Bunny Certified, which means that Milk Makeup does not test on animals at any stage in its supply chain. Additionally, our products have no animal derivatives and are 100% vegan.
|
•
|
“Clean” Ingredients: We
are dedicated to creating natural products, which means our products will never contain any of the over 2,500 controversial and potentially harmful or irritating ingredients, including parabens, sulfates, BHA, BPA, plastic microbeads,
talc, urea, retinyl palmitate, mercury or mercury-containing ingredients, resorcinol, formaldehyde, aluminum salts, and mineral oil. We publish a complete and growing list of ingredients it will never use in our “Ingredient No List.”
|
•
|
Natural Products: Milk
Makeup follows ISO 16128 guidelines, where “natural” means plant, mineral, and/or microbiologically derived ingredients. We want to bring products that are as natural as possible to our community, while also not compromising on quality
and performance. We are always striving to improve, and are currently working toward making new formulas that are over 80% natural.
|
•
|
Ethically Sourced Ingredients: We
have committed to ethical and responsible sourcing for our formulas from start to finish. For any products containing mica or palm-derived ingredients, we only use ethically sourced and sustainable mica and sustainability certified
palm-derived ingredients. Milk Makeup also exclusively works with GMP (Good Manufacturing Practice) compliant factories.
|
•
|
More Sustainable Shipping:
Starting in January 2021, we redesigned our e-commerce shipping system and started transporting our products in a new, sustainable shipping box and bag. Our new shipping box is printed with petroleum-free plant-based inks and its inner
bag is made from 100% post-consumer waste, both of which are made in the U.S. Both the new box and bag are both 100% recyclable once the adhesive strip on the packaging is removed.
|
•
|
Environmentally Friendly In-Store Packaging: Milk Makeup is working to use less plastic, offer more refills and use more post-consumer resin and recyclable materials on packaging and in-store merchandising, which includes launching new product
display systems that use 63% less plastic on average than previous displays, introducing refills where possible, and exploring the use of mono plastic to make recycling easier.
|
•
|
How2Recycle Partnership:
In the U.S. and Canada, we have partnered with How2Recycle to help develop labels to communicate clear recycling instructions on our products.
|
•
|
g2 revolution Partnership: Milk
Makeup has partnered with g2 revolution, a specialty recycling solutions program that helps to develop ways to responsibly dispose of hard to recycle excess products and components.
|
|
| |
Nine Months Ended
September 30,
|
|||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
Net revenue
|
| |
$152,714
|
| |
$50,864
|
Cost of goods sold (exclusive of depreciation and amortization expense)
|
| |
36,131
|
| |
12,295
|
Amortization expense(1)
|
| |
3,667
|
| |
3,667
|
Gross profit
|
| |
$112,916
|
| |
$34,902
|
Add: Amortization expense(1)
|
| |
3,667
|
| |
3,667
|
Adjusted gross profit
|
| |
$116,583
|
| |
$38,569
|
|
| |
Year Ended
December 31,
|
|||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
Net revenue
|
| |
$84,145
|
| |
$117,085
|
Cost of goods sold (exclusive of depreciation and amortization expense)
|
| |
19,969
|
| |
26,687
|
Amortization expense(1)
|
| |
4,890
|
| |
4,871
|
Gross profit
|
| |
$59,286
|
| |
$85,527
|
Add: Amortization expense(1)
|
| |
4,890
|
| |
4,871
|
Adjusted gross profit
|
| |
$64,176
|
| |
$90,398
|
(1)
|
Includes supply agreement and developed technology intangible asset amortization expense that pertains to cost of goods sold.
|
|
| |
Nine Months Ended
September 30,
|
|||
(in thousands)
|
| |
2021
|
| |
2020
|
Net income (loss)
|
| |
$14,300
|
| |
$(11,755)
|
Adjusted for:
|
| |
|
| |
|
Interest expense
|
| |
8,099
|
| |
4,532
|
Income tax expense (benefit)
|
| |
2,112
|
| |
(6,507)
|
Depreciation and amortization
|
| |
10,501
|
| |
9,997
|
Relocation expense(1)
|
| |
78
|
| |
—
|
Transaction related costs(2)
|
| |
649
|
| |
—
|
Loss on extinguishment of debt
|
| |
2,317
|
| |
—
|
Gain on PPP Loan forgiveness
|
| |
(6,824)
|
| |
—
|
Adjusted EBITDA
|
| |
31,232
|
| |
(3,733)
|
|
| |
Year Ended
December 31,
|
|||
(in thousands)
|
| |
2020
|
| |
2019
|
Net (loss) income
|
| |
$(9,171)
|
| |
$5,820
|
Adjusted for:
|
| |
|
| |
|
Interest expense
|
| |
6,281
|
| |
6,834
|
Income tax benefit
|
| |
(5,094)
|
| |
(1,589)
|
Depreciation and amortization
|
| |
13,426
|
| |
12,940
|
Adjusted EBITDA(3)
|
| |
5,442
|
| |
24,005
|
(1)
|
The amount reflects one-time expenses in connection with a planned relocation of our corporate headquarters.
|
(2)
|
Includes mainly advisory, consulting, accounting and legal expenses in connection with the Business Combination (see “Business
Combination” section within).
|
(3)
|
We did not incur any non-core relocation expense or transaction costs; therefore no adjustments were made for these amounts
for the year ended December 31, 2020 and 2019.
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Net revenue
|
| |
$152,714
|
| |
$50,864
|
| |
$101,850
|
| |
200.2%
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
36,131
|
| |
12,295
|
| |
23,836
|
| |
193.9%
|
Selling, general and administrative
|
| |
80,797
|
| |
39,329
|
| |
41,468
|
| |
105.4%
|
Research and development
|
| |
5,030
|
| |
2,964
|
| |
2,066
|
| |
69.7%
|
Depreciation and amortization
|
| |
10,501
|
| |
9,997
|
| |
504
|
| |
5.0%
|
Total operating expenses
|
| |
132,459
|
| |
64,585
|
| |
67,874
|
| |
105.1%
|
Operating income (loss)
|
| |
20,255
|
| |
(13,721)
|
| |
33,976
|
| |
247.6%
|
Interest expense
|
| |
8,099
|
| |
4,532
|
| |
3,567
|
| |
78.7%
|
Loss on extinguishment of debt
|
| |
2,317
|
| |
—
|
| |
2,317
|
| |
100%
|
Gain on PPP Loan forgiveness
|
| |
(6,824)
|
| |
—
|
| |
(6,824)
|
| |
(100)%
|
Other expense – net
|
| |
251
|
| |
9
|
| |
242
|
| |
n.m.
|
Income (loss) before income taxes
|
| |
16,412
|
| |
(18,262)
|
| |
34,674
|
| |
189.9%
|
Income tax expense (benefit)
|
| |
2,112
|
| |
(6,507)
|
| |
8,619
|
| |
132.5%
|
Net income (loss)
|
| |
14,300
|
| |
(11,755)
|
| |
26,055
|
| |
221.7%
|
|
| |
Nine Months Ended September 30,
|
| |
Nine Months Ended
September 30, 2021 vs 2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$Change
|
| |
% Change
|
Sales Channel
|
| |
|
| |
|
| |
|
| |
|
Medical
|
| |
$147,017
|
| |
$50,025
|
| |
$96,992
|
| |
193.9%
|
as a percentage of total revenue
|
| |
96.3%
|
| |
98.4%
|
| |
|
| |
|
Clinical
|
| |
$4,735
|
| |
$839
|
| |
$3,896
|
| |
464.4%
|
as a percentage of total revenue
|
| |
3.1%
|
| |
1.6%
|
| |
|
| |
|
Other
|
| |
$962
|
| |
$—
|
| |
$962
|
| |
100.0%
|
as a percentage of total revenue
|
| |
0.6%
|
| |
0.0%
|
| |
|
| |
|
Total
|
| |
$152,714
|
| |
$50,864
|
| |
$101,850
|
| |
200.2%
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Region
|
| |
|
| |
|
| |
|
| |
|
North America
|
| |
$67,188
|
| |
$32,072
|
| |
$35,116
|
| |
109.5%
|
as a percentage of total revenue
|
| |
44.0%
|
| |
63.1%
|
| |
|
| |
|
Asia Pacific
|
| |
$68,272
|
| |
$9,742
|
| |
$58,530
|
| |
600.8%
|
as a percentage of total revenue
|
| |
44.7%
|
| |
19.2%
|
| |
|
| |
|
Rest of the World
|
| |
$12,497
|
| |
$4,187
|
| |
$8,310
|
| |
198.5%
|
as a percentage of total revenue
|
| |
8.2%
|
| |
8.2%
|
| |
|
| |
|
Net Product Sales
|
| |
$147,957
|
| |
$46,001
|
| |
$101,956
|
| |
221.6%
|
as a percentage of total revenue
|
| |
96.9%
|
| |
90.4%
|
| |
|
| |
|
Asia Pacific Royalties
|
| |
$4,757
|
| |
$4,863
|
| |
$(106)
|
| |
(2.2)%
|
as a percentage of total revenue
|
| |
3.1%
|
| |
9.6%
|
| |
|
| |
|
Total
|
| |
$152,714
|
| |
$50,864
|
| |
$101,850
|
| |
200.2%
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Cost of goods sold (exclusive of depreciation and
amortization expense)
|
| |
$36,131
|
| |
$12,295
|
| |
$23,836
|
| |
193.9%
|
as a percentage of total revenue
|
| |
23.7%
|
| |
24.2%
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Selling, general and administrative
|
| |
$80,797
|
| |
$39,329
|
| |
$41,468
|
| |
105.4%
|
as a percentage of total revenue
|
| |
52.9%
|
| |
77.3%
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Research and development
|
| |
$5,030
|
| |
$2,964
|
| |
$2,066
|
| |
69.7%
|
as a percentage of total revenue
|
| |
3.3%
|
| |
5.8%
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Depreciation and amortization
|
| |
$10,501
|
| |
$9,997
|
| |
$504
|
| |
5.0%
|
as a percentage of total revenue
|
| |
6.9%
|
| |
19.7%
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Interest expense
|
| |
$8,099
|
| |
$4,532
|
| |
$3,567
|
| |
78.7%
|
as a percentage of total revenue
|
| |
5.3%
|
| |
8.9%
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Loss on extinguishment of debt
|
| |
$2,317
|
| |
$—
|
| |
$2,317
|
| |
100%
|
as a percentage of total revenue
|
| |
1.5%
|
| |
—
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Gain on PPP Loan Forgiveness
|
| |
$(6,824)
|
| |
$—
|
| |
$(6,824)
|
| |
(100)%
|
as a percentage of total revenue
|
| |
(4.5)%
|
| |
—
|
| |
|
| |
|
|
| |
Nine Months Ended
September 30,
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Income tax expense (benefit)
|
| |
$2,112
|
| |
$(6,507)
|
| |
$8,619
|
| |
(132.5)%
|
Effective tax rate
|
| |
12.9%
|
| |
35.6%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Net revenue
|
| |
$84,145
|
| |
$117,085
|
| |
$(32,940)
|
| |
(28.1)%
|
Cost of goods sold (exclusive of depreciation and
amortization expense)
|
| |
19,969
|
| |
26,687
|
| |
(6,718)
|
| |
(25.2)%
|
Selling, general and administrative
|
| |
54,794
|
| |
62,762
|
| |
(7,968)
|
| |
(12.7)%
|
Research and development
|
| |
3,929
|
| |
3,484
|
| |
445
|
| |
12.8%
|
Depreciation and amortization
|
| |
13,426
|
| |
12,940
|
| |
486
|
| |
3.8%
|
Total operating expenses
|
| |
92,118
|
| |
105,873
|
| |
(13,755)
|
| |
(13.0)%
|
Operating income (loss)
|
| |
(7,973)
|
| |
11,212
|
| |
(19,185)
|
| |
(171.1)%
|
Interest expense
|
| |
6,281
|
| |
6,834
|
| |
(553)
|
| |
(8.1)%
|
Other expense – net
|
| |
11
|
| |
147
|
| |
(136)
|
| |
n.m.
|
Income (loss) before income taxes
|
| |
(14,265)
|
| |
4,231
|
| |
(18,496)
|
| |
(437.2)%
|
Income tax benefit
|
| |
(5,094)
|
| |
(1,589)
|
| |
(3,505)
|
| |
220.6%
|
Net income (loss)
|
| |
(9,171)
|
| |
5,820
|
| |
(14,991)
|
| |
(257.6)%
|
|
| |
Year Ended December 31,
|
| |
2020 vs 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Sales Channel
|
| |
|
| |
|
| |
|
| |
|
Medical
|
| |
$ 82,532
|
| |
$ 114,585
|
| |
$ (32,053)
|
| |
(28.0%)
|
as a percentage of total revenue
|
| |
98.1%
|
| |
97.9%
|
| |
|
| |
|
Clinical
|
| |
$1,613
|
| |
$2,500
|
| |
$(887)
|
| |
(35.5%)
|
as a percentage of total revenue
|
| |
1.9%
|
| |
2.1%
|
| |
|
| |
|
Total
|
| |
$ 84,145
|
| |
$ 117,085
|
| |
$ (32,940)
|
| |
(28.1)%
|
|
| |
Year Ended
December 31,
|
| |
2020 vs 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Region
|
| |
|
| |
|
| |
|
| |
|
North America
|
| |
$55,389
|
| |
$85,025
|
| |
$(29,636)
|
| |
(34.9)%
|
as a percentage of total revenue
|
| |
65.8%
|
| |
72.6%
|
| |
|
| |
|
Asia Pacific
|
| |
$16,696
|
| |
$20,496
|
| |
$(3,800)
|
| |
(18.5)%
|
as a percentage of total revenue
|
| |
19.8%
|
| |
17.5%
|
| |
|
| |
|
Rest of the World
|
| |
$6,156
|
| |
$5,225
|
| |
$931
|
| |
17.8%
|
as a percentage of total revenue
|
| |
7.3%
|
| |
4.5%
|
| |
|
| |
|
Net Product Sales
|
| |
$78,241
|
| |
$110,746
|
| |
$(32,505)
|
| |
(29.4)%
|
as a percentage of total revenue
|
| |
93.0%
|
| |
94.6%
|
| |
|
| |
|
Asia Pacific Royalties
|
| |
$5,904
|
| |
$6,339
|
| |
$(435)
|
| |
(6.9)%
|
as a percentage of total revenue
|
| |
7.0%
|
| |
5.4%
|
| |
|
| |
|
Total
|
| |
$84,145
|
| |
$117,085
|
| |
$(32,940)
|
| |
(28.1)%
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Cost of goods sold (exclusive of depreciation and
amortization)
|
| |
$19,969
|
| |
$26,687
|
| |
$(6,718)
|
| |
(25.2)%
|
as a percentage of total revenue
|
| |
23.7%
|
| |
22.8%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Selling, general and administrative
|
| |
$54,794
|
| |
$62,762
|
| |
$(7,968)
|
| |
(12.7)%
|
as a percentage of total revenue
|
| |
65.1%
|
| |
53.6%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Research and development
|
| |
$3,929
|
| |
$3,484
|
| |
$445
|
| |
12.8%
|
as a percentage of total revenue
|
| |
4.7%
|
| |
3.0%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Depreciation and amortization
|
| |
$13,426
|
| |
$12,940
|
| |
$486
|
| |
3.8%
|
as a percentage of total revenue
|
| |
16.0%
|
| |
11.1%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Interest expense
|
| |
$6,281
|
| |
$6,834
|
| |
$(553)
|
| |
(8.1)%
|
as a percentage of total revenue
|
| |
7.5%
|
| |
5.8%
|
| |
|
| |
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Income tax benefit
|
| |
$(5,094)
|
| |
$(1,589)
|
| |
$(3,505)
|
| |
220.6%
|
Effective tax rate
|
| |
35.6%
|
| |
(37.6)%
|
| |
|
| |
|
|
| |
Leverage Ratio
|
| |
Fixed Charge Coverage Ratio
|
||||||
Fiscal quarter ended
|
| |
Maximum
|
| |
Actual
|
| |
Minimum
|
| |
Actual
|
September 30, 2021
|
| |
4.00
|
| |
3.05
|
| |
1.375
|
| |
2.758
|
June 30, 2021
|
| |
5.00
|
| |
3.34
|
| |
1.375
|
| |
3.003
|
March 31, 2021
|
| |
8.00
|
| |
6.17
|
| |
1.375
|
| |
2.553
|
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
| |
Nine Months Ended
September 30, 2021 vs
2020
|
||||||
(in thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Net cash provided by (used in) operating activities
|
| |
$15,185
|
| |
$(12,504)
|
| |
$27,689
|
| |
221.4%
|
Net cash used in investing activities
|
| |
(4,112)
|
| |
(1,349)
|
| |
(2,763)
|
| |
(204.8)%
|
Net cash provided by financing activities
|
| |
5,437
|
| |
23,740
|
| |
(18,303)
|
| |
(77.1)%
|
|
| |
Year Ended
December 31,
|
| |
2020 vs. 2019
|
||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Net cash (used in) provided by operating activities
|
| |
$(7,251)
|
| |
$3,776
|
| |
$(11,027)
|
| |
(292.0)%
|
Net cash used in investing activities
|
| |
(1,887)
|
| |
(788)
|
| |
(1,099)
|
| |
(139.5)%
|
Net cash provided by (used in) financing activities
|
| |
14,319
|
| |
(6,814)
|
| |
21,133
|
| |
310.1%
|
|
| |
Nine months ended
September 30,
|
| |
Change
|
||||||
(In thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
Net sales
|
| |
$39,663
|
| |
$31,426
|
| |
$8,237
|
| |
26%
|
Cost of goods sold (exclusive of depreciation and
amortization)
|
| |
17,423
|
| |
17,896
|
| |
(473)
|
| |
(3)%
|
Selling, general, and administrative expenses
|
| |
20,534
|
| |
19,467
|
| |
1,067
|
| |
6%
|
Depreciation and amortization
|
| |
1,460
|
| |
1,279
|
| |
181
|
| |
14%
|
Operating income (loss)
|
| |
$246
|
| |
(7,216)
|
| |
7,462
|
| |
(103)%
|
Interest expense, net
|
| |
1
|
| |
16
|
| |
(15)
|
| |
(94)%
|
Other expense, net
|
| |
61
|
| |
298
|
| |
(237)
|
| |
(80)%
|
Income before provision for income taxes
|
| |
184
|
| |
(7,530)
|
| |
7,714
|
| |
(102)%
|
Income tax provision
|
| |
—
|
| |
—
|
| |
—
|
| |
0%
|
Net income (loss)
|
| |
$184
|
| |
$(7,530)
|
| |
$7,714
|
| |
(102)%
|
Comprehensive income (loss)
|
| |
$184
|
| |
$(7,530)
|
| |
$7,714
|
| |
(102)%
|
|
| |
Year ended
December 31,
|
| |
Change
|
||||||
(In thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
Net sales
|
| |
$39,515
|
| |
$50,811
|
| |
$(11,296)
|
| |
(22)%
|
Cost of goods sold (exclusive of depreciation and
amortization)
|
| |
23,450
|
| |
23,379
|
| |
71
|
| |
0%
|
Selling, general, and administrative expenses
|
| |
26,559
|
| |
33,567
|
| |
(7,008)
|
| |
(21)%
|
Depreciation and amortization
|
| |
1,746
|
| |
2,536
|
| |
(790)
|
| |
(31)%
|
Operating loss
|
| |
(12,240)
|
| |
(8,671)
|
| |
(3,569)
|
| |
41%
|
Interest expense, net
|
| |
301
|
| |
1,369
|
| |
(1,068)
|
| |
(78)%
|
Other expense, net
|
| |
393
|
| |
918
|
| |
(525)
|
| |
(57)%
|
Income before provision for income taxes
|
| |
(12,934)
|
| |
(10,958)
|
| |
(1,976)
|
| |
18%
|
Income tax provision
|
| |
—
|
| |
—
|
| |
—
|
| |
0%
|
Net loss
|
| |
$(12,934)
|
| |
$(10,958)
|
| |
$(1,976)
|
| |
18%
|
Comprehensive loss
|
| |
$(12,934)
|
| |
$(10,958)
|
| |
$(1,976)
|
| |
18%
|
|
| |
Nine months ended September 30,
|
|||||||||
(In thousands, except percentages)
|
| |
2021
|
| |
2020
|
| |
$ Change
|
| |
% Change
|
Net cash provided by (used in) operating activities
|
| |
$227
|
| |
$(7,771)
|
| |
$7,998
|
| |
(103)%
|
Net cash used in investing activities
|
| |
(961)
|
| |
(3,754)
|
| |
2,793
|
| |
(74)%
|
Net cash provided by financing activities
|
| |
—
|
| |
10,000
|
| |
(10,000)
|
| |
(100)%
|
|
| |
Year ended December 31,
|
|||||||||
(In thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
$ Change
|
| |
% Change
|
Net cash provided by (used in) operating activities
|
| |
$(4,694)
|
| |
$(20,124)
|
| |
$15,430
|
| |
(77)%
|
Net cash used in investing activities
|
| |
(6,001)
|
| |
(1,106)
|
| |
(4,895)
|
| |
443%
|
Net cash provided by financing activities
|
| |
10,000
|
| |
25,000
|
| |
(15,000)
|
| |
(60)%
|
•
|
Fair Value of Common Stock:
As our common units are not publicly traded, the fair value was determined by our management, with input from valuation reports prepared by third-party valuation specialists. Stock-based compensation for financial reporting purposes is
measured based on updated estimates of fair value when appropriate, such as when additional relevant information related to the estimate becomes available in a valuation report issued as of a subsequent date.
|
•
|
Expected Dividend Yield:
We have not historically declared or paid dividends and do not anticipate that distributions will be made in the near future. As a result, an expected dividend yield of zero percent was used.
|
•
|
Expected Volatility: The
volatility factor for our unit-based options was estimated using publicly available trading data, which was used to estimate our volatility, had we been public.
|
•
|
Expected Term: Our
expected term represents the period that the awards are expected to be outstanding and was determined as a function of contractual terms of the unit-based awards and vesting schedules. We use the simplified method of calculation for
estimating expected term.
|
•
|
Risk-Free Interest Rate:
We base the risk-free interest rate used in the Black-Scholes model on implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term.
|
•
|
Independent third-party valuations of our common units;
|
•
|
The prices at which we sold our common units to outside investors in arms-length transactions;
|
•
|
Our results of operations, financial position, and capital resources;
|
•
|
Industry outlook;
|
•
|
The lack of marketability of our common units;
|
•
|
The fact that the option grants involve illiquid securities in a private company;
|
•
|
The likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company, given prevailing
market conditions;
|
•
|
The history and nature of our business, industry trends, and competitive environment; and
|
•
|
General economic outlook including economic growth, inflation and unemployment, interest rate environment, and global
economic trends.
|
Name
|
| |
Age
|
| |
Position
|
Executive Officers/Directors:
|
| |
|
| |
|
Michel Brousset
|
| |
49
|
| |
Chief Executive Officer and Director
|
Hind Sebti
|
| |
42
|
| |
Chief Operating Officer
|
Tassilo Festetics
|
| |
43
|
| |
Chief Financial Officer and Chief Technology Officer
|
Non-Employee Directors:
|
| |
|
| |
|
Felipe Dutra
|
| |
56
|
| |
Director
|
Cristiano Souza
|
| |
46
|
| |
Director
|
Sarah Brown
|
| |
58
|
| |
Director
|
Juliette Hickman
|
| |
47
|
| |
Director
|
Lindsay Pattison
|
| |
47
|
| |
Director
|
Zack Werner
|
| |
35
|
| |
Director
|
Simon Dai
|
| |
30
|
| |
Director
|
Aaron Chatterley
|
| |
55
|
| |
Director
|
|
| |
|
| |
|
•
|
the Class I directors, which we anticipate will be Lindsay Pattison, Zack Werner and Sarah Brown, and their terms will expire
at the first annual meeting of stockholders to be held after the consummation of the Business Combination;
|
•
|
the Class II directors, which we anticipate will be Aaron Chatterley, Juliette Hickman and Cristiano Souza, and their terms
will expire at the second annual meeting of stockholders to be held after the consummation of the Business Combination; and
|
•
|
the Class III directors, which we anticipate will be Michel Brousset, Felipe Dutra and Simon Dai, and their terms will expire
at the third annual meeting of stockholders to be held after the consummation of the Business Combination.
|
•
|
assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory
requirements, (3) our independent auditor’s qualifications and independence and (4) the performance of our internal audit function and independent auditors;
|
•
|
the appointment, compensation, retention, replacement and oversight of the work of the independent auditors and any other
independent registered public accounting firm engaged by us;
|
•
|
pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public
accounting firm engaged by us, and establishing pre-approval policies and procedures;
|
•
|
reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their
continued independence;
|
•
|
setting clear hiring policies for employees or former employees of the independent auditors;
|
•
|
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
•
|
obtaining and reviewing a report, at least annually, from the independent auditors describing (1) the independent auditor’s
internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
|
•
|
meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and
the independent auditor, including reviewing our specific disclosures under “Waldencast’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
|
•
|
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated by the SEC prior to us entering into such transaction; and
|
•
|
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or
compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any
significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
•
|
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s
compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
|
•
|
reviewing and making recommendations to our board of directors with respect to the compensation, and any
incentive-compensation and equity-based plans that are subject to board approval of all of our other officers;
|
•
|
reviewing our executive compensation policies and plans;
|
•
|
implementing and administering our incentive compensation equity-based remuneration plans;
|
•
|
assisting management in complying with our proxy statement and annual report disclosure requirements;
|
•
|
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our
officers and employees;
|
•
|
producing a report on executive compensation to be included in our annual proxy statement; and
|
•
|
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
•
|
identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the
board of directors, and recommending to the board of directors candidates for nomination for appointment at the annual general meeting or to fill vacancies on the board of directors;
|
•
|
developing and recommending to the board of directors and overseeing implementation of Waldencast plc’s corporate governance
guidelines;
|
•
|
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and
management in the governance of the company; and
|
•
|
reviewing on a regular basis Waldencast plc’s overall corporate governance and recommending improvements as and when
necessary.
|
•
|
each person who is known to be the beneficial owner of more than 5% of Waldencast ordinary shares and/or is expected to be
the beneficial owner of more than 5% of shares of Waldencast plc Class A ordinary shares post-Business Combination;
|
•
|
each of Waldencast’s current executive officers and directors;
|
•
|
each person who will become an executive officer or director of Waldencast plc post-Business Combination; and
|
•
|
all executive officers and directors of Waldencast as a group pre-Business Combination, and all executive officers and
directors of Waldencast plc post-Business Combination.
|
•
|
Assuming No Redemptions — this scenario assumes that no public shareholders of
Waldencast exercise their redemption rights with respect to their public shares of Class A ordinary shares for a pro rata share of the funds in the trust account.
|
•
|
Assuming Maximum Redemptions — there is no specified maximum redemptions threshold;
however, the Closing is conditioned upon minimum closing available cash of $565.0 million (calculated as the cash in the trust account after giving effect to redemptions, plus the PIPE Investment, the FPA proceeds and the cash and cash
equivalents of Waldencast prior to closing) which does not result in 100% redemptions. Hence, this scenario assumes that Waldencast’s shareholders will redeem 21,984,625 shares of Class A ordinary shares for aggregate redemption
payments of $219.9 million. The number of public redemption shares of 21,984,625 shares was calculated based on the estimated per share redemption value of $10.00 ($345.0 million of cash from trust account divided at September 30, 2021
by 34,500,000 outstanding Waldencast public shares). Further, this scenario assumes that 1,970,625 additional Waldencast plc Class A Ordinary shares were issued to the Milk Members and 5,250,000 additional Waldencast plc Class A
Ordinary shares were issued to the Obagi Shareholders as a result of Consideration Substitution (see the section entitled “BCA Proposals – Potential Impact of Significant Redemptions on the Percentage
Ownership of Waldencast plc Ordinary Shares by the Public Shareholders of Waldencast”). If there are significant redemptions by public shareholders, the maximum amount of redemptions could exceed the Maximum Redemption scenario
presented herein.
|
|
| |
Pre-Business Combination,
PIPE Investment and
Forward Purchase Transaction
|
| |
Post-Business Combination and
PIPE Investment
|
||||||||||||||||||
|
| |
|
| |
|
| |
|
| |
|
| |
Assuming No
Redemptions
|
| |
Assuming
Redemptions
|
||||||
Name and Address of Beneficial Owner(1)
|
| |
Number of
Waldencast
Ordinary
Shares(2)
|
| |
% of
Waldencast
Class A
Ordinary
Shares
|
| |
% of
Waldencast
Class B
Ordinary
Shares
|
| |
% of
Waldencast
Ordinary
Shares
|
| |
Number of
Shares of
Waldencast plc
Common Stock
|
| |
%
|
| |
Number of
Shares of
Waldencast plc
Common Stock
|
| |
%
|
5% Holders
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Waldencast Long-Term Capital LLC(3)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
SPX Equities Gestao de Recursos Ltda(4)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Verde Servicos Internacionais S.A.(5)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Sharp Capital Gestora de Recursos Ltda.(6)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Directors and
Executive Officers Pre-Business Combination
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Michel Brousset
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Felipe Dutra
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Tassilo Festetics
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Hind Sebti
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Sarah Brown
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Juliette Hickman
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lindsay Pattison
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cristiano Souza
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Zack Werner
|
| |||||||||||||||||||||||
All Waldencast directors and executive officers as a
group (nine individuals)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Directors and Executive
Officers Post-Business Combination
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Michel Brousset
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Hind Sebti
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Tassilo Festetics
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Felipe Dutra
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cristiano Souza
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Sarah Brown
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Juliette Hickman
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lindsay Pattison
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Zack Werner
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Simon Dai
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Aaron Chatterley
|
| |||||||||||||||||||||||
All Waldencast plc directors and executive officers as a
group (eleven individuals)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
*
|
Less than one percent
|
(1)
|
Unless otherwise noted, the business address of each of those listed in the table above “Directors and Executive Officers
Pre-Business Combination” is c/o Waldencast plc, 10 Bank Street, Suite 560, White Plains, NY 10606, United States.
|
(2)
|
Prior to the Closing, holders of record of Waldencast Class A ordinary shares are entitled to one vote for each share held on
all matters to be voted on by Waldencast shareholders and vote together as a single class, except as required by law. As a result of and upon the effective time of the Domestication, (a) each of the then issued and outstanding
Waldencast Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Waldencast plc Class A ordinary shares and (b) each of the then issued and outstanding Waldencast Class B ordinary shares will
convert automatically, on a one-for-one basis, into a share of Waldencast plc Class A ordinary shares.
|
(3)
|
Waldencast Long-Term Capital LLC directly holds the Waldencast Class B ordinary shares. The address for Waldencast Long-Term
Capital LLC is 10 Bank Street, Suite 560, White Plains, NY 10606.
|
(4)
|
According to a Schedule 13G filed on March 29, 2021, SPX Equities Gestao de Recursos Ltda shares voting and dispositive power
of 1,786,695 Waldencast Class A ordinary shares. SPX Equities Gestaeo de Recursos Ltda. Is a non-US investment adviser advising upon the shares beneficially owned by several non-US private investment funds, none of which holds more than
5% individually. The filing of the Schedule 13G is not to be construed as an admission that SPX Equities de Recursos Ltda. is, for the purposes of Sections 13(d) and 13(g) of the Exchange Act, the beneficial owner of any Waldencast
Class A ordinary shares covered by the Schedule 13G. The address of SPX Equities Gestao de Recursos Ltda is Rua Humaita, 275, 6 floor, Huamita, CEP 22261-005, Rio de Janeiro, RJ, Brazil.
|
(5)
|
According to a Schedule 13G filed on March 26, 2021, Verde Servicos Internacionais S.A. has voting and dispositive power over
and beneficial ownership of 2,250,000 Waldencast Class A ordinary shares. The address of Verde Servicos Internacionais S.A. is Rua Leopoldo Couto de Magalhaes Jr., 700 11 andar (parte) CEP 04542-000 – Itaim Bibi Sao Sao Paulo/SP –
Brazil.
|
(6)
|
According to a Schedule 13G filed on March 24, 2021, each of Sharp Capital Gestora de Recursos Ltda. (“Sharp Capital) and Ivan
Guetta share voting and dispositive power over and beneficial ownership of 2,497,500 shares of Waldencast Class A ordinary shares. Sharp Capital serves as an investment manager of certain funds that own Waldencast Class A ordinary
shares and Ivan Guetta serves as Chief Executive Officer, Chief Investment Officer, director and control person of Sharp Capital. The address of Sharp Capital Gestora de Recursos Ltda. And Ivan Guetta is Borges de Medeiros Avenue,
Number 633, Office Number 202, Rio de Janeiro, 22430-041, Brazil.
|
•
|
Obagi Hong Kong shall promptly refrain from using the Product Information File, the Specifications and the Confidential
Information of Obagi Cosmeceuticals (each as defined in the Supply Agreement);
|
•
|
Obagi Hong Kong shall return to Obagi Cosmeceuticals all documents relating to the Product Information File,Specifications
and Confidential Information of Obagi Cosmeceuticals. The relevant costs shall be borne by the party who is responsible for the termination or the non-renewal of the Supply Agreement; and
|
•
|
Unless the Supply Agreement is terminated by Obagi Hong Kong due to Obagi Cosmeceuticals’ breach of its obligations related
to the quality of the products, Obagi Cosmeceuticals shall complete the manufacturing of all products covered by firm orders and deliver them to the applicable recipient.
|
•
|
in whole and not in part;
|
•
|
at a price of $0.01 per warrant;
|
•
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
|
•
|
if, and only if, the last reported sale price of the Waldencast plc Class A ordinary shares for any 20 trading days within a
30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders (which we refer to as the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for
adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “— Redeemable Warrants — Public Shareholders’ Warrants — Anti-dilution
Adjustments”).
|
•
|
in whole and not in part;
|
•
|
at $0.10 per public warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able
to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of Waldencast plc Class A ordinary
shares (as defined below) except as otherwise described below;
|
•
|
if, and only if, the Reference Value (as defined above under “Redemption of warrants when the price per Waldencast plc
Class A ordinary share equals or exceeds $18.00”) equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “— Redeemable Warrants — Public Shareholders’ Warrants—Anti-dilution Adjustments”); and
|
•
|
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon
exercise or the exercise price of a warrant as described under the heading “— Redeemable Warrants — Public Shareholders’ Warrants — Anti-dilution Adjustments”), the private placement warrants
must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
|
Redemption Date (period to
expiration of warrants)
|
| |
Fair Market Value of Class A Ordinary Shares
|
||||||||||||||||||||||||
|
≤$10.00
|
| |
$11.00
|
| |
$12.00
|
| |
$13.00
|
| |
$14.00
|
| |
$15.00
|
| |
$16.00
|
| |
$17.00
|
| |
≥$18.00
|
||
60 months
|
| |
0.261
|
| |
0.281
|
| |
0.297
|
| |
0.311
|
| |
0.324
|
| |
0.337
|
| |
0.348
|
| |
0.358
|
| |
0.361
|
57 months
|
| |
0.257
|
| |
0.277
|
| |
0.294
|
| |
0.310
|
| |
0.324
|
| |
0.337
|
| |
0.348
|
| |
0.358
|
| |
0.361
|
54 months
|
| |
0.252
|
| |
0.272
|
| |
0.291
|
| |
0.307
|
| |
0.322
|
| |
0.335
|
| |
0.347
|
| |
0.357
|
| |
0.361
|
51 months
|
| |
0.246
|
| |
0.268
|
| |
0.287
|
| |
0.304
|
| |
0.320
|
| |
0.333
|
| |
0.346
|
| |
0.357
|
| |
0.361
|
48 months
|
| |
0.241
|
| |
0.263
|
| |
0.283
|
| |
0.301
|
| |
0.317
|
| |
0.332
|
| |
0.344
|
| |
0.356
|
| |
0.361
|
45 months
|
| |
0.235
|
| |
0.258
|
| |
0.279
|
| |
0.298
|
| |
0.315
|
| |
0.330
|
| |
0.343
|
| |
0.356
|
| |
0.361
|
42 months
|
| |
0.228
|
| |
0.252
|
| |
0.274
|
| |
0.294
|
| |
0.312
|
| |
0.328
|
| |
0.342
|
| |
0.355
|
| |
0.361
|
39 months
|
| |
0.221
|
| |
0.246
|
| |
0.269
|
| |
0.290
|
| |
0.309
|
| |
0.325
|
| |
0.340
|
| |
0.354
|
| |
0.361
|
36 months
|
| |
0.213
|
| |
0.239
|
| |
0.263
|
| |
0.285
|
| |
0.305
|
| |
0.323
|
| |
0.339
|
| |
0.353
|
| |
0.361
|
33 months
|
| |
0.205
|
| |
0.232
|
| |
0.257
|
| |
0.280
|
| |
0.301
|
| |
0.320
|
| |
0.337
|
| |
0.352
|
| |
0.361
|
30 months
|
| |
0.196
|
| |
0.224
|
| |
0.250
|
| |
0.274
|
| |
0.297
|
| |
0.316
|
| |
0.335
|
| |
0.351
|
| |
0.361
|
27 months
|
| |
0.185
|
| |
0.214
|
| |
0.242
|
| |
0.268
|
| |
0.291
|
| |
0.313
|
| |
0.332
|
| |
0.350
|
| |
0.361
|
24 months
|
| |
0.173
|
| |
0.204
|
| |
0.233
|
| |
0.260
|
| |
0.285
|
| |
0.308
|
| |
0.329
|
| |
0.348
|
| |
0.361
|
21 months
|
| |
0.161
|
| |
0.193
|
| |
0.223
|
| |
0.252
|
| |
0.279
|
| |
0.304
|
| |
0.326
|
| |
0.347
|
| |
0.361
|
18 months
|
| |
0.146
|
| |
0.179
|
| |
0.211
|
| |
0.242
|
| |
0.271
|
| |
0.298
|
| |
0.322
|
| |
0.345
|
| |
0.361
|
15 months
|
| |
0.130
|
| |
0.164
|
| |
0.197
|
| |
0.230
|
| |
0.262
|
| |
0.291
|
| |
0.317
|
| |
0.342
|
| |
0.361
|
12 months
|
| |
0.111
|
| |
0.146
|
| |
0.181
|
| |
0.216
|
| |
0.250
|
| |
0.282
|
| |
0.312
|
| |
0.339
|
| |
0.361
|
9 months
|
| |
0.090
|
| |
0.125
|
| |
0.162
|
| |
0.199
|
| |
0.237
|
| |
0.272
|
| |
0.305
|
| |
0.336
|
| |
0.361
|
6 months
|
| |
0.065
|
| |
0.099
|
| |
0.137
|
| |
0.178
|
| |
0.219
|
| |
0.259
|
| |
0.296
|
| |
0.331
|
| |
0.361
|
3 months
|
| |
0.034
|
| |
0.065
|
| |
0.104
|
| |
0.150
|
| |
0.197
|
| |
0.243
|
| |
0.286
|
| |
0.326
|
| |
0.361
|
0 months
|
| |
—
|
| |
—
|
| |
0.042
|
| |
0.115
|
| |
0.179
|
| |
0.233
|
| |
0.281
|
| |
0.323
|
| |
0.361
|
•
|
acquires an interest in shares of a Code Company that, when taken together with shares in which persons acting in concert
with such person are interested, carry 30% or more of the voting rights of the Code Company; or
|
•
|
who, together with persons acting in concert with such person, is interested in shares that in the aggregate carry not less
than 30% and not more than 50% of the voting rights in the Code Company, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested,
|
|
| |
Cayman Islands
|
| |
Jersey
|
|||
Special Meetings of Stockholders/
Shareholders
|
| |
The directors, the chief executive officer, the secretary or the chairman
of the board of directors of Waldencast may call general meetings, and they shall on a members' requisition forthwith proceed to convene an extraordinary general meeting of Waldencast.
|
| |
Shareholders holding 10% or more of the company’s voting rights and
entitled to vote at the relevant meeting may legally require our directors to call a meeting of shareholders.
|
|||
|
|
| |
|
|||||
|
| |
Waldencast may, but shall not be obliged to, in each year hold a general
meeting as its annual general meeting.
|
| |
The Jersey Financial Services Commission may, at the request of any
officer, secretary, or shareholder, call or direct the calling of an annual general meeting. Failure to call an annual general meeting in accordance with the requirements of the Jersey Companies Law is a criminal offense on the part of
a Jersey company and its directors and secretary.
|
|||
|
| |
|
| |
|
|||
Stockholder/Shareholder
Approval of Business
Combinations
|
| |
Pursuant to the Cayman Islands Companies Act and the Cayman Constitutional
Documents, mergers or consolidations require a special resolution (being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the
extraordinary general meeting). Parties holding certain security interests in the constituent companies must also consent.
|
| |
A sale or disposal of all or substantially all the assets of a Jersey
company must be approved by the board of directors and, only if the articles of association of the company require, by the shareholders in general meeting. A merger involving a Jersey company must be generally documented in a merger
agreement which must be approved by special resolution of that company.
|
|||
|
|
| |
|
|||||
|
All mergers (other than parent/subsidiary mergers) require shareholder
approval — there is no exception for smaller mergers.
|
| |
|
|||||
|
|
| |
|
|||||
|
Where a bidder has acquired 90% or more of the shares in a Cayman Islands
company, it can compel the acquisition of the shares of the remaining shareholders and thereby become the sole shareholder.
|
| |
|
|||||
|
|
| |
|
|||||
|
A Cayman Islands company may also be acquired through a “scheme of
arrangement” sanctioned by a Cayman Islands court and approved by 50%+1 in number and 75% in value of shareholders in attendance and voting at a shareholders’ meeting.
|
| |
A Jersey company may be acquired through a “scheme of arrangement”
sanctioned by the Royal Court of Jersey and approved by a majority in number of shareholders representing 75% of the voting rights of the shareholders (or class of shareholders).
|
|
| |
Cayman Islands
|
| |
Jersey
|
|||
Stockholder/Shareholder Votes for
Routine Matters
|
| |
Under the Cayman Islands Companies Act, routine corporate matters may be
approved by an ordinary resolution (being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting).
|
| |
Under the Jersey Companies Law, certain routine corporate matters may be
approved by either an ordinary resolution (being a resolution passed by a simple majority of the shareholders as being entitled to do so), or a special resolution (being a resolution passed by a two thirds majority unless the articles
of association provide a higher threshold).
|
|||
|
| |
|
| |
|
| ||
Appraisal Rights
|
| |
Minority shareholders that dissent from a merger are entitled to be paid
the fair market value of their shares (subject to limited exceptions), which if necessary may ultimately be determined by the court.
|
| |
No appraisal rights.
|
|||
|
| |
|
| |
|
| |
|
Inspection of Books and Records
|
| |
Shareholders generally do not have any rights to inspect or obtain copies
of the register of shareholders or other corporate records of a company.
|
| |
The register of shareholders and books containing the minutes of general
meetings or of meetings of any class of shareholders of a Jersey company must during business hours be open to the inspection of a shareholder of the company without charge. The register of directors and secretaries must during business
hours (subject to such reasonable restrictions as the company may by its articles of association or in general meeting impose, but so that not less than two hours in each business day be allowed for inspection) be open to the inspection
of a shareholder or director of the company without charge.
|
|||
|
| |
|
| |
|
| |
|
Stockholder/Shareholder Lawsuits
|
| |
In the Cayman Islands, the decision to institute proceedings on behalf of a
company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances.
|
| |
Under Article 141 of the Jersey Companies Law, a shareholder may apply to
court for relief on the ground that the conduct of a company’s affairs, including a proposed or actual act or omission by a company, is “unfairly prejudicial” to the interests of shareholders generally or of some part of shareholders,
including at least the shareholder making the application. Under Article 143 of the Jersey Companies Law (which sets out the types of relief a court may grant in relation to an action brought under Article 141 of the Jersey Companies
Law), the court may make an order regulating the affairs of a company, requiring a company to refrain from doing or continuing to do an act complained of, authorizing civil proceedings and providing for the purchase of shares by a
company or by any of its other shareholders. There may be customary personal law actions available to shareholders which would include certain derivate and other actions to bring proceedings against the directors of the company as well
as the company.
|
|
| |
Cayman Islands
|
| |
Jersey
|
|||
Fiduciary Duties of Directors
|
| |
A director owes fiduciary duties to a company, including to exercise
loyalty, honesty and good faith to the company as a whole.
|
| |
Under the Jersey Companies Law, a director of a Jersey company, in
exercising the director’s powers and discharging the director’s duties, has a fiduciary duty to act honestly and in good faith with a view to the best interests of the company; and a duty of care to exercise the care, diligence and
skill that a reasonably prudent person would exercise in comparable circumstances.
|
|||
|
|
| |
|
| |
|
||
|
Such duties are owed to the company but may be owed direct to creditors or
shareholders in certain limited circumstances.
|
| |
Customary law is also an important source of law in the area of directors’
duties in Jersey as it expands upon and provides a more detailed understanding of the general duties and obligations of directors. The Jersey courts view English common law as highly persuasive in this area. In summary, the following
duties will apply as manifestations of the general fiduciary duty under the Jersey Companies Law: a duty to act in good faith and in what he or she bona fide considers to be the best interests of the company; a duty to exercise powers
for a proper purpose; a duty to avoid any actual or potential conflict between his or her own and the company’s interests; and a duty to account for profits and not take personal profit from any opportunities arising from his or her
directorship, even if he or she is acting honestly and for the good of the company. However, the articles of association of a company may permit the director to be personally interested in arrangements involving the company (subject to
the requirement to have disclosed such interest).
|
|||||
|
|
| |
|
| |
|
||
|
|
| |
Under the Proposed Constitutional Document, Waldencast plc renounces any
interest or expectancy in, or in being offered an opportunity to participate in, in any potential transaction or matter that may be a corporate opportunity for Waldencast plc, on the one hand, and one of its officers or directors, on
the other, or that may be a corporate opportunity for both Waldencast plc and one of its officers or directors.
|
|||||
|
|
| |
|
| |
|
||
|
|
| |
Under the articles of association, directors who are in any way, whether
directly or indirectly, interested in a contract or proposed contract with Waldencast must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any
contract or proposed contract notwithstanding his interest; provided that, in exercising any such vote, such director’s duties remain as described above.
|
|
| |
Cayman Islands
|
| |
Jersey
|
|||
Indemnification of Directors and
Officers and Limitations on Director’s Liability
|
| |
A Cayman Islands company generally may indemnify its directors or officers
except with regard to fraud, willful neglect or willful default.
|
| |
The Jersey Companies Law does not contain any provision permitting Jersey
companies to limit the liabilities of directors for breach of fiduciary duty.
|
|||
|
|
| |
|
| ||||
|
Liability of directors may be unlimited, except with regard to their own
fraud, willful neglect or willful default.
|
| |
However, a Jersey company may exempt from liability, and indemnify
directors and officers for, liabilities:
• incurred in defending any civil or criminal
legal proceedings where:
• the person is either acquitted or receives a
judgment in their favor;
• the proceedings are discontinued other than
by reason of such person (or someone on their behalf) giving some benefit or suffering some detriment; or
• the proceedings are settled on terms that
such person (or someone on their behalf) gives some benefit or suffers some detriment but in the opinion of a majority of the disinterested directors, the person was substantially successful on the merits in the person’s resistance to
the proceedings;
• incurred to anyone other than to the company
if the person acted in good faith with a view to the best interests of the company;
• incurred in connection with an application
made to the court for relief from liability for negligence, default, breach of duty, or breach of trust under Article 212 of the Jersey Companies Law in which relief is granted to the person by the court; or
• incurred in a case in which the company
normally maintains insurance for persons other than directors.
|
|||||
|
| |
|
| |
|
| |
|
Amendments to Governing Documents
|
| |
Pursuant to the Cayman Companies Act and the Cayman Constitutional
Documents, the Cayman Constitutional Documents may only be amended by special resolution (being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon
and who vote at the extraordinary general meeting).
|
| |
The memorandum of association and articles of association of a Jersey
company may only be amended by special resolution (being a two-third majority if the articles of association of the company do not specify a greater majority) passed by shareholders in general meeting or by written resolution signed by
all the shareholders entitled to vote.
|
•
|
1% of the total number of Waldencast plc Class A ordinary shares then outstanding; or
|
•
|
the average weekly reported trading volume of Waldencast plc’s Class A ordinary shares during the four calendar weeks
preceding the filing of a notice on Form 144 with respect to the sale.
|
•
|
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
•
|
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
•
|
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the
preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
|
•
|
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting
its status as an entity that is not a shell company.
|
•
|
the applicable U.S. courts had jurisdiction over the case, as recognized under Jersey law;
|
•
|
the judgment is given on the merits and is final, conclusive and non-appealable;
|
•
|
the judgment relates to the payment of a sum of money, not being taxes, fines or similar governmental penalties;
|
•
|
the defendant is not immune under the principles of public international law;
|
•
|
the same matters at issue in the case were not previously the subject of a judgment or disposition in a separate court;
|
•
|
the judgment was not obtained by fraud; and
|
•
|
the recognition and enforcement of the judgment is not contrary to public policy in Jersey.
|
|
| |
Page
|
| | ||
Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| |
|
| |
Page
|
Condensed Financial Statements (UNAUDITED)
|
| |
|
| | ||
| | ||
| | ||
| | ||
| |
|
| |
Page
|
| | ||
| | ||
| | ||
| | ||
| | ||
| |
|
| |
Page
|
| | ||
| | ||
| | ||
| | ||
| |
Assets
|
| |
|
Deferred offering cost
|
| |
$166,792
|
Total Assets
|
| |
$166,792
|
|
| |
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
| |
|
Current liabilities:
|
| |
|
Accrued offering costs
|
| |
$177,743
|
Total current liabilities
|
| |
177,743
|
|
| |
|
Commitments and Contingencies
|
| |
|
|
| |
|
Shareholder’s Deficit:
|
| |
|
Preferred shares, $0.0001 par value; 5,000,000 shares authorized; none outstanding
|
| |
—
|
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none outstanding
|
| |
—
|
Class B ordinary shares, $0.0001 par value; 50,000,000
shares authorized; 0 shares issued and outstanding as of December 31, 2020
|
| |
—
|
Additional paid-in capital
|
| |
—
|
Accumulated deficit
|
| |
(10,951)
|
Total Shareholder’s Deficit
|
| |
(10,951)
|
TOTAL LIABILITIES AND SHAREHOLDER’S DEFICIT
|
| |
$166,792
|
|
| |
Class B Ordinary Shares
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Shareholder’s
Deficit
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of December 8, 2020 (inception)
|
| |
—
|
| |
$—
|
| |
$—
|
| |
$ —
|
| |
$ —
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,951)
|
| |
(10,951)
|
Balance as of December 31, 2020
|
| |
—
|
| |
$—
|
| |
$—
|
| |
$(10,951)
|
| |
$(10,951)
|
Cash Flows from Operating Activities:
|
| |
|
Net loss
|
| |
$(10,951)
|
Changes in operating assets and liabilities:
|
| |
|
Accrued offering costs
|
| |
10,951
|
Net cash used in operating activities
|
| |
—
|
|
| |
|
Net Change in Cash
|
| |
—
|
|
| |
|
Cash – Beginning of period
|
| |
—
|
Cash – End of period
|
| |
$
—
|
|
| |
|
Supplemental disclosure of cash flow information:
|
| |
|
Deferred offering costs included in accrued offering costs
|
| |
$166,792
|
•
|
in whole and not in part;
|
•
|
at a price of $0.01
per Public Warrant;
|
•
|
upon not less than 30
days’ prior written notice of redemption to each warrant holder and
|
•
|
if, and only if, the reported last sale price of the Class A ordinary shares for any 20 trading days within a 30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
|
•
|
in whole and not in part;
|
•
|
at $0.10 per
warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their
warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A ordinary shares;
|
•
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and
|
•
|
if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described
above.
|
|
| |
September 30,
2021
(Unaudited)
|
| |
December 31,
2020
|
Assets
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
Cash
|
| |
$ 335,058
|
| |
$ —
|
Prepaid expenses - current
|
| |
219,325
|
| |
|
Deferred offering costs associated with initial private offering
|
| |
|
| |
166,792
|
Total current assets
|
| |
$ 554,383
|
| |
$166,792
|
Prepaid expenses — non-current portion
|
| |
117,217
|
| |
|
Investment held in Trust Account
|
| |
345,030,985
|
| |
|
Total assets
|
| |
$345,702,585
|
| |
$166,792
|
Liabilities and Shareholders’ Deficit
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
Accounts payable and accrued expenses
|
| |
$66,739
|
| |
$177,743
|
Due to related party
|
| |
65,000
|
| |
|
Total current liabilities
|
| |
131,739
|
| |
177,743
|
Warrant liabilities
|
| |
14,180,333
|
| |
|
Deferred legal fees
|
| |
683,919
|
| |
|
Forward purchase agreement liabilities
|
| |
8,991,000
|
| |
|
Deferred underwriters’ discount
|
| |
12,075,000
|
| |
|
Total liabilities
|
| |
36,061,991
|
| |
177,743
|
Commitments
|
| |
|
| |
|
Class A ordinary shares subject to possible redemption, 34,500,000 and no shares at
redemption value at September 30, 2021 and December 31, 2020, respectively
|
| |
345,000,000
|
| |
|
Shareholders’ deficit:
|
| |
|
| |
|
Preference shares, $0.0001 par value; 5,000,000
shares authorized; none issued and outstanding
|
| |
|
| |
—
|
Class A ordinary shares, $0.0001 par value; 500,000,000
shares authorized; no shares issued and outstanding (excluding 34,500,000 and no shares subject to redemption) at September 30,
2021 and December 31, 2020, respectively
|
| |
|
| |
—
|
Class B ordinary shares, $0.0001 par value; 50,000,000
shares authorized; 8,625,000 and no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
|
| |
863
|
| |
—
|
Additional paid-in capital
|
| |
|
| |
—
|
Accumulated deficit
|
| |
(35,360,269)
|
| |
(10,951)
|
Total shareholders’ deficit
|
| |
(35,359,406)
|
| |
(10,951)
|
Total liabilities and shareholders’ deficit
|
| |
$345,702,585
|
| |
$166,792
|
|
| |
Three months
ended
September 30,
2021
|
| |
Nine months
ended
September 30,
2021
|
Formation and operating costs
|
| |
$
645,123
|
| |
$
964,205
|
Loss from operations
|
| |
(645,123)
|
| |
(964,205)
|
Other income (expense):
|
| |
|
| |
|
Interest income on operating account
|
| |
256
|
| |
698
|
Interest income on marketable securities held in Trust Account
|
| |
16,609
|
| |
30,985
|
Offering expenses related to warrant issuance
|
| |
|
| |
(719,201)
|
Change in fair value of forward purchase agreement liabilities
|
| |
3,330,000
|
| |
2,664,000
|
Change in fair value of warrant liabilities
|
| |
5,055,667
|
| |
4,009,667
|
Total other income
|
| |
8,402,532
|
| |
5,986,149
|
Net income
|
| |
$ 7,757,409
|
| |
$ 5,021,944
|
Weighted average shares outstanding, Class A ordinary
shares subject to possible redemption
|
| |
34,500,000
|
| |
24,895,604
|
Basic and diluted net income per share, Class A ordinary
shares subject to possible redemption
|
| |
$ 0.18
|
| |
$ 0.15
|
Weighted average shares outstanding, Non-redeemable Class B ordinary shares
|
| |
8,625,000
|
| |
7,977,564
|
Basic and diluted net income per share, Non-redeemable Class B ordinary shares
|
| |
$ 0.18
|
| |
$
0.15
|
|
| |
Ordinary Shares
|
| |
|
| |
|
| |
|
|||||||||
|
| |
Class A
|
| |
Class B
|
| |
Additional
Paid-In
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Shareholders’
Deficit
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of December 31, 2020
|
| |
|
| |
$
|
| |
—
|
| |
$ —
|
| |
$ —
|
| |
$ (10,951)
|
| |
$(10,951)
|
Issuance of Founder Shares
|
| |
—
|
| |
|
| |
8,625,000
|
| |
863
|
| |
24,137
|
| | | |
25,000
|
|
Sale of Units in Initial Public Offering, less initial fair
value of public warrants and forward purchase agreements, net of offering expenses, plus excess cash received over initial fair value of private warrants
|
| |
34,500,000
|
| |
3,450
|
| |
—
|
| |
|
| |
304,601,152
|
| | | |
304,604,602
|
|
Class A ordinary shares subject to possible redemption
|
| |
(34,500,000)
|
| |
(3,450)
|
| |
—
|
| |
|
| |
(304,625,289)
|
| |
(40,371,261)
|
| |
(345,000,000)
|
Net loss
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(1,183,957)
|
| |
(1,183,957)
|
Balance as of March 31, 2021, as restated
|
| | | |
$
|
| |
8,625,000
|
| |
$863
|
| |
$
|
| |
$(41,566,169)
|
| |
$ (41,565,306)
|
|
Net loss
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(1,551,509)
|
| | (1,551,509) |
Balance as of June 30, 2021, as restated
|
| |
|
| |
$
|
| |
8,625,000
|
| |
$863
|
| |
$
|
| |
$(43,117,678)
|
| |
$ (43,116,815)
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
7,757,409
|
| |
7,757,409
|
Balance as of September 30, 2021
|
| | | |
$
|
| |
8,625,000
|
| |
$863
|
| |
$
|
| |
$(35,360,269)
|
| |
$ (35,359,406)
|
|
| |
Nine months ended
September 30,
2021
|
Cash Flows from Operating Activities:
|
| |
|
Net income
|
| |
$ 5,021,944
|
Adjustments to reconcile net income to net cash used in operating activities:
|
| |
|
Interest earned on Trust Account
|
| |
(30,985)
|
Change in fair value of warrant liabilities
|
| |
(4,009,667)
|
Change in fair value of forward purchase agreement liabilities
|
| |
(2,664,000)
|
Offering costs allocated to warrants
|
| |
719,201
|
Changes in current assets and current liabilities:
|
| |
|
Prepaid assets
|
| |
(336,542)
|
Accounts payable
|
| |
66,739
|
Due to related party
|
| |
65,000
|
Net cash used in operating activities
|
| |
(1,168,310)
|
Cash Flows from Investing Activities:
|
| |
|
Investment of cash into Trust Account
|
| |
(345,000,000)
|
Net cash used in investing activities
|
| |
(345,000,000)
|
Cash Flows from Financing Activities:
|
| |
|
Proceeds from issuance of Founder Shares
|
| |
25,000
|
Proceeds from Initial Public Offering, net of underwriters’ discount
|
| |
338,100,000
|
Proceeds from issuance of Private Placement Warrants
|
| |
8,900,000
|
Payments of offering costs
|
| |
(521,631)
|
|
| |
|
Net cash provided by financing activities
|
| |
346,503,369
|
Net Change in Cash
|
| |
335,058
|
Cash — Beginning
|
| |
—
|
Cash — Ending
|
| |
$ 335,058
|
Supplemental Disclosure of Non-cash Financing Activities:
|
| |
|
Initial value of Class A ordinary shares subject to possible redemption
|
| |
$ 345,000,000
|
Accretion of Class A ordinary shares to redemption value
|
| |
31,410,398
|
Initial value of warrant liabilities
|
| |
18,190,000
|
Deferred underwriters’ discount payable charged to additional paid-in capital
|
| |
12,075,000
|
Initial value of forward purchase agreement liabilities
|
| |
11,655,000
|
|
| |
As Previously
Reported
|
| |
Adjustment
|
| |
As Restated
|
Balance Sheet as of March 31, 2021
|
| |
|
| |
|
| |
|
Class A ordinary shares subject to possible redemption
|
| |
$298,434,690
|
| |
$46,565,310
|
| |
$345,000,000
|
Class A ordinary shares, $0.0001 par value
|
| |
466
|
| |
(466)
|
| |
|
Class B ordinary shares, $0.0001 par value
|
| |
863
|
| |
|
| |
863
|
Additional Paid-in Capital
|
| |
6,193,583
|
| |
(6,193,583)
|
| |
|
Accumulated Deficit
|
| |
(1,194,908)
|
| |
(40,371,261)
|
| |
(41,566,169)
|
Total Shareholder’s Equity (Deficit)
|
| |
$
5,000,004
|
| |
$(46,565,310)
|
| |
$ (41,565,306)
|
Number of shares subject to redemption
|
| |
29,843,469
|
| |
4,656,531
|
| |
34,500,000
|
Income Statement as of March 31, 2021
|
| |
|
| |
|
| |
|
Net loss
|
| |
$ (1,183,957)
|
| |
$
|
| |
$ (1,183,957)
|
Weighted average Redeemable Class A ordinary shares
|
| |
29,885,095
|
| |
(24,845,769)
|
| |
5,039,326
|
Basic and diluted net loss per share, redeemable Class A
ordinary shares
|
| |
0.00
|
| |
$ (0.10)
|
| |
$ (0.10)
|
Weighted average non-redeemable Class B ordinary shares
|
| |
9,342,874
|
| |
(2,703,829)
|
| |
6,639,045
|
Basic and diluted net loss per share, non-redeemable
Class B ordinary shares
|
| |
(0.13)
|
| |
$ 0.03
|
| |
$
(0.10)
|
Balance Sheet as of June 30, 2021
|
| |
|
| |
|
| |
|
Class A ordinary shares subject to possible redemption
|
| |
$296,883,180
|
| |
$48,116,820
|
| |
$345,000,000
|
Class A ordinary shares, $0.0001 par value
|
| |
482
|
| |
(482)
|
| |
|
Class B ordinary shares, $0.0001 par value
|
| |
863
|
| |
|
| |
863
|
Additional Paid-in Capital
|
| |
7,745,077
|
| |
(7,745,077)
|
| |
|
Accumulated Deficit
|
| |
(2,746,416)
|
| |
(40,371,262)
|
| |
(43,117,678)
|
Total Shareholder’s Equity (Deficit)
|
| |
$
5,000,006
|
| |
$(48,116,821)
|
| |
$ (43,116,815)
|
Number of shares subject to redemption
|
| |
29,688,318
|
| |
4,811,682
|
| |
34,500,000
|
Income Statement as of June 30, 2021
|
| |
|
| |
|
| |
|
Three Months
|
| |
|
| |
|
| |
|
Net loss
|
| |
$ (1,551,508)
|
| |
$
|
| |
$ (1,551,508)
|
Weighted average Redeemable Class A ordinary shares
|
| |
29,483,469
|
| |
4,656,531
|
| |
34,500,000
|
Basic and diluted net loss per share, redeemable Class A
ordinary shares
|
| |
$ 0.00
|
| |
(0.04)
|
| |
(0.04)
|
Weighted average non-redeemable Class B ordinary shares
|
| |
13,281,531
|
| |
(4,656,531)
|
| |
8,625,000
|
Basic and diluted net loss per share, non-redeemable
Class B ordinary shares
|
| |
(0.12)
|
| |
0.08
|
| |
(0.04)
|
Six Months
|
| |
|
| |
|
| |
|
Net loss
|
| |
$ (2,735,465)
|
| |
$
|
| |
$ (2,735,465)
|
Weighted average Redeemable Class A ordinary shares
|
| |
29,849,073
|
| |
(9,915,740)
|
| |
19,933,333
|
Basic and diluted net loss per share, redeemable Class A
ordinary shares
|
| |
0.00
|
| |
(0.10)
|
| |
(0.10)
|
Weighted average non-redeemable Class B ordinary shares
|
| |
11,322,835
|
| |
(3,679,779)
|
| |
7,643,056
|
Basic and diluted net loss per share, non-redeemable
Class B ordinary shares
|
| |
(0.24)
|
| |
0.14
|
| |
(0.10)
|
Gross proceeds
|
| |
$345,000,000
|
Less:
|
| |
|
Proceeds allocated to public warrants
|
| |
(11,960,000)
|
Issuance costs related to Class A ordinary shares
|
| |
(19,450,398)
|
Plus:
|
| |
|
Accretion of carrying value to redemption value
|
| |
31,410,398
|
Contingently redeemable Class A ordinary shares
|
| |
$345,000,000
|
|
| |
For the
Three Months
ended
September 30,
2021
|
| |
For the
Nine Months
ended
September 30,
2021
|
Ordinary shares subject to possible redemption
|
| |
|
| |
|
Numerator:
|
| |
|
| |
|
Net income allocable to Class A ordinary shares subject to possible redemption
|
| |
$ 6,205,927
|
| |
$ 3,803,233
|
Denominator:
|
| |
|
| |
|
Weighted Average Redeemable Class A Ordinary shares, Basic and Diluted
|
| |
34,500,000
|
| |
24,895,604
|
Basic and Diluted net income per share, Redeemable Class A Ordinary shares
|
| |
0.18
|
| |
$
0.15
|
Non-Redeemable Ordinary shares
|
| |
|
| |
|
Numerator:
|
| |
|
| |
|
Net income allocable to Class B ordinary shares not subject to redemption
|
| |
$ 1,551,482
|
| |
$ 1,218,711
|
Denominator:
|
| |
|
| |
|
Weighted Average Non-Redeemable Ordinary shares, Basic and Diluted
|
| |
8,625,000
|
| |
7,977,564
|
Basic and diluted net income per share, ordinary shares
|
| |
0.18
|
| |
$ 0.15
|
|
| |
September 30,
2021
|
| |
Quoted Prices
In Active
Markets
(Level 1)
|
| |
Significant
Other
Observable
Inputs (Level 2)
|
| |
Significant
Other
Unobservable
Inputs (Level 3)
|
Description
|
| |
|
| |
|
| |
|
| |
|
Assets:
|
| |
|
| |
|
| |
|
| |
|
Marketable Securities held in Trust Account
|
| |
$345,030,985
|
| |
$345,030,985
|
| |
$—
|
| |
$ —
|
Liabilities
|
| |
|
| |
|
| |
|
| |
|
Forward purchase agreement liabilities
|
| |
(8,991,000)
|
| |
—
|
| |
—
|
| |
(8,991,000)
|
Warrant liabilities
|
| |
(14,180,333)
|
| |
(9,315,000)
|
| |
—
|
| |
(4,865,333)
|
|
| |
$321,859,652
|
| |
$335,715,985
|
| |
$—
|
| |
$(13,856,333)
|
|
| |
At
March 18,
2021
(Initial
Measurement)
|
| |
At
September 30,
2021
|
Share price
|
| |
10.00
|
| |
$10.00
|
Strike price
|
| |
11.50
|
| |
$11.50
|
Term (in years)
|
| |
6.00
|
| |
6.00
|
Volatility
|
| |
12.5%
|
| |
12.3%
|
Risk-free rate
|
| |
1.11%
|
| |
1.15%
|
Dividend yield
|
| |
0.0%
|
| |
0.0%
|
|
| |
Public
|
| |
Private
Placement
|
| |
Warrant
Liabilities
|
Fair value as of December 31, 2020
|
| |
$
|
| |
$
|
| |
$
|
Initial measurement on March 18, 2021
|
| |
11,960,000
|
| |
6,230,000
|
| |
18,190,000
|
Change in fair value of warrant liabilities
|
| |
230,000
|
| |
118,666
|
| |
348,666
|
Fair value as of March 31, 2021
|
| |
$12,190,000
|
| |
$6,348,666
|
| |
$18,538,666
|
Change in fair value of warrant liabilities
|
| |
460,000
|
| |
237,334
|
| |
697,334
|
Fair value as of June 30, 2021
|
| |
$12,650,000
|
| |
$6,586,000
|
| |
$19,236,000
|
Change in fair value of warrant liabilities
|
| |
(3,335,000)
|
| |
(1,720,667)
|
| |
(5,055,667)
|
Fair value as of September 30, 2021
|
| |
$
9,315,000
|
| |
$ 4,865,333
|
| |
$
14,180,333
|
|
| |
FPA Liabilities
|
Derivative liability — forward purchase agreement at March 18, 2021
|
| |
$ 11,655,000
|
Change in fair value of derivative liability — forward purchase agreement
|
| |
|
Derivative liability — forward purchase agreement at March 31, 2021
|
| |
$ 11,655,000
|
Change in fair value of derivative liability — forward purchase agreement
|
| |
666,000
|
Derivative liability — forward purchase agreement at June 30, 2021
|
| |
$ 12,321,000
|
Change in fair value of derivative liability — forward purchase agreement
|
| |
(3,330,000)
|
Derivative liability — forward purchase agreement at September 30, 2021
|
| |
$
8,991,000
|
|
| |
For the years ended
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Net revenue
|
| |
84,145
|
| |
117,085
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
19,969
|
| |
26,687
|
Selling, general and administrative
|
| |
54,794
|
| |
62,762
|
Research and development
|
| |
3,929
|
| |
3,484
|
Depreciation and amortization
|
| |
13,426
|
| |
12,940
|
Total operating expenses
|
| |
92,118
|
| |
105,873
|
Operating (loss) income
|
| |
(7,973)
|
| |
11,212
|
Interest expense
|
| |
6,281
|
| |
6,834
|
Other expense, net
|
| |
11
|
| |
147
|
(Loss) income before income taxes
|
| |
(14,265)
|
| |
4,231
|
Income tax benefit
|
| |
(5,094)
|
| |
(1,589)
|
Net (loss) income
|
| |
(9,171)
|
| |
5,820
|
Other comprehensive income (loss)—Foreign currency
translation adjustments, net of tax
|
| |
16
|
| |
(9)
|
Comprehensive (loss) income
|
| |
$(9,155)
|
| |
$5,811
|
|
| |
|
| |
|
Net (loss) income per share of common stock—Basic and diluted
|
| |
$(1.14)
|
| |
$0.73
|
Weighted average shares of common stock outstanding—Basic and diluted (Note 1)
|
| |
8,000,002
|
| |
8,000,002
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Income (Loss)
|
| |
Total
Shareholder's
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| |||||||||||
BALANCE—January 1, 2019 (Note 1)
|
| |
8,000,002
|
| |
$4,000
|
| |
$96,055
|
| |
$(5,758)
|
| |
$—
|
| |
$94,297
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
5,820
|
| |
—
|
| |
5,820
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(9)
|
| |
(9)
|
Dividends paid (Note 10)
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,575)
|
| |
—
|
| |
(1,575)
|
BALANCE—December 31, 2019
|
| |
8,000,002
|
| |
4,000
|
| |
96,055
|
| |
(1,513)
|
| |
(9)
|
| |
98,533
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(9,171)
|
| |
—
|
| |
(9,171)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
16
|
| |
16
|
Non-cash contribution of trademarks
|
| |
—
|
| |
—
|
| |
4,058
|
| |
—
|
| |
—
|
| |
4,058
|
Dividends paid (Note 10)
|
| |
—
|
| |
—
|
| |
—
|
| |
(2,044)
|
| |
—
|
| |
(2,044)
|
BALANCE—December 31, 2020
|
| |
8,000,002
|
| |
$4,000
|
| |
$100,113
|
| |
$(12,728)
|
| |
$7
|
| |
$91,392
|
|
| |
For the years ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
| |
|
| |
|
Net (loss) income
|
| |
$(9,171)
|
| |
$5,820
|
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
|
| |
|
| |
|
Depreciation and amortization
|
| |
13,426
|
| |
12,940
|
Amortization of debt issuance costs
|
| |
798
|
| |
731
|
Deferred income taxes
|
| |
(4,743)
|
| |
(1,590)
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
(961)
|
| |
(7,166)
|
Inventories
|
| |
1,593
|
| |
(8,922)
|
Prepaid expenses
|
| |
(2,150)
|
| |
(1,722)
|
Other current assets and other assets
|
| |
(998)
|
| |
(1,050)
|
Accrued interest—related party
|
| |
—
|
| |
(1,959)
|
Accounts payable
|
| |
(7,523)
|
| |
5,222
|
Other current liabilities and other liabilities
|
| |
2,478
|
| |
1,472
|
Net cash (used in) provided by operating activities
|
| |
(7,251)
|
| |
3,776
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
| |
|
| |
|
Capital expenditure on intangible assets
|
| |
(652)
|
| |
(788)
|
Capital expenditure on property and equipment
|
| |
(1,235)
|
| |
—
|
Net cash used in investing activities
|
| |
(1,887)
|
| |
(788)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
| |
|
| |
|
Payment of dividends
|
| |
(2,044)
|
| |
(1,575)
|
Proceeds from revolving credit facility
|
| |
29,000
|
| |
47,000
|
Payments of revolving credit facility
|
| |
(9,000)
|
| |
(43,000)
|
Repayment of term loan
|
| |
(9,370)
|
| |
(9,000)
|
Proceeds from PPP Loan
|
| |
6,750
|
| |
—
|
Payment of debt issuance costs
|
| |
(1,017)
|
| |
(239)
|
Net cash provided by (used in) financing activities
|
| |
14,319
|
| |
(6,814)
|
CHANGE IN CASH AND CASH EQUIVALENTS
|
| |
5,181
|
| |
(3,826)
|
CASH AND CASH EQUIVALENTS—Beginning of year
|
| |
3,391
|
| |
7,217
|
CASH AND CASH EQUIVALENTS—End of year
|
| |
8,572
|
| |
3,391
|
SUPPLEMENTAL CASH FLOW DATA:
|
| |
|
| |
|
Income taxes paid
|
| |
$9
|
| |
$50
|
Interest paid-related party
|
| |
$—
|
| |
$1,959
|
Interest paid
|
| |
$5,449
|
| |
$6,055
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
| |
|
| |
|
Capital expenditures in accounts payable
|
| |
$186
|
| |
$—
|
Capital contribution of trademarks
|
| |
$4,058
|
| |
$—
|
1.
|
DESCRIPTION OF BUSINESS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
| |
Estimated Useful Lives
|
Machinery equipment
|
| |
3 years
|
Capital lease equipment
|
| |
3 years
|
Leasehold improvements
|
| |
Lesser of useful life or term of lease
|
•
|
Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting
entity at the measurement date.
|
•
|
Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the asset or liability.
|
•
|
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable
inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
3.
|
REVENUE
|
|
| |
Year ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Revenue by Sales Channel
|
| |
|
| |
|
Medical
|
| |
$82,532
|
| |
$114,585
|
Clinical
|
| |
1,613
|
| |
2,500
|
Total:
|
| |
$84,145
|
| |
$117,085
|
|
| |
|
| |
|
|
| |||||
Revenue by Geographic Region
|
| |
|
| |
|
North America
|
| |
$55,389
|
| |
$85,025
|
Asia Pacific
|
| |
16,696
|
| |
20,496
|
Rest of the World
|
| |
6,156
|
| |
5,225
|
Net product sales
|
| |
$78,241
|
| |
$110,746
|
Asia Pacific Royalties
|
| |
5,904
|
| |
6,339
|
Total:
|
| |
$84,145
|
| |
$117,085
|
•
|
Identify the customer contract;
|
•
|
Identify the performance obligations in the contract;
|
•
|
Determine the transaction price;
|
•
|
Allocate the transaction price to the performance obligations in the contract; and
|
•
|
Recognize revenue as the performance obligations are satisfied.
|
|
| |
Year ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Selling, general and administrative
|
| |
$3,545
|
| |
$5,426
|
4.
|
ACCOUNTS RECEIVABLE, NET
|
5.
|
INVENTORIES
|
|
| |
As of December 31,
|
|||
|
| |
2020
|
| |
2019
|
Work in process
|
| |
$1,937
|
| |
$1,847
|
Finished goods
|
| |
12,024
|
| |
13,306
|
Goods in transit
|
| |
19
|
| |
420
|
Total
|
| |
$13,980
|
| |
$15,573
|
6.
|
PROPERTY AND EQUIPMENT—NET
|
|
| |
As of December 31,
|
|||
|
| |
2020
|
| |
2019
|
Computer software and website development costs
|
| |
$1,795
|
| |
$456
|
Other property and equipment
|
| |
93
|
| |
11
|
Total property and equipment
|
| |
1,888
|
| |
467
|
Less accumulated depreciation
|
| |
(266)
|
| |
(148)
|
Property and equipment, net
|
| |
$1,622
|
| |
$319
|
7.
|
INTANGIBLE ASSETS—NET
|
|
| |
Weighted
Average
Useful
Lives (Years)
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net
Carrying
Amount
|
Trademarks
|
| |
10
|
| |
$45,240
|
| |
$(13,207)
|
| |
$32,033
|
Customer lists
|
| |
10
|
| |
39,370
|
| |
(12,467)
|
| |
26,903
|
Supply agreement
|
| |
10
|
| |
25,570
|
| |
(8,097)
|
| |
17,473
|
Developed technology
|
| |
10
|
| |
22,863
|
| |
(7,260)
|
| |
15,603
|
Patents
|
| |
20
|
| |
85
|
| |
(3)
|
| |
82
|
Total
|
| |
|
| |
$133,128
|
| |
$(41,034)
|
| |
$92,094
|
|
| |
Weighted
Average
Useful
Lives (Years)
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net
Carrying
Amount
|
Trademarks
|
| |
10
|
| |
$40,615
|
| |
$(8,729)
|
| |
$31,886
|
Customer lists
|
| |
10
|
| |
39,370
|
| |
(8,530)
|
| |
30,840
|
Supply agreement
|
| |
10
|
| |
25,570
|
| |
(5,540)
|
| |
20,030
|
Developed technology
|
| |
10
|
| |
22,863
|
| |
(4,927)
|
| |
17,936
|
Total
|
| |
|
| |
$128,418
|
| |
$(27,726)
|
| |
$100,692
|
Years Ending December 31
|
| |
|
2021
|
| |
$13,426
|
2022
|
| |
13,423
|
2023
|
| |
13,423
|
2024
|
| |
13,260
|
2025
|
| |
13,216
|
Thereafter
|
| |
25,346
|
|
| |
$92,094
|
8.
|
OTHER CURRENT LIABILITIES
|
|
| |
As of December 31,
|
|||
|
| |
2020
|
| |
2019
|
Accrued salaries and related expenses
|
| |
$5,811
|
| |
5,352
|
Accrued distribution fees
|
| |
2,327
|
| |
472
|
Accrued interest
|
| |
111
|
| |
77
|
Other
|
| |
258
|
| |
289
|
Total
|
| |
$8,507
|
| |
6,190
|
9.
|
DEBT
|
(in thousands)
|
| |
|
| |
As of December 31,
|
|||
|
| |
Maturity Date
|
| |
2020
|
| |
2019
|
Term Loan
|
| |
December 2023
|
| |
$71,630
|
| |
$81,000
|
Revolving Credit Facility
|
| |
December 2023
|
| |
39,000
|
| |
19,000
|
PPP Loan
|
| |
May 2022
|
| |
6,750
|
| |
—
|
Unamortized debt issuance costs
|
| |
|
| |
(2,483)
|
| |
(2,264)
|
Net carrying amount
|
| |
|
| |
114,897
|
| |
97,736
|
Less: Current portion of long-term debt
|
| |
|
| |
(47,034)
|
| |
(27,307)
|
Total long-term portion
|
| |
|
| |
$67,863
|
| |
$70,429
|
Year Ending December 31,
|
| |
|
2021
|
| |
$48,000
|
2022
|
| |
15,750
|
2023
|
| |
53,630
|
Total unpaid principal
|
| |
$117,380
|
10.
|
SHAREHOLDER’S EQUITY
|
11.
|
INCOME TAX BENEFIT
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Income (loss) before income taxes:
|
| |
|
| |
|
Federal
|
| |
$(20,652)
|
| |
$(6,891)
|
Foreign
|
| |
6,387
|
| |
11,122
|
Total
|
| |
$(14,265)
|
| |
$4,231
|
|
| |
As of December 31,
|
|||
Current provision:
|
| |
2020
|
| |
2019
|
Federal
|
| |
$(363)
|
| |
$84
|
State
|
| |
(20)
|
| |
(83)
|
Foreign
|
| |
32
|
| |
—
|
|
| |
(351)
|
| |
1
|
Deferred expense:
|
| |
|
| |
|
Federal
|
| |
(3,915)
|
| |
(1,471)
|
State
|
| |
(828)
|
| |
(119)
|
Foreign
|
| |
—
|
| |
—
|
|
| |
(4,743)
|
| |
(1,590)
|
Net income tax provision
|
| |
$(5,094)
|
| |
$(1,589)
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Income tax benefit at Cayman Islands statutory rate
|
| |
0.0%
|
| |
0.0%
|
U.S./foreign tax rate differential
|
| |
30.1%
|
| |
(34.1%)
|
State income tax benefit, net of federal benefit
|
| |
4.7%
|
| |
(4.0%)
|
Permanent Items
|
| |
(0.6%)
|
| |
2.4%
|
True-Ups
|
| |
0.0%
|
| |
(0.5%)
|
Tax credits
|
| |
1.4%
|
| |
(2.4%)
|
Other
|
| |
0.0%
|
| |
1.0%
|
Total income tax expense (benefit)
|
| |
35.6%
|
| |
(37.6%)
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Deferred tax assets:
|
| |
|
| |
|
Accrued interest to foreign related parties
|
| |
$509
|
| |
$331
|
Intangibles
|
| |
2,434
|
| |
2,059
|
Formation costs
|
| |
1,807
|
| |
1,972
|
Net operating losses
|
| |
4,050
|
| |
625
|
Other temporary differences
|
| |
876
|
| |
554
|
Accrued compensation
|
| |
694
|
| |
466
|
R&D tax credits
|
| |
495
|
| |
191
|
Non-deductible interest carryover
|
| |
1,519
|
| |
1,146
|
Total deferred tax assets
|
| |
12,384
|
| |
7,344
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Deferred tax liabilities:
|
| |
|
| |
|
Goodwill
|
| |
(1,475)
|
| |
(1,484)
|
Fixed asset basis
|
| |
(308)
|
| |
(1)
|
Capitalized software costs
|
| |
(75)
|
| |
(76)
|
Total deferred tax liabilities
|
| |
(1,858)
|
| |
(1,561)
|
Net deferred tax assets
|
| |
10,526
|
| |
5,783
|
Less: valuation allowance
|
| |
—
|
| |
—
|
Net deferred tax assets
|
| |
$10,526
|
| |
$5,783
|
|
| |
Amount
|
| |
Expiration Year
|
Net operating losses, federal
|
| |
$16,449
|
| |
Do Not Expire
|
Net operating losses, state
|
| |
$14,425
|
| |
2039-2040
|
Tax Credits, federal
|
| |
$317
|
| |
2039-2040
|
Tax Credits, state
|
| |
$225
|
| |
Do Not Expire
|
12.
|
RELATED PARTY TRANSACTIONS
|
13.
|
COMMITMENTS AND CONTINGENCIES
|
Year Ending December 31
|
| |
|
2021
|
| |
$1,250
|
2022
|
| |
1,046
|
2023
|
| |
1,078
|
2024
|
| |
1,110
|
2025
|
| |
1,143
|
Thereafter
|
| |
488
|
|
| |
$6,115
|
14.
|
EMPLOYEE BENEFIT PLAN
|
15.
|
SUBSEQUENT EVENTS
|
16.
|
CONDENSED FINANCIAL INFORMATION OF OBAGI GLOBAL HOLDINGS LIMITED (PARENT COMPANY ONLY)
|
|
| |
As of December 31,
|
|||
ASSETS
|
| |
2020
|
| |
2019
|
Current assets
|
| |
$—
|
| |
$—
|
Noncurrent assets
|
| |
|
| |
|
Investment in subsidiaries
|
| |
91,392
|
| |
98,533
|
TOTAL ASSETS
|
| |
$91,392
|
| |
$98,533
|
|
| |
|
| |
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
| |
|
| |
|
Current liabilities
|
| |
$—
|
| |
$—
|
Noncurrent liabilities
|
| |
—
|
| |
—
|
Total liabilities
|
| |
—
|
| |
—
|
|
| |
|
| |
|
SHAREHOLDER’S EQUITY:
|
| |
|
| |
|
Common stock, 25,000,000 and 50,000 shares authorized;
$0.50 par value; 8,000,002 shares issued and outstanding as of December 31, 2020 and 2019, respectively (Note 1)
|
| |
4,000
|
| |
4,000
|
Additional paid-in capital
|
| |
100,113
|
| |
96,055
|
Accumulated deficit
|
| |
(12,728)
|
| |
(1,513)
|
Accumulated other comprehensive income (loss)
|
| |
7
|
| |
(9)
|
TOTAL SHAREHOLDER’S EQUITY
|
| |
$91,392
|
| |
$98,533
|
|
| |
For the years ended
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Net revenue
|
| |
—
|
| |
—
|
Selling, general and administrative
|
| |
—
|
| |
—
|
Total operating income
|
| |
—
|
| |
—
|
Other income
|
| |
—
|
| |
—
|
Equity earnings of consolidated subsidiaries
|
| |
(9,171)
|
| |
5,820
|
(Loss) income before income taxes
|
| |
(9,171)
|
| |
5,820
|
Income tax benefit
|
| |
—
|
| |
—
|
Net (loss) income
|
| |
(9,171)
|
| |
5,820
|
Other comprehensive income (loss)—Foreign currency
translation adjustments, net of tax
|
| |
16
|
| |
(9)
|
Comprehensive (loss) income
|
| |
$
(9,155)
|
| |
$5,811
|
|
| |
Nine months ended
September 30,
|
|||
|
| |
2021
|
| |
2020
|
Net revenue
|
| |
$152,714
|
| |
$50,864
|
Cost of goods sold (exclusive of depreciation and
amortization shown separately below)
|
| |
36,131
|
| |
12,295
|
Selling, general and administrative
|
| |
80,797
|
| |
39,329
|
Research and development
|
| |
5,030
|
| |
2,964
|
Depreciation and amortization
|
| |
10,501
|
| |
9,997
|
Total operating expenses
|
| |
132,459
|
| |
64,585
|
Operating income (loss)
|
| |
20,255
|
| |
(13,721)
|
Interest expense
|
| |
8,099
|
| |
4,532
|
Loss on extinguishment of debt
|
| |
2,317
|
| |
—
|
Gain on PPP Loan forgiveness (Note 8)
|
| |
(6,824)
|
| |
—
|
Other expense, net
|
| |
251
|
| |
9
|
Income (loss) before income taxes
|
| |
16,412
|
| |
(18,262)
|
Income tax expense (benefit)
|
| |
2,112
|
| |
(6,507)
|
Net income (loss)
|
| |
14,300
|
| |
(11,755)
|
Other comprehensive income (loss) — Foreign currency
translation adjustments, net of tax
|
| |
(8)
|
| |
—
|
Comprehensive income (loss)
|
| |
$14,292
|
| |
$(11,755)
|
|
| |
|
| |
|
Net income (loss) per share of common stock — Basic and diluted
|
| |
$1.79
|
| |
$(1.47)
|
Weighted average shares of common stock outstanding —
Basic and diluted (Note 1)
|
| |
8,000,002
|
| |
8,000,002
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Income (Loss)
|
| |
Total
Shareholder's
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| |||||||||||
BALANCE—January 1, 2020 (Note 1)
|
| |
8,000,002
|
| |
$4,000
|
| |
$96,055
|
| |
$(1,513)
|
| |
$(9)
|
| |
$98,533
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(11,755)
|
| |
—
|
| |
(11,755)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Non-cash contribution of trademarks
|
| |
—
|
| |
—
|
| |
4,058
|
| |
—
|
| |
—
|
| |
4,058
|
Dividends paid (Note 10)
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,500)
|
| |
—
|
| |
(1,500)
|
BALANCE—September 30, 2020
|
| |
8,000,002
|
| |
4,000
|
| |
100,113
|
| |
(14,768)
|
| |
(9)
|
| |
89,336
|
BALANCE—January 1, 2021
|
| |
8,000,002
|
| |
4,000
|
| |
100,113
|
| |
(12,728)
|
| |
7
|
| |
91,392
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
14,300
|
| |
—
|
| |
14,300
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(8)
|
| |
(8)
|
Dividends paid (Note 10)
|
| |
—
|
| |
—
|
| |
—
|
| |
(2,000)
|
| |
—
|
| |
(2,000)
|
BALANCE—September 30, 2021
|
| |
8,000,002
|
| |
$4,000
|
| |
$100,113
|
| |
$(428)
|
| |
$(1)
|
| |
$103,684
|
|
| |
Nine months ended
September 30,
|
|||
|
| |
2021
|
| |
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
| |
|
| |
|
Net income (loss)
|
| |
$14,300
|
| |
$(11,755)
|
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
|
| |
|
| |
|
Depreciation and amortization
|
| |
10,501
|
| |
9,997
|
Amortization of debt issuance costs
|
| |
859
|
| |
574
|
Loss on extinguishment of debt
|
| |
2,317
|
| |
—
|
Gain on PPP Loan forgiveness
|
| |
(6,824)
|
| |
—
|
Loss on disposal of property and equipment
|
| |
52
|
| |
—
|
Deferred income taxes
|
| |
2,167
|
| |
(6,284)
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
(14,224)
|
| |
4,738
|
Inventories
|
| |
2,471
|
| |
(3,579)
|
Prepaid expenses
|
| |
(3,885)
|
| |
(341)
|
Other current assets and other assets
|
| |
764
|
| |
(35)
|
Accounts payable
|
| |
6,451
|
| |
(6,778)
|
Other current liabilities and other liabilities
|
| |
236
|
| |
959
|
Net cash provided by (used in) operating activities
|
| |
15,185
|
| |
(12,504)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
| |
|
| |
|
Capital expenditure on intangible assets
|
| |
(514)
|
| |
(535)
|
Capital expenditure on property and equipment
|
| |
(1,098)
|
| |
(814)
|
Advances for note receivable
|
| |
(2,500)
|
| |
—
|
Net cash used in investing activities
|
| |
(4,112)
|
| |
(1,349)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
| |
|
| |
|
Payment of dividends
|
| |
(2,000)
|
| |
(1,500)
|
Proceeds from term loan
|
| |
110,000
|
| |
—
|
Proceeds from revolving credit facility
|
| |
20,000
|
| |
29,000
|
Repayment of revolving credit facility
|
| |
(44,000)
|
| |
(3,000)
|
Repayment of term loan
|
| |
(72,180)
|
| |
(7,120)
|
Proceeds from PPP Loan
|
| |
—
|
| |
6,750
|
Payment of debt issuance costs
|
| |
(6,383)
|
| |
(390)
|
Net cash provided by financing activities
|
| |
5,437
|
| |
23,740
|
CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
| |
16,510
|
| |
9,887
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year
|
| |
8,572
|
| |
3,391
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of year
|
| |
25,082
|
| |
13,278
|
1.
|
DESCRIPTION OF BUSINESS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Revenue by Sales Channel
|
| |
|
| |
|
Medical
|
| |
$ 147,017
|
| |
$50,025
|
Clinical
|
| |
4,735
|
| |
839
|
Other
|
| |
962
|
| |
—
|
Total:
|
| |
$
152,714
|
| |
$
50,864
|
Revenue by Geographic Region
|
| |
|
| |
|
North America
|
| |
$67,188
|
| |
$ 32,072
|
Asia Pacific
|
| |
68,272
|
| |
9,742
|
Rest of the World
|
| |
12,497
|
| |
4,187
|
Net product sales
|
| |
$ 147,957
|
| |
46,001
|
Asia Pacific Royalties
|
| |
4,757
|
| |
4,863
|
Total:
|
| |
$
152,714
|
| |
$
50,864
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Selling, general and administrative
|
| |
$29,510
|
| |
$1,892
|
Research and development
|
| |
1,594
|
| |
—
|
Total
|
| |
$31,104
|
| |
$1,892
|
4.
|
ACCOUNTS AND NOTE RECEIVABLE, NET
|
5.
|
INVENTORIES
|
|
| |
September 30, 2021
|
| |
December 31, 2020
|
Work in process
|
| |
$1,024
|
| |
$1,937
|
Finished goods
|
| |
10,433
|
| |
12,024
|
Goods in transit
|
| |
52
|
| |
19
|
Total
|
| |
$11,509
|
| |
$13,980
|
6.
|
PROPERTY AND EQUIPMENT, NET
|
|
| |
September 30, 2021
|
| |
December 31, 2020
|
Computer software and website development costs
|
| |
$3,298
|
| |
$1,795
|
Other property and equipment
|
| |
87
|
| |
93
|
Total property and equipment
|
| |
3,385
|
| |
1,888
|
Less: accumulated depreciation
|
| |
(665)
|
| |
(266)
|
Property and equipment, net
|
| |
$2,720
|
| |
$1,622
|
7.
|
INTANGIBLE ASSETS, NET
|
|
| |
Weighted Average
Useful Lives (Years)
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net Carrying
Amount
|
Trademarks
|
| |
10
|
| |
$45,497
|
| |
$(16,662)
|
| |
$28,835
|
Customer lists
|
| |
10
|
| |
39,370
|
| |
(15,420)
|
| |
23,950
|
Supply agreement
|
| |
10
|
| |
25,570
|
| |
(10,015)
|
| |
15,555
|
Developed technology
|
| |
10
|
| |
22,863
|
| |
(9,009)
|
| |
13,854
|
Patents
|
| |
20
|
| |
254
|
| |
(7)
|
| |
247
|
Other intangibles
|
| |
3
|
| |
89
|
| |
(5)
|
| |
84
|
Total
|
| |
|
| |
$133,643
|
| |
$(51,118)
|
| |
$82,525
|
|
| |
Weighted Average
Useful Lives (Years)
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net Carrying
Amount
|
Trademarks
|
| |
10
|
| |
$45,240
|
| |
$(13,207)
|
| |
$32,033
|
Customer lists
|
| |
10
|
| |
39,370
|
| |
(12,467)
|
| |
26,903
|
Supply agreement
|
| |
10
|
| |
25,570
|
| |
(8,097)
|
| |
17,473
|
Developed technology
|
| |
10
|
| |
22,863
|
| |
(7,260)
|
| |
15,603
|
Patents
|
| |
20
|
| |
85
|
| |
(3)
|
| |
82
|
Other intangibles
|
| |
3
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
|
| |
$133,128
|
| |
$(41,034)
|
| |
$92,094
|
Years Ending December 31
|
| |
|
2021 (remaining 3 months)
|
| |
$3,372
|
2022
|
| |
13,486
|
2023
|
| |
13,486
|
2024
|
| |
13,311
|
2025
|
| |
13,251
|
Thereafter
|
| |
25,619
|
|
| |
$82,525
|
8.
|
DEBT
|
(in thousands)
|
| |
Maturity Date
|
| |
September 30,
2021
|
| |
December 31,
2020
|
2021 Term Loan
|
| |
March 2026
|
| |
$109,450
|
| |
$—
|
2021 Revolving Credit Facility
|
| |
March 2026
|
| |
15,000
|
| |
—
|
2018 Term Loan
|
| |
December 2023
|
| |
—
|
| |
71,630
|
2018 Revolving Credit Facility
|
| |
December 2023
|
| |
—
|
| |
39,000
|
PPP Loan
|
| |
May 2022
|
| |
—
|
| |
6,750
|
Unamortized debt issuance costs
|
| |
|
| |
(5,690)
|
| |
(2,483)
|
Net carrying amount
|
| |
|
| |
118,760
|
| |
114,897
|
Less: Current portion of long-term debt
|
| |
|
| |
14,883
|
| |
47,034
|
Total long-term portion
|
| |
|
| |
$103,877
|
| |
$67,863
|
Year Ending December 31,
|
| |
|
2021 (remaining 3 months)
|
| |
$15,275
|
2022
|
| |
2,750
|
2023
|
| |
5,500
|
2024
|
| |
5,500
|
2025
|
| |
5,500
|
2026
|
| |
89,925
|
Total unpaid principal
|
| |
$124,450
|
9.
|
STOCK BASED COMPENSATION
|
|
| |
Nine months ended
September 30, 2021
|
Risk-free interest rate(1)
|
| |
0.68%
|
Expected term (years)(2)
|
| |
6.2
|
Expected stock price volatility(3)
|
| |
43.0%
|
Dividend yield(4)
|
| |
N/A
|
Common stock per share value
|
| |
38.68
|
(1)
|
The risk-free rate is based on U.S. Treasury securities with maturities equivalent to the expected term.
|
(2)
|
The expected term is the estimated length of time the grants are expected to be outstanding before it is exercised or
terminated. This number is calculated as the midpoint between the requisite service period and the contractual term of the award, as the Company does not have any historical data that would provide a reasonable basis to estimate the
expected term for the option.
|
(3)
|
The expected price volatility is based on the average of the historical volatility of comparable public companies over a
period consistent with the expected term.
|
(4)
|
The Company historically made distributions to shareholders but does not plan to declare dividends in the foreseeable future
and therefore assumed a dividend yield of zero.
|
|
| |
Shares
|
| |
Weighted Average Grant
Date Fair Value per Share
|
Outstanding as of January 1, 2021
|
| |
—
|
| |
—
|
Granted
|
| |
243,307
|
| |
$38.68
|
Exercised
|
| |
—
|
| |
—
|
Forfeited
|
| |
—
|
| |
—
|
Vested
|
| |
—
|
| |
—
|
Outstanding as of September 30, 2021
|
| |
243,307
|
| |
$38.68
|
10.
|
SHAREHOLDER’S EQUITY
|
11.
|
NET INCOME (LOSS) PER SHARE
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Net income (loss)
|
| |
$14,300
|
| |
$(11,755)
|
Weighted-average number of shares outstanding – basic and diluted
|
| |
8,000,002
|
| |
8,000,002
|
Net income (loss) per share – basic and diluted
|
| |
$1.79
|
| |
$(1.47)
|
|
| |
Nine Months Ended
September 30,
|
|||
|
| |
2021
|
| |
2020
|
Stock options
|
| |
800,000
|
| |
—
|
Restricted Stock
|
| |
243,307
|
| |
—
|
Total
|
| |
1,043,307
|
| |
—
|
12.
|
INCOME TAX PROVISION (BENEFIT)
|
|
| |
Nine Months Ended
September 30,
|
|||
|
| |
2021
|
| |
2020
|
Income tax provision
|
| |
$2,112
|
| |
$(6,507)
|
Effective tax rate
|
| |
12.9%
|
| |
35.6%
|
13.
|
RELATED PARTY TRANSACTIONS
|
14.
|
COMMITMENTS AND CONTINGENCIES
|
Year Ending December 31
|
| |
|
2021 (remaining 3 months)
|
| |
$258
|
2022
|
| |
1,046
|
2023
|
| |
1,078
|
2024
|
| |
1,110
|
2025
|
| |
1,143
|
Thereafter
|
| |
488
|
|
| |
$5,123
|
15.
|
SUBSEQUENT EVENTS
|
|
| |
Year ended December 31,
|
|||
(In thousands)
|
| |
2020 (as
Restated)
|
| |
2019 (as
Restated)
|
Net sales
|
| |
$39,515
|
| |
$50,811
|
Cost of goods sold (exclusive of depreciation
and amortization)
|
| |
23,450
|
| |
23,379
|
Selling, general and administrative expenses
|
| |
26,559
|
| |
33,567
|
Depreciation and amortization
|
| |
1,746
|
| |
2,536
|
Operating loss
|
| |
(12,240)
|
| |
(8,671)
|
Interest expense, net
|
| |
301
|
| |
1,369
|
Other expense, net
|
| |
393
|
| |
918
|
Loss before provision for income taxes
|
| |
(12,934)
|
| |
(10,958)
|
Income tax provision
|
| |
—
|
| |
—
|
Net loss
|
| |
$(12,934)
|
| |
$(10,958)
|
Comprehensive loss
|
| |
$(12,934)
|
| |
$(10,958)
|
|
| |
December 31,
|
|||
(In thousands, except share data)
|
| |
2020 (as
Restated)
|
| |
2019 (as
Restated)
|
ASSETS
|
| |
|
| |
|
Current assets
|
| |
|
| |
|
Cash
|
| |
$7,207
|
| |
$7,902
|
Accounts receivable, net
|
| |
3,603
|
| |
4,753
|
Inventories
|
| |
16,385
|
| |
27,924
|
Prepaid expenses and other current assets
|
| |
488
|
| |
606
|
Prepaid supplier
|
| |
1,039
|
| |
3,281
|
Total current assets
|
| |
28,722
|
| |
44,466
|
Property, plant and equipment, net
|
| |
5,492
|
| |
899
|
Intangible assets, net
|
| |
14
|
| |
309
|
Due from officers
|
| |
760
|
| |
581
|
Total assets
|
| |
$34,988
|
| |
$46,255
|
|
| |
|
| |
|
LIABILITIES, REDEEMABLE PREFERRED
UNITS, AND MEMBERS’ EQUITY
|
| |
|
| |
|
Current liabilities
|
| |
|
| |
|
Accounts payable
|
| |
$3,697
|
| |
$9,197
|
Tenant allowance liability – current
|
| |
132
|
| |
—
|
Customer deposits
|
| |
—
|
| |
5,491
|
Accrued bonuses
|
| |
657
|
| |
478
|
Other current liabilities
|
| |
1,041
|
| |
659
|
Total current liabilities
|
| |
5,527
|
| |
15,825
|
Warrant liabilities
|
| |
99
|
| |
94
|
Deferred rent – non-current
|
| |
936
|
| |
—
|
Tenant allowance liability – non-current
|
| |
1,176
|
| |
—
|
Total liabilities
|
| |
7,738
|
| |
15,919
|
COMMITMENTS AND CONTINGENCIES
|
| |
|
| |
|
Redeemable Series A Preferred units, 3,843,750 units
authorized, issued and outstanding as of December 31, 2020 and 2019
|
| |
15,375
|
| |
15,375
|
Redeemable Series B Preferred units, 2,272,727 units
authorized, issued and outstanding as of December 31, 2020 and 2019
|
| |
10,000
|
| |
10,000
|
Redeemable Series C Preferred units, 3,515,352 units
authorized, and 3,505,055 issued and outstanding as of December 31, 2020 and 2019
|
| |
21,276
|
| |
21,276
|
Redeemable Series D Preferred units, 1,904,208 and 921,474
units authorized as of December 31, 2020 and 2019, respectively, and 1,898,069 and 915,751 units issued and outstanding as of December 31, 2020 and 2019, respectively.
|
| |
20,330
|
| |
10,000
|
Members’ Equity:
|
| |
|
| |
|
Common units, 23,086,766 units authorized as of
December 31, 2020 and 2019, and 10,000,000 units issued and outstanding as of December 31, 2020 and 2019
|
| |
12,647
|
| |
12,977
|
Members’ equity
|
| |
(52,378)
|
| |
(39,292)
|
Total members’ equity
|
| |
(39,731)
|
| |
(26,315)
|
TOTAL LIABILITIES,REDEEMABLE PREFERRED
UNITS, AND MEMBERS’ EQUITY
|
| |
$34,988
|
| |
$46,255
|
(In thousands, except share data)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Redeemable Series A
Preferred Units
|
| |
Redeemable Series B
Preferred Units
|
| |
Redeemable Series C
Preferred Units
|
| |
Redeemable Series D
Preferred Units
|
| |
Common Units
|
| |
Members’
Equity
|
| |
Total Members’
Equity
|
|||||||||||||||
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amounts
|
| |||||
Balance as of December 31, 2018
(as Restated)
|
| |
3,843,750
|
| |
$15,490
|
| |
2,272,727
|
| |
$10,000
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
10,000,000
|
| |
$12,861
|
| |
$(28,573)
|
| |
$(15,712)
|
Issuance of Redeemable Series C Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,505,055
|
| |
21,276
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Issuance of Redeemable Series D Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
915,751
|
| |
10,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Change in redemption value of Redeemable Preferred Units
|
| |
—
|
| |
(115)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
115
|
| |
—
|
| |
115
|
Equity based compensation expense
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
239
|
| |
239
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,958)
|
| |
(10,958)
|
Balance as of December 31, 2019
(as Restated)
|
| |
3,843,750
|
| |
15,375
|
| |
2,272,727
|
| |
10,000
|
| |
3,505,055
|
| |
21,276
|
| |
915,751
|
| |
10,000
|
| |
10,000,000
|
| |
12,977
|
| |
(39.292)
|
| |
(26,315)
|
Issuance of Redeemable Series D Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
982,318
|
| |
10,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Change in redemption value of Redeemable Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
330
|
| |
—
|
| |
(330)
|
| |
—
|
| |
(330)
|
Equity based compensation expense
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(152)
|
| |
(152)
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(12,934)
|
| |
(12,934)
|
Balance as of December 31, 2020
(as Restated)
|
| |
3,843,750
|
| |
$15,375
|
| |
2,272,727
|
| |
$10,000
|
| |
3,505,055
|
| |
$21,276
|
| |
1,898,069
|
| |
$20,330
|
| |
10,000,000
|
| |
$12,647
|
| |
$(52,378)
|
| |
$(39,731)
|
|
| |
Year ended December 31,
|
|||
(In thousands)
|
| |
2020
|
| |
2019
|
Cash flows from operating activities:
|
| |
|
| |
|
Net loss
|
| |
$(12,934)
|
| |
$(10,958)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation and amortization
|
| |
1,746
|
| |
2,536
|
Non-cash interest (income) expense
|
| |
(24)
|
| |
1,370
|
Loss on disposal of assets
|
| |
44
|
| |
42
|
Equity-based compensation
|
| |
(152)
|
| |
239
|
Change in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable, net
|
| |
1,150
|
| |
(3,536)
|
Inventories
|
| |
11,539
|
| |
(16,509)
|
Prepaid expenses and other current assets
|
| |
2,360
|
| |
(2,992)
|
Accounts payable
|
| |
(5,737)
|
| |
3,797
|
Other assets and liabilities
|
| |
(2,686)
|
| |
5,887
|
Net cash used in operating activities
|
| |
(4,694)
|
| |
(20,124)
|
Cash flows from investing activities:
|
| |
|
| |
|
Purchases of property, plant, and equipment
|
| |
(5,851)
|
| |
(896)
|
Due from officers
|
| |
(150)
|
| |
(210)
|
Net cash used in investing activities
|
| |
(6,001)
|
| |
(1,106)
|
Cash flows from financing activities:
|
| |
|
| |
|
Contributions from members
|
| |
10,000
|
| |
25,000
|
Net cash provided by financing activities
|
| |
10,000
|
| |
25,000
|
Net (decrease) increase in cash
|
| |
(695)
|
| |
3,770
|
Cash at beginning of year
|
| |
7,902
|
| |
4,132
|
Cash at end of year
|
| |
$7,207
|
| |
$7,902
|
|
| |
|
| |
|
Supplemental disclosure of cash flow information:
|
| |
|
| |
|
Cash paid during the year for interest
|
| |
$324
|
| |
$—
|
Supplemental disclosures of non-cash investing and financing
activities
|
| |
|
| |
|
Purchases of property, plant and equipment in accounts payable
|
| |
$237
|
| |
$588
|
Conversion of convertible promissory note into Redeemable Series C Preferred
Units
|
| |
$—
|
| |
$5,021
|
1.
|
DESCRIPTION OF BUSINESS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Description
|
| |
Estimated Useful
Lives
|
Furniture and fixtures
|
| |
7
|
Equipment
|
| |
3-7
|
Computers
|
| |
5
|
Leasehold improvements
|
| |
Shorter of
estimated
useful life or
lease
term
|
Description
|
| |
Estimated Useful
lives
|
Internal use software
|
| |
3-5
|
Other intangible assets
|
| |
3
|
|
| |
Receivables
|
| |
Contract Liabilities
|
||||||
(In thousands)
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
Beginning of year
|
| |
$4,753
|
| |
$1,217
|
| |
$61
|
| |
$339
|
End of year
|
| |
$3,603
|
| |
$4,753
|
| |
$129
|
| |
$61
|
•
|
Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.
|
•
|
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at
the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.
|
3.
|
RESTATEMENT
|
a.
|
Off-price retailer revenue recognition – The Company historically recorded the net
margin of sales of excess and old products to off-price retailers as a reduction to Cost of goods sold (COGS) as the Company often sold the products at a loss. The Company subsequently reevaluated the accounting under ASC 606, Revenue from Contracts with Customers, and determined that it is the principal in the transaction and should recognize revenue in the gross amount of consideration to which it would expect to be
entitled in exchange for the specified goods transferred. Therefore, the Company has reflected an adjustment to reflect the sales to off-price retailers and the related adjustment to COGS for the years ended December 31, 2020 and 2019.
|
b.
|
Inventory write-off – The Company improperly presented inventory write-off within
Other (income) expense in the statement of operations as of December 31, 2020. The Company has reflected an adjustment to present the amount in Cost of goods sold instead in the statement of operations as of December 31, 2020.
|
c.
|
Equity appreciation rights – The Company historically accounted for appreciation
rights awards granted to employees and non-employees as liability-classified options, as the awards might be settled in cash or units. The Company subsequently determined that the awards could be settled in cash or units at the sole
option of the Company and that the awards should be accounted for as equity-classified options. Therefore, the Company has reflected an adjustment to eliminate the Equity based compensation liabilities and record the awards within
Members’ equity based on the original grant date fair value as of December 31, 2020 and 2019. The impact on the statements of operations and comprehensive loss for the years ended December 31, 2020 and 2019 was immaterial.
|
d.
|
Redeemable Preferred Units – The Company changed its presentation of Redeemable
Preferred Units to conform with SEC guidance on redeemable equity. The Company historically accounted for Redeemable Preferred Units as permanent equity instead of temporary equity and did not record changes in redeemable value because
the Company is a private company that had not previously been required to apply the SEC guidance. The Company has reflected an adjustment to record changes in redeemable value in Redeemable Preferred Units with offset to Common Units.
However, in connection with the change in presentation, the Company determined that it improperly recorded the discount related to the conversion of the convertible promissory note into Redeemable Series C Preferred Units within
Members’ equity, instead as an adjustment to the carrying value of the Redeemable Series C Preferred Units. The Company has reflected an adjustment to reclass the amount from Members’ equity to Redeemable Series C Preferred Units as of
December 31, 2019.
|
(In thousands)
Statement of operations for the year ended December 31, 2020
|
| |
|
| |
As
Previously
Reported
|
| |
Adjustments
|
| |
As Revised
|
Net Sales
|
| |
a
|
| |
$30,153
|
| |
$9,362
|
| |
$39,515
|
Costs of goods sold
|
| |
a
|
| |
12,118
|
| |
11,332
|
| |
23,450
|
Inventory write-off
|
| |
|
| |
1,970
|
| |
(1,970)
|
| |
—
|
(In thousands)
Statement of operations for the year ended December 31, 2019
|
| |
|
| |
As
Previously
Reported
|
| |
Adjustments
|
| |
As Revised
|
Net Sales
|
| |
a
|
| |
$49,184
|
| |
$1,627
|
| |
$50,811
|
Costs of goods sold
|
| |
a
|
| |
21,752
|
| |
1,627
|
| |
23,379
|
(In thousands)
Balance Sheet as of December 31, 2020
|
| |
|
| |
As
Previously
Reported
|
| |
Adjustments
|
| |
As Revised
|
Equity based compensation liabilities
|
| |
b
|
| |
$209
|
| |
$(209)
|
| |
$—
|
Member’s Equity
|
| |
b
|
| |
51,311
|
| |
(1,067)
|
| |
(52,378)
|
(In thousands)
Balance sheet as of December 31, 2019
|
| |
|
| |
As
Previously
Reported
|
| |
Adjustments
|
| |
As Revised
|
Equity based compensation liabilities
|
| |
b
|
| |
$361
|
| |
$(361)
|
| |
$—
|
Member’s Equity
|
| |
b, c
|
| |
(38,777)
|
| |
(515)
|
| |
(39,292)
|
Redeemable Series C Preferred Units
|
| |
c
|
| |
20,000
|
| |
1,276
|
| |
21,276
|
4.
|
INVENTORIES
|
|
| |
As of December 31,
|
|||
(In thousands)
|
| |
2020
|
| |
2019
|
Components
|
| |
$4,704
|
| |
$8,741
|
Finished goods
|
| |
12,451
|
| |
22,683
|
|
| |
17,155
|
| |
31,424
|
Less: Inventory reserve
|
| |
770
|
| |
3,500
|
Total inventories
|
| |
$16,385
|
| |
$27,924
|
5.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
| |
As of December 31,
|
|||
(In thousands)
|
| |
2020
|
| |
2019
|
Furniture and fixtures
|
| |
$206
|
| |
$206
|
Equipment
|
| |
4,724
|
| |
3,943
|
Computers
|
| |
255
|
| |
242
|
Leasehold improvements
|
| |
1,925
|
| |
—
|
Property, plant and equipment, gross
|
| |
7,110
|
| |
4,391
|
Less: accumulated depreciation
|
| |
1,618
|
| |
3,492
|
Property, plant and equipment, net
|
| |
$5,492
|
| |
$899
|
6.
|
INTANGIBLE ASSETS, NET
|
|
| |
December 31, 2020
|
| |
December 31, 2019
|
||||||||||||
(In thousands)
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net
|
| |
Gross
Carrying
Amount
|
| |
Accumulated
Amortization
|
| |
Net
|
Internal use software
|
| |
$1,180
|
| |
$1,166
|
| |
$14
|
| |
$1,180
|
| |
$877
|
| |
$303
|
Other intangible assets
|
| |
71
|
| |
71
|
| |
—
|
| |
71
|
| |
65
|
| |
6
|
Total
|
| |
$1,251
|
| |
$1,237
|
| |
$14
|
| |
$1,251
|
| |
$942
|
| |
$309
|
(In thousands)
|
| |
|
2021
|
| |
$14
|
Total
|
| |
$14
|
7.
|
DEBT
|
8.
|
REDEEMABLE PREFERRED UNITS AND MEMBERS’ EQUITY
|
•
|
The Founding Member (as defined) acquired 10,000,000 Common Units for all contributions and considerations through
December 31, 2016. The Founding Member converted $1,276 thousand of due to affiliates to contributions to the Company during the year ended December 31, 2017.
|
•
|
$10,000 thousand was contributed for the purchase of 2,500,000 authorized Redeemable Series A Preferred Units with the
purchaser being admitted as a member (Preferred Member #1) in 2016. Preferred Member #1 contributed $2,875 thousand for an additional 718,750 Redeemable Series A Preferred Units and the Founding Member contributed $2,500 thousand for
625,000 Redeemable Series A Preferred Units during the year ended December 31, 2017.
|
•
|
Preferred Member #1 contributed $10,000 thousand for 2,272,727 authorized Redeemable Series B Preferred Units during the year
ended December 31, 2018
|
•
|
$15,000 thousand was contributed for the purchase of 2,471,169 authorized Redeemable Series C Preferred Units with the
purchaser being admitted as a member (Preferred Member #2) during the year ended December 31, 2019. The convertible promissory note issued during 2018 by Preferred Member #1 automatically converted into 1,033,886 authorized Redeemable
Series C Preferred Units. At the time of the conversion, the outstanding principal amount and all accrued interest on the convertible note amounted to $5,021 thousand. During the year ended December 31, 2019 the Company recognized
approximately $1,276 thousand of non-cash interest expense related to the embedded features of variable equity settlements and the redemption following the sale of the Company, as described in Note 7.
|
•
|
$10,000 thousand was contributed for the purchase of 915,751 authorized Redeemable Series D Preferred Units with the
purchaser being admitted as a member (Preferred Member #3) during the year ended December 31, 2019. Preferred Member #3 contributed an additional $10,000 thousand for the purchase of 982,318 authorized Redeemable Series D Preferred
Units during the year ended December 31, 2020.
|
9.
|
FAIR VALUE MEASUREMENTS
|
(In thousands)
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Warrant Liabilities
|
| |
—
|
| |
—
|
| |
$99
|
| |
$99
|
Total
|
| |
—
|
| |
—
|
| |
$99
|
| |
$99
|
(In thousands)
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Warrant Liabilities
|
| |
—
|
| |
—
|
| |
$94
|
| |
$94
|
Total
|
| |
—
|
| |
—
|
| |
$94
|
| |
$94
|
(In thousands)
|
| |
Year ended
December 31, 2020
|
Opening balance
|
| |
$94
|
Change in fair value
|
| |
5
|
Ending balance
|
| |
$99
|
10.
|
EQUITY BASED COMPENSATION EXPENSE
|
(In thousands, except per share data)
|
| |
Stock
Appreciation
Rights
|
| |
Weighted Average
Exercise Price
|
| |
Aggregate
Intrinsic Value
|
| |
Weighted Average
Remaining
Contractual Term
(Years)
|
Balance at December 31, 2019
|
| |
686,522
|
| |
$2.29
|
| |
$—
|
| |
9.07
|
Awards granted
|
| |
1,385,206
|
| |
5.63
|
| |
—
|
| |
9.30
|
Awards exercised
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Awards forfeited
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
(In thousands, except per share data)
|
| |
Stock
Appreciation
Rights
|
| |
Weighted Average
Exercise Price
|
| |
Aggregate
Intrinsic Value
|
| |
Weighted Average
Remaining
Contractual Term
(Years)
|
Balance at December 31, 2020
|
| |
2,071,728
|
| |
$4.52
|
| |
$—
|
| |
8.89
|
Exercisable at December 31, 2020
|
| |
542,858
|
| |
$1.89
|
| |
$—
|
| |
7.91
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Expected term
|
| |
7 years
|
| |
7 years
|
Volatility
|
| |
55.00%
|
| |
47.69%
|
Risk-free interest rate
|
| |
0.65%
|
| |
1.46%
|
Distributions yield
|
| |
0%
|
| |
0%
|
11.
|
WARRANT LIABILITIES
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Expected term
|
| |
10 years
|
| |
10 years
|
Volatility
|
| |
55.00%
|
| |
47.69%
|
Risk-free interest rate
|
| |
0.93%
|
| |
1.96%
|
Distributions yield
|
| |
0%
|
| |
0%
|
12.
|
RELATED PARTY TRANSACTIONS
|
13.
|
RETIREMENT PLANS
|
14.
|
LEASES
|
Year Ended December 31,
|
| |
|
(In thousands)
|
| |
|
2021
|
| |
$1,263
|
2022
|
| |
1,291
|
2023
|
| |
1,434
|
2024
|
| |
1,463
|
2025
|
| |
1,492
|
Thereafter
|
| |
7,782
|
Total future minimum lease payments
|
| |
$14,725
|
15.
|
COMMITMENTS & CONTINGENCIES
|
16.
|
INCOME TAXES
|
17.
|
SUBSEQUENT EVENTS
|
|
| |
Nine Months Ended September 30,
|
|||
(In thousands)
|
| |
2021
|
| |
2020
|
Net sales
|
| |
$39,663
|
| |
$31,426
|
Cost of goods sold (exclusive of depreciation
and amortization)
|
| |
17,423
|
| |
17,896
|
Selling, general and administrative
|
| |
20,534
|
| |
19,467
|
Depreciation and amortization
|
| |
1,460
|
| |
1,279
|
Operating income (loss)
|
| |
246
|
| |
(7,216)
|
Interest expense, net
|
| |
1
|
| |
16
|
Other expense, net
|
| |
61
|
| |
298
|
Income before provision for income taxes
|
| |
184
|
| |
(7,530)
|
Income tax provision
|
| |
—
|
| |
—
|
Net income (loss)
|
| |
$184
|
| |
$(7,530)
|
Comprehensive income (loss)
|
| |
$184
|
| |
$(7,530)
|
|
| |
September 30,
|
| |
December 31,
|
(In thousands, except share data)
|
| |
2021
|
| |
2020
|
ASSETS
|
| |
|
| |
|
Current assets
|
| |
|
| |
|
Cash
|
| |
$6,473
|
| |
$7,207
|
Accounts receivable, net
|
| |
4,229
|
| |
3,603
|
Inventories
|
| |
17,480
|
| |
16,385
|
Prepaid expenses and other current assets
|
| |
428
|
| |
488
|
Prepaid supplier
|
| |
1,694
|
| |
1,039
|
Total current assets
|
| |
30,304
|
| |
28,722
|
Property, plant and equipment, net
|
| |
5,260
|
| |
5,492
|
Intangible assets, net
|
| |
1
|
| |
14
|
Due from officers
|
| |
770
|
| |
760
|
Total assets
|
| |
$36,335
|
| |
$34,988
|
|
| |
|
| |
|
LIABILITIES AND MEMBERS’ EQUITY
|
| |
|
| |
|
Current liabilities
|
| |
|
| |
|
Accounts payable
|
| |
$5,505
|
| |
$3,697
|
Tenant allowance liability – current
|
| |
132
|
| |
132
|
Accrued bonuses
|
| |
788
|
| |
657
|
Other current liabilities
|
| |
220
|
| |
1,041
|
Total current liabilities
|
| |
6,645
|
| |
5,527
|
Warrant liabilities
|
| |
101
|
| |
99
|
Deferred rent – non-current
|
| |
946
|
| |
936
|
Tenant allowance liability – non-current
|
| |
1,077
|
| |
1,176
|
Total liabilities
|
| |
8,769
|
| |
7,738
|
COMMITMENTS AND CONTINGENCIES
|
| |
|
| |
|
Redeemable Series A Preferred units, 3,843,750 units
authorized, issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
20,872
|
| |
15,375
|
Redeemable Series B Preferred units, 2,272,727 units
authorized, issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
12,705
|
| |
10,000
|
Redeemable Series C Preferred units, 3,515,352 units
authorized, and 3,505,055 issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
26,814
|
| |
21,276
|
Redeemable Series D Preferred units, 1,904,208 units
authorized as of September 30, 2021 and December 31, 2020, and 1,898,069 units issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
25,513
|
| |
20,330
|
Members’ Equity:
|
| |
|
| |
|
Common units, 23,086,766 units authorized as of
September 30, 2021 and December 31, 2020, and 10,000,000 units issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
—
|
| |
12,647
|
Members’ equity
|
| |
(58,338)
|
| |
(52,378)
|
Total members’ equity
|
| |
(58,338)
|
| |
(39,731)
|
TOTAL LIABILITIES, REDEEMABLE PREFERRED
UNITS, AND MEMBERS’ EQUITY
|
| |
$36,335
|
| |
$34,988
|
|
| |
Redeemable Series A
Preferred Units
|
| |
Redeemable Series B
Preferred Units
|
| |
Redeemable Series C
Preferred Units
|
| |
Redeemable Series D
Preferred Units
|
| |
Common Units
|
| |
|
| |
|
|||||||||||||||
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Members’
Equity
|
| |
Total Members'
Equity
|
Balance as of December 31, 2020
|
| |
3,843,750
|
| |
$15,375
|
| |
2,272,727
|
| |
$10,000
|
| |
3,505,055
|
| |
$21,276
|
| |
1,898,069
|
| |
$20,330
|
| |
10,000,000
|
| |
$12,647
|
| |
(52,378)
|
| |
(39,731)
|
Change in redemption value of Redeemable Preferred Units
|
| |
—
|
| |
5,497
|
| |
—
|
| |
2,705
|
| |
—
|
| |
5,538
|
| |
—
|
| |
5,183
|
| |
—
|
| |
(12,647)
|
| |
(6,275)
|
| |
(18,922)
|
Equity-based compensation expense
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
131
|
| |
131
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
184
|
| |
184
|
Balance as of September 30, 2021
|
| |
3,843,750
|
| |
$20,872
|
| |
2,272,727
|
| |
$12,705
|
| |
3,505,055
|
| |
$26,814
|
| |
1,898,069
|
| |
$25,513
|
| |
10,000,000
|
| |
$—
|
| |
(58,338)
|
| |
(58,338)
|
|
| |
Redeemable Series A
Preferred Units
|
| |
Redeemable Series B
Preferred Units
|
| |
Redeemable Series C
Preferred Units
|
| |
Redeemable Series D
Preferred Units
|
| |
Common Units
|
| |
|
| |
|
|||||||||||||||
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Units
|
| |
Amount
|
| |
Members’
Equity
|
| |
Total Members'
Equity
|
Balance as of December 31, 2019
|
| |
3,843,750
|
| |
$15,375
|
| |
2,272,727
|
| |
$10,000
|
| |
3,505,055
|
| |
$21,276
|
| |
915,751
|
| |
$10,000
|
| |
10,000,000
|
| |
$12,977
|
| |
(39,292)
|
| |
(26,315)
|
Issuance of Redeemable Series D Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
982,318
|
| |
10,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Change in redemption value of Redeemable Preferred Units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
366
|
| |
—
|
| |
(366)
|
| |
—
|
| |
(366)
|
Equity-based compensation expense
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
58
|
| |
58
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—-
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(7,530)
|
| |
(7,530)
|
Balance as of September 30, 2020
|
| |
3,843,750
|
| |
$15,375
|
| |
2,272,727
|
| |
$10,000
|
| |
3,505,055
|
| |
$21,276
|
| |
1,898,069
|
| |
$20,366
|
| |
10,000,000
|
| |
$12,611
|
| |
(46,764)
|
| |
(34,153)
|
|
| |
Nine Months Ended September 30,
|
|||
(In thousands)
|
| |
2021
|
| |
2020
|
Cash flows from operating activities:
|
| |
|
| |
|
Net income (loss)
|
| |
$184
|
| |
$(7,530)
|
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
|
| |
|
| |
|
Depreciation and amortization
|
| |
1,460
|
| |
1,279
|
Non-cash interest income
|
| |
(12)
|
| |
(33)
|
Loss on disposal of assets
|
| |
145
|
| |
12
|
Equity-based compensation
|
| |
131
|
| |
58
|
Change in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable, net
|
| |
(626)
|
| |
(4,086)
|
Inventories
|
| |
(1,095)
|
| |
8,500
|
Prepaid expenses and other current assets
|
| |
(594)
|
| |
1,023
|
Accounts payable
|
| |
1,409
|
| |
(7,763)
|
Other assets and liabilities
|
| |
(775)
|
| |
769
|
Net cash provided by (used in) operating activities
|
| |
227
|
| |
(7,771)
|
Cash flows from investing activities:
|
| |
|
| |
|
Purchases of property, plant, and equipment
|
| |
(961)
|
| |
(3,604)
|
Due from officers
|
| |
—
|
| |
(150)
|
Net cash used in investing activities
|
| |
(961)
|
| |
(3,754)
|
Cash flows from financing activities:
|
| |
|
| |
|
Contributions from members
|
| |
—
|
| |
10,000
|
Net cash provided by financing activities
|
| |
—
|
| |
10,000
|
Net decrease in cash
|
| |
(734)
|
| |
(1,525)
|
Cash at beginning of year
|
| |
7,207
|
| |
7,902
|
Cash at end of year
|
| |
$6,473
|
| |
$6,377
|
|
| |
|
| |
|
Supplemental disclosure of cash flow information:
|
| |
|
| |
|
Cash paid during the year for interest
|
| |
$—
|
| |
$49
|
Supplemental disclosures of non-cash investing and financing
activities
|
| |
|
| |
|
Purchases of property, plant and equipment in accounts payable
|
| |
$399
|
| |
$502
|
1.
|
DESCRIPTION OF BUSINESS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
| |
Receivables
|
| |
Contract Liabilities
|
||||||
(In thousands)
|
| |
September 30, 2021
|
| |
December 31, 2020
|
| |
September 30, 2021
|
| |
December 31, 2020
|
Beginning of period
|
| |
$3,603
|
| |
$4,753
|
| |
$129
|
| |
$61
|
End of period
|
| |
$4,229
|
| |
$3,603
|
| |
$58
|
| |
$129
|
•
|
Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.
|
•
|
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at
the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.
|
3.
|
DEBT
|
4.
|
FAIR VALUE MEASUREMENTS
|
(In thousands)
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Warrant liabilities
|
| |
—
|
| |
—
|
| |
$101
|
| |
$101
|
Total
|
| |
—
|
| |
—
|
| |
$101
|
| |
$101
|
(In thousands)
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Warrant Liabilities
|
| |
—
|
| |
—
|
| |
$99
|
| |
$99
|
Total
|
| |
—
|
| |
—
|
| |
$99
|
| |
$99
|
(In thousands)
|
| |
Nine months ended
September 30, 2021
|
Opening balance
|
| |
$99
|
Change in fair value
|
| |
2
|
Ending balance
|
| |
$101
|
5.
|
EQUITY BASED COMPENSATION EXPENSE
|
(In thousands, except per share data)
|
| |
Stock Appreciation
Rights Outstanding
|
| |
Weighted
Average
Exercise Price
|
| |
Aggregate
Intrinsic Value
|
| |
Weighted Average
Remaining
Contractual Term
(Years)
|
Balance at December 31, 2020
|
| |
2,071,728
|
| |
$4.52
|
| |
$—
|
| |
8.89
|
Awards granted
|
| |
99,000
|
| |
0.26
|
| |
—
|
| |
0.44
|
Awards exercised
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Awards forfeited
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Balance at September 30, 2021
|
| |
2,170,728
|
| |
$4.57
|
| |
$307
|
| |
8.22
|
Exercisable at September 30, 2021
|
| |
814,847
|
| |
$3.01
|
| |
$307
|
| |
7.63
|
|
| |
Nine months ended
September 30,
|
| |
Year ended
December 31,
|
|
| |
2021
|
| |
2020
|
Expected term
|
| |
7 years
|
| |
7 years
|
Volatility
|
| |
50.00%
|
| |
55.00%
|
Risk-free interest rate
|
| |
1.32%
|
| |
0.65%
|
Distributions yield
|
| |
0%
|
| |
0%
|
6.
|
WARRANT LIABILITIES
|
|
| |
Nine months ended
September 30,
|
| |
Year Ended
December 31,
|
|
| |
2021
|
| |
2020
|
Expected term
|
| |
10 years
|
| |
10 years
|
Volatility
|
| |
55.00%
|
| |
55.00%
|
Risk-free interest rate
|
| |
1.52%
|
| |
0.93%
|
Distributions yield
|
| |
0%
|
| |
0%
|
7.
|
RELATED PARTY TRANSACTIONS
|
8.
|
COMMITMENTS & CONTINGENCIES
|
9.
|
SUBSEQUENT EVENTS
|
|
| |
|
| |
|
| |
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Page
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| | | | | |
Exhibits
|
| |
|
Exhibit A
|
| |
Term Sheet for Acquiror Memorandum and Articles of Association
|
Exhibit B
|
| |
Form of Obagi China Distribution Agreement
|
Exhibit C
|
| |
Form of TSA
|
Exhibit D
|
| |
Form of Supply Agreement
|
Exhibit E
|
| |
Form of License Agreement
|
Exhibit F
|
| |
Form of Registration Rights Agreement
|
Exhibit G
|
| |
Form of Lock-Up Agreement
|
Exhibit H
|
| |
Form of Investor Rights Agreement
|
Exhibit I
|
| |
Form of Subscription Agreement
|
Exhibit J
|
| |
Form of Obagi License Letter Agreement
|
Exhibit K
|
| |
Waldencast Ventures Guidelines
|
a)
|
if (i) the Closing Available Cash is greater than $670,000,000.00 and (ii) the amount of Company Transaction Expenses exceeds
$26,000,000.00 (any excess, the “Company Transaction Expenses Overage”), an amount equal to the Company Transaction Expenses Overage; or
|
b)
|
if the Closing Available Cash is equal to or less than (i) $670,000,000.00, and greater than (ii) $630,000,000.00, an amount
equal to (A) $380,000,000.00, minus (B) the Closing Available Cash, plus (C) the Total Transaction Expenses, minus (D)
the sum of the Acquiror Transaction Expenses and the Milk Transaction Expenses, plus (E) $35,000,000.00, plus (F) Balance Sheet Cash, plus (G) the Total Implied Milk Cash Consideration Amount, plus (H) the amount by which the Company Transaction Expenses are less than $26,000,000.00, if
any; or
|
c)
|
if the Closing Available Cash is equal to or less than $630,000,000.00 and greater than $615,000,000.00, an amount equal to
(i) $40,000,000.00, plus (ii) the Company Transaction Expenses Overage; or
|
d)
|
if the Closing Available Cash is equal to or less than $615,000,000.00 and greater than $565,000,000.00, an amount equal to
(i) $40,000,000.00, plus (ii) the Company Transaction Expenses Overage, if any, plus (iii) 25% of the amount equal to (A) $340,000,000.00, minus (B) the Company Transaction Expenses Overage, if any, minus (C) the Closing Available Cash, plus (D) the
Total Transaction Expenses, plus (E) Balance Sheet Cash, plus (F) the Total Implied Milk Cash Consideration Amount, minus
(G) $15,000,000.00, minus (H) the sum of the Acquiror Transaction Expenses and the Milk Transaction Expenses, plus (I) $35,000,000.00, plus (J) the amount by which the Company Transaction Expenses are less than $26,000,000.00, if any; or
|
e)
|
if the Closing Available Cash is equal to or less than $565,000,000.00, an amount equal to (i) $52,500,000.00, plus (ii) the Company Transaction Expenses Overage, if any, plus (iii) 50% of the amount equal to (A) $327,500,000.00, minus
(B) the Company Transaction Expenses Overage, if any, minus (C) the Closing Available Cash, plus (D) the Total Transaction Expenses, plus (E) Balance Sheet Cash, plus (F) the Total Implied Milk Cash Consideration Amount, minus (G) $52,500,000.00, minus (H) the sum of the Acquiror Transaction Expenses and the Milk Transaction Expenses, plus (I) $35,000,000.00, plus
(J) the amount by which the Company Transaction Expenses are less than $26,000,000.00, if any;
|
|
| |
WALDENCAST ACQUISITION CORP.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|||
|
| |
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
| |
|
|
| |
OBAGI MERGER SUB, INC.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|||
|
| |
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
|
| |
Title:
|
| |
Director
|
|
| |
|
| |
|
| |
|
|
| |
OBAGI GLOBAL HOLDINGS LIMITED
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Jaime Castle
|
|||
|
| |
|
| |
Name:
|
| |
Jaime Castle
|
|
| |
|
| |
Title:
|
| |
Authorized Representative
|
| | |||||
|
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| | | | |||
| | | |
Appendices
|
| |
|
Appendix A
|
| |
Members
|
Appendix B
|
| |
Pre-Closing Milk Restructuring
|
Appendix C
|
| |
Milk Closing Cash Bonus Reduction Amount Individuals
|
Exhibits
|
| |
|
Exhibit A
|
| |
Term Sheet for Acquiror Memorandum and Articles of Association
|
Exhibit B
|
| |
Form of Registration Rights Agreement
|
Exhibit C
|
| |
Form of Lock-Up Agreement
|
Exhibit D
|
| |
Term Sheet for Amended and Restated Waldencast Partners LP Agreement
|
Exhibit E
|
| |
Form of Subscription Agreement
|
Exhibit F
|
| |
Waldencast Ventures Guidelines
|
|
| |
WALDENCAST ACQUISITION CORP.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
||||||
|
| |
WALDENCAST PARTNERS LP
|
|||
|
| |
|
| |
|
|
| |
By: Obagi Holdco 1 Limited, its General Partner
|
|||
|
||||||
|
| |
By:
|
| |
/s/ Robert Lucas
|
|
| |
Name:
|
| |
Robert Lucas
|
|
| |
Title:
|
| |
Director
|
|
||||||
|
| |
OBAGI HOLDCO 1 LIMITED
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Robert Lucas
|
|
| |
Name:
|
| |
Robert Lucas
|
|
| |
Title:
|
| |
Director
|
|
||||||
|
| |
MILK MAKEUP LLC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Tim Coolican
|
|
| |
Name:
|
| |
Tim Coolican
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
MEMBER:
|
||||||
|
| |
|
||||||
|
| |
ACG DAIRY LLC
|
||||||
|
| |
By: Alliance Consumer Growth, LLC, its Manager
|
||||||
|
| |
|
||||||
|
| |
By:
|
| |
/s/ Julian Steinberg
|
|||
|
| |
|
| |
Name:
|
| |
Julian Steinberg
|
|
| |
|
| |
Title:
|
| |
Managing Partner
|
|
|||||||||
|
| |
MEMBER:
|
||||||
|
| |
|
| |
|
| |
|
|
| |
AMOREPACIFIC GROUP
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Seung-Hwan Kim
|
|||
|
| |
|
| |
Name:
|
| |
Seung-Hwan Kim
|
|
| |
|
| |
Title:
|
| |
President
|
|
|||||||||
|
| |
MEMBER:
|
||||||
|
| |
|
| |
|
| |
|
|
| |
MAIN POST GROWTH CAPITAL, L.P.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Josh McDowell
|
|||
|
| |
|
| |
Name:
|
| |
Josh McDowell
|
|
| |
|
| |
Title:
|
| |
Partner
|
|
|||||||||
|
| |
MILK MAKEUP HOLDINGS, LLC
|
||||||
|
| |
|
| |
|
| ||
|
| |
By: Milk Makeup Management LLC
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Mazdack Rassi
|
|||
|
| |
|
| |
Name:
|
| |
Mazdack Rassi
|
|
| |
|
| |
Title:
|
| |
Chief Executive Officer
|
|
|||||||||
|
| |
SHAREHOLDER REPRESENTATIVE SERVICES LLC
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Sam Riffe
|
|||
|
| |
Name: Sam Riffe
|
|
| |
SPONSOR PARTIES:
|
|||
|
| |
|
|||
|
| |
SPONSOR:
|
|||
|
| |
|
|||
|
| |
WALDENCAST LONG-TERM CAPITAL LLC
|
|||
|
| |
|
|||
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
INSIDERS:
|
|||
|
| |
|
|||
|
| |
By:
|
| |
/s/ Sarah Brown
|
|
| |
|
| |
Name: Sarah Brown
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Juliette Hickman
|
|
| |
|
| |
Name: Juliette Hickman
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Lindsay Pattison
|
|
| |
|
| |
Name: Lindsay Pattison
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Zack Werner
|
|
| |
|
| |
Name: Zack Werner
|
|
| |
ACQUIROR:
|
||||||
|
| |
|
| |
|
| |
|
|
| |
WALDENCAST ACQUISITION CORP.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|||
|
| |
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
COMPANY:
|
||||||
|
| |
|
| |
|
| |
|
|
| |
OBAGI GLOBAL HOLDINGS LIMITED
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Jaime Castle
|
|||
|
| |
|
| |
Name:
|
| |
Jaime Castle
|
|
| |
|
| |
Title:
|
| |
Authorized Representative
|
Sponsor Party
|
| |
Acquiror Common Shares
|
| |
Acquiror Warrants
|
Waldencast Long-Term Capital LLC
|
| |
8,545,000
|
| |
5,933,333
|
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
|
| |
|
| |
|
|
| |
|
| |
|
Sarah Brown
|
| |
20,000
|
| |
—
|
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
|
| |
|
| |
|
|
| |
|
| |
|
Juliette Hickman
|
| |
20,000
|
| |
—
|
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
|
| |
|
| |
|
|
| |
|
| |
|
Lindsay Pattison
|
| |
20,000
|
| |
—
|
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
|
| |
|
| |
|
|
| |
|
| |
|
Zack Werner
|
| |
20,000
|
| |
—
|
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
|
| |
|
| |
|
*
|
Waldencast Long-Term Capital LLC (Sponsor) is the record holder of the Class B ordinary shares. Waldencast Ventures, LP and
Burwell Mountain Trust, controlled by Michel Brousset and Felipe Dutra, respectively, and Dynamo Master Fund, participate in voting and investment decisions of the Sponsor. Dynamo Internacional Gestão de Recursos Ltda., a Brazilian
limited company (“Dynamo International”) is the investment manager of Dynamo Master Fund. Each of Luiz Orenstein, Bruno Hermes da Fonseca Rudge and Luiz Felipe de Almeida Campos (and together with Dynamo Master Fund and Dynamo
International, the “Dynamo Parties”) participate in voting and investment decisions of Dynamo International. Each of Michel Brousset, Felipe Dutra and the Dynamo Parties disclaims any beneficial ownership of the shares.
|
1.
|
Promissory Note, dated January 12, 2021, issued by Acquiror to Sponsor
|
2.
|
Letter Agreement, dated March 15, 2021, between Acquiror, Sponsor, and Acquiror’s officers and directors
|
3.
|
Registration Rights Agreement, dated March 15, 2021, between Acquiror and Sponsor
|
4.
|
Securities Subscription Agreement, dated as of January 12, 2021, between Acquiror and Sponsor
|
5.
|
Administrative Services Agreement, dated March 15, 2021, between Acquiror and Sponsor
|
6.
|
Sponsor Warrants Purchase Agreement, dated March 15, 2021, between Acquiror and Sponsor
|
7.
|
Forward Purchase Agreement, dated February 22, 2021, between Acquiror, Sponsor and Dynamo Master Fund
|
8.
|
Forward Purchase Agreement, dated March 1, 2021, between Acquiror and Beauty Ventures LLC
|
9.
|
Convertible Promissory Note, dated as of August 18, 2021 issued by Acquiror to Sponsor.
|
10.
|
Indemnity Agreement, dated March 15, 2021, between Acquiror and Sarah Brown
|
11.
|
Indemnity Agreement, dated March 15, 2021, between Acquiror and Juliette Hickman
|
12.
|
Indemnity Agreement, dated March 15, 2021, between Acquiror and Lindsay Pattison
|
13.
|
Indemnity Agreement, dated March 15, 2021, between Acquiror and Zack Werner
|
Date: [ ], 2021
|
| |
|
| |
|
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
| |
|
|
| |
Address for Notices:
|
|||
|
| |
|
| |
|
|
| |
With copies to:
|
|
| |
SPONSOR PARTIES:
|
|||
|
| |
|
| |
|
|
| |
SPONSOR:
|
|||
|
| |
|
| |
|
|
| |
WALDENCAST LONG-TERM CAPITAL LLC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
INSIDERS:
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Sarah Brown
|
|
| |
|
| |
Name: Sarah Brown
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Juliette Hickman
|
|
| |
|
| |
Name: Juliette Hickman
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Lindsay Pattison
|
|
| |
|
| |
Name: Lindsay Pattison
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Zack Werner
|
|
| |
|
| |
Name: Zack Werner
|
|
| |
ACQUIROR:
|
|||
|
| |
|
| |
|
|
| |
WALDENCAST ACQUISITION CORP.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
|
| |
Name: Michel Brousset
|
|
| |
|
| |
Title: Chief Executive Officer
|
|
| |
EQUITYHOLDER REPRESENTATIVE:
|
|||
|
| |
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| |
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SHAREHOLDER REPRESENTATIVE SERVICES LLC
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By:
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/s/ Sam Riffe
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Name: Sam Riffe
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Title: Managing Director
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Sponsor Party
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Acquiror Common Shares
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Acquiror Warrants
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Waldencast Long-Term Capital LLC
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
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8,545,000
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5,933,333
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Sarah Brown
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
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20,000
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—
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Juliette Hickman
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
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20,000
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—
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Lindsay Pattison
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
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20,000
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—
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Zack Werner
c/o Waldencast Acquisition Corp.,
10 Bank Street, Suite 560, White Plains, NY 10606.
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20,000
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—
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*
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Waldencast Long-Term Capital LLC (Sponsor) is the record holder of the Class B ordinary shares. Waldencast Ventures, LP and
Burwell Mountain Trust, controlled by Michel Brousset and Felipe Dutra, respectively, and Dynamo Master Fund, participate in voting and investment decisions of the Sponsor. Dynamo Internacional Gestão de Recursos Ltda., a Brazilian
limited company (“Dynamo International”) is the investment manager of Dynamo Master Fund. Each of Luiz Orenstein, Bruno Hermes da Fonseca Rudge and Luiz Felipe de Almeida Campos (and together with Dynamo Master Fund and Dynamo
International, the “Dynamo Parties”) participate in voting and investment decisions of Dynamo International. Each of Michel Brousset, Felipe Dutra and the Dynamo Parties disclaims any beneficial ownership of the shares.
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1.
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Promissory Note, dated January 12, 2021, issued by Acquiror to Sponsor
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2.
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Letter Agreement, dated March 15, 2021, between Acquiror, Sponsor, and Acquiror’s officers and directors
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3.
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Registration Rights Agreement, dated March 15, 2021, between Acquiror and Sponsor
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4.
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Securities Subscription Agreement, dated as of January 12, 2021, between Acquiror and Sponsor
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5.
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Administrative Services Agreement, dated March 15, 2021, between Acquiror and Sponsor
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6.
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Sponsor Warrants Purchase Agreement, dated March 15, 2021, between Acquiror and Sponsor
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7.
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Forward Purchase Agreement, dated February 22, 2021, between Acquiror, Sponsor and Dynamo Master Fund
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8.
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Forward Purchase Agreement, dated March 1, 2021, between Acquiror and Beauty Ventures LLC
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9.
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Convertible Promissory Note, dated as of August 18, 2021 issued by Acquiror to Sponsor.
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10.
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Indemnity Agreement, dated March 15, 2021, between Acquiror and Sarah Brown
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11.
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Indemnity Agreement, dated March 15, 2021, between Acquiror and Juliette Hickman
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12.
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Indemnity Agreement, dated March 15, 2021, between Acquiror and Lindsay Pattison
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13.
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Indemnity Agreement, dated March 15, 2021, between Acquiror and Zack Werner
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Date: [ ], 2021
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By:
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Name:
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Title:
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Address for Notices:
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With copies to:
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COMPANY STOCKHOLDER:
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CEDARWALK SKINCARE LTD.
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By:
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/s/ Sicong Dai
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Name:
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Sicong Dai
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Title:
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Authorized Representative
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ACQUIROR:
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WALDENCAST ACQUISITION CORP.
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By:
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/s/ Michel Brousset
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Name:
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Michel Brousset
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Title:
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Chief Executive Officer
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COMPANY:
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OBAGI GLOBAL HOLDINGS LIMITED
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By:
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/s/ Jaime Castle
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Name:
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Jaime Castle
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Title:
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Authorized Representative
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Company Stockholder
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Shares of Common Stock
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Cedarwalk Skincare Ltd.
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8,000,002
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By:
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Name:
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Title:
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Address for Notices:
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With copies to:
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1
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The name of the Company is Waldencast Acquisition Corp.
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2
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The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide.
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3
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The objects for which the Company is established are unrestricted and the Company shall have full power and authority to
carry out any object not prohibited by the laws of the Cayman Islands.
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4
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The liability of each Member is limited to the amount unpaid on such Member’s shares.
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5
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The share capital of the Company is US$55,500 divided into 500,000,000 Class A ordinary shares of a par value of US$0.0001
each, 50,000,000 Class B ordinary shares of a par value of US$0.0001 each and 5,000,000 preference shares of a par value of US$0.0001 each.
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6
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The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
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7
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Capitalised terms that are not defined in this Amended and Restated Memorandum of Association bear the respective meanings
given to them in the Amended and Restated Articles of Association of the Company.
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1
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Interpretation
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1.1
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In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or
context inconsistent therewith:
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“Affiliate”
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in respect of a person, means any other person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with, such person, and (a) in the case of a natural person, shall include, without limitation, such person’s spouse, parents, children, siblings,
mother-in-law and father-in-law and brothers and sisters-in-law, whether by blood, marriage or adoption or anyone residing in such person’s home, a trust for the benefit of any of the foregoing, a company, partnership or any natural
person or entity wholly or jointly owned by any of the foregoing and (b) in the case of an entity, shall include a partnership, a corporation or any natural person or entity which directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, such entity.
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“Applicable Law”
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means, with respect to any person, all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates, judgments, decisions, decrees or orders of any governmental authority applicable to such person.
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“Articles”
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means these amended and restated articles of association of the Company.
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“Audit Committee”
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means the audit committee of the board of directors of the Company established
pursuant to the Articles, or any successor committee.
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“Auditor”
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means the person for the time being performing the duties of auditor of the
Company (if any).
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“Business Combination”
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means a merger, amalgamation, share exchange, asset acquisition, share
purchase, reorganisation or similar business combination involving the Company, with one or more businesses or entities (the “target business”), which Business Combination: (a) as long as the
Company’s securities are listed on the Nasdaq Stock Market LLC, must occur with one or more operating businesses or assets with a fair market value equal to at least 80 per cent of the net assets held in the Trust Account (net of
amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount held in trust) at the time of signing the agreement to enter into such Business Combination; and
(b) must not be effectuated solely with another blank cheque company or a similar company with nominal operations.
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“business day”
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means any day other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions or trust companies are authorised or obligated by law to close in New York City.
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“Clearing House”
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means a clearing house recognised by the laws of the jurisdiction in which the
Shares (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction.
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“Class A Share”
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means a class A ordinary share of a par value of US$0.0001 in the share capital
of the Company.
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“Class B Share”
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means a class B ordinary share of a par value of US$0.0001 in the share capital
of the Company.
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“Company”
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means the above named company.
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“Company’s Website”
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means the website of the Company and/or its web-address or domain name, if any.
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“Compensation Committee”
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means the compensation committee of the board of directors of the Company
established pursuant to the Articles, or any successor committee.
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“Designated Stock Exchange”
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means any U.S. national securities exchange on which the securities of the
Company are listed for trading, including the Nasdaq Stock Market LLC.
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“Directors”
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means the directors for the time being of the Company.
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“Dividend”
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means any dividend (whether interim or final) resolved to be paid on Shares
pursuant to the Articles.
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“Electronic Communication”
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means a communication sent by electronic means, including electronic posting to
the Company’s Website, transmission to any number, address or internet website (including the website of the Securities and Exchange Commission) or other electronic delivery methods as otherwise decided and approved by the Directors.
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“Electronic Record”
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has the same meaning as in the Electronic Transactions Act.
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“Electronic Transactions Act”
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means the Electronic Transactions Act (As Revised) of the Cayman Islands.
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“Equity-linked Securities”
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means any debt or equity securities that are convertible, exercisable or
exchangeable for Class A Shares issued in a financing transaction in connection with a Business Combination, including but not limited to a private placement of equity or debt.
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“Exchange Act”
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means the United States Securities Exchange Act of 1934, as amended, or any
similar U.S. federal statute and the rules and regulations of the Securities and Exchange Commission thereunder, all as the same shall be in effect at the time.
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“Founders”
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means all Members immediately prior to the consummation of the IPO.
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“Independent Director”
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has the same meaning as in the rules and regulations of the Designated Stock
Exchange or in Rule 10A-3 under the Exchange Act, as the case may be.
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“IPO”
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means the Company’s initial public offering of securities.
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“Member”
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has the same meaning as in the Statute.
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“Memorandum”
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means the amended and restated memorandum of association of the Company.
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“Nominating and Corporate Governance
Committee”
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means the nominating and corporate governance committee of the board of
directors of the Company established pursuant to the Articles, or any successor committee.
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“Officer”
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means a person appointed to hold an office in the Company.
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“Ordinary Resolution”
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means a resolution passed by a simple majority of the Members as, being
entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to
which each Member is entitled by the Articles.
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“Over-Allotment Option”
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means the option of the Underwriters to purchase up to an additional 15 per
cent of the firm units (as described in the Articles) issued in the IPO at a price equal to US$10 per unit, less underwriting discounts and commissions.
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“Preference Share”
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means a preference share of a par value of US$0.0001 in the share capital of
the Company.
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“Public Share”
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means a Class A Share issued as part of the units (as described in the
Articles) issued in the IPO.
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“Redemption Notice”
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means a notice in a form approved by the Company by which a holder of Public
Shares is entitled to require the Company to redeem its Public Shares, subject to any conditions contained therein.
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“Register of Members”
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means the register of Members maintained in accordance with the Statute and
includes (except where otherwise stated) any branch or duplicate register of Members.
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“Registered Office”
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means the registered office for the time being of the Company.
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“Representative”
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means a representative of the Underwriters.
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“Seal”
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means the common seal of the Company and includes every duplicate seal.
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“Securities and Exchange Commission”
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means the United States Securities and Exchange Commission.
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“Share”
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means a Class A Share, a Class B Share or a Preference Share and includes a
fraction of a share in the Company.
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“Special Resolution”
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subject to Article 29.4, has the same meaning as in the Statute, and includes a
unanimous written resolution.
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“Sponsor”
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means Waldencast Long-Term Capital LLC, a Cayman Islands limited liability
company, and its successors or assigns.
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“Statute”
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means the Companies Act (As Revised) of the Cayman Islands.
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“Treasury Share”
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means a Share held in the name of the Company as a treasury share in accordance
with the Statute.
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“Trust Account”
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means the trust account established by the Company upon the consummation of its
IPO and into which a certain amount of the net proceeds of the IPO, together with a certain amount of the proceeds of a private placement of warrants simultaneously with the closing date of the IPO, will be deposited.
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“Underwriter”
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means an underwriter of the IPO from time to time and any successor
underwriter.
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1.2
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In the Articles:
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(a)
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words importing the singular number include the plural number and vice versa;
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(b)
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words importing the masculine gender include the feminine gender;
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(c)
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words importing persons include corporations as well as any other legal or natural person;
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(d)
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“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of
an Electronic Record;
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(e)
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“shall” shall be construed as imperative and “may” shall be construed as permissive;
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(f)
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references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified,
re-enacted or replaced;
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(g)
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any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as
illustrative and shall not limit the sense of the words preceding those terms;
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(h)
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the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects
qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context
otherwise requires);
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(i)
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headings are inserted for reference only and shall be ignored in construing the Articles;
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(j)
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any requirements as to delivery under the Articles include delivery in the form of an Electronic Record;
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(k)
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any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be
satisfied in the form of an electronic signature as defined in the Electronic Transactions Act;
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(l)
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sections 8 and 19(3) of the Electronic Transactions Act shall not apply;
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(m)
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the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received
or deemed to be received and the day for which it is given or on which it is to take effect; and
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(n)
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the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of
such Share.
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2
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Commencement of Business
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2.1
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The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit.
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2.2
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The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation
and establishment of the Company, including the expenses of registration.
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3
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Issue of Shares
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3.1
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Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general
meeting) and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, and without prejudice
to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions,
whether in regard to Dividends or other distributions, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary
such rights, save that the Directors shall not allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) to the extent that it may affect the ability of the Company to carry out a Class B Share
Conversion set out in the Articles.
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3.2
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The Company may issue rights, options, warrants or convertible securities or securities of similar nature conferring the
right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company on such terms as the Directors may from time to time determine.
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3.3
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The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights,
options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as
the Directors may from time to time determine. The securities comprising any such units which are issued pursuant to the IPO can only be traded separately from one another on the 52nd day following the date of the prospectus relating to
the IPO unless the Representative(s) determines that an earlier date is acceptable, subject to the Company having filed a current report on Form 8-K with the Securities and Exchange Commission and a press release announcing when such
separate trading will begin. Prior to such date, the units can be traded, but the securities comprising such units cannot be traded separately from one another.
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3.4
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The Company shall not issue Shares to bearer.
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4
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Register of Members
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4.1
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The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
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4.2
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The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the
Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time.
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5
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Closing Register of Members or Fixing Record Date
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5.1
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For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment
thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may, after notice has been given by advertisement in an appointed
newspaper or any other newspaper or by any other means in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise
under Applicable Law, provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.
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5.2
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In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record
date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other
distribution, or in order to make a determination of Members for any other purpose.
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5.3
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If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice
of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay
such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this
Article, such determination shall apply to any adjournment thereof.
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6
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Certificates for Shares
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6.1
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A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued.
Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise
certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All
certificates surrendered to the Company for transfer shall be cancelled and, subject to the Articles, no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been
surrendered and cancelled.
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6.2
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The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and
delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
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6.3
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If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and
indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
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6.4
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Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled
to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.
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6.5
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Share certificates shall be issued within the relevant time limit as prescribed by the Statute, if applicable, or as the
rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law may from time to time determine, whichever is shorter,
after the allotment or, except in the case of a Share transfer which the Company is for the time being entitled to refuse to register and does not register, after lodgement of a Share transfer with the Company.
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7
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Transfer of Shares
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7.1
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Subject to the terms of the Articles, any Member may transfer all or any of his Shares by an instrument of transfer provided
that such transfer complies with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under
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7.2
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The instrument of transfer of any Share shall be in writing in the usual or common form or in a form prescribed by the rules
and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law or in any other form approved by the Directors and shall be
executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee) and may be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), by hand or by
machine imprinted signature or by such other manner of execution as the Directors may approve from time to time. The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register
of Members.
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8
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Redemption, Repurchase and Surrender of Shares
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8.1
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Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange,
the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or
the Company. The redemption of such Shares, except Public Shares, shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of such Shares. With respect to redeeming
or repurchasing the Shares:
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(a)
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Members who hold Public Shares are entitled to request the redemption of such Shares in the circumstances described in the
Business Combination Article hereof;
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(b)
|
Class B Shares held by the Founders shall be surrendered by the Founders for no consideration to the extent that the
Over-Allotment Option is not exercised in full so that the number of Class B Shares will equal 20 per cent of the Company’s issued Shares after the IPO (exclusive of any securities purchased in a private placement simultaneously with
the IPO); and
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(c)
|
Public Shares shall be repurchased by the Company in the circumstances set out in the Business Combination Article hereof.
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8.2
|
Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange,
the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms
as the Directors may agree with the relevant Member. For the avoidance of doubt, redemptions, repurchases and surrenders of Shares in the circumstances described in the Article above shall not require further approval of the Members.
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8.3
|
The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the
Statute, including out of capital.
|
8.4
|
The Directors may accept the surrender for no consideration of any fully paid Share.
|
9
|
Treasury Shares
|
9.1
|
The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a
Treasury Share.
|
9.2
|
The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper
(including, without limitation, for nil consideration).
|
10
|
Variation of Rights of Shares
|
10.1
|
Subject to Article 3.1, if at any time the share capital of the Company is divided into different classes of Shares, all or
any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares
of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent
|
10.2
|
For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one
class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.
|
10.3
|
The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless
otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or Shares issued with preferred or other rights.
|
11
|
Commission on Sale of Shares
|
|
The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or
agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the
issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
|
12
|
Non Recognition of Trusts
|
|
The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future
or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.
|
13
|
Lien on Shares
|
13.1
|
The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a
Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien
thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share.
|
13.2
|
The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in
respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence
of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.
|
13.3
|
To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares
sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the
purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles.
|
13.4
|
The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of
which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.
|
14
|
Call on Shares
|
14.1
|
Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of
any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or
times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall
remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.
|
14.2
|
A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
|
14.3
|
The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
|
14.4
|
If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount
unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive
payment of the interest or expenses wholly or in part.
|
14.5
|
An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of
the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.
|
14.6
|
The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be
paid.
|
14.7
|
The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies
uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.
|
14.8
|
No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other
distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable.
|
15
|
Forfeiture of Shares
|
15.1
|
If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person
from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice
shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.
|
15.2
|
If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice
has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture.
|
15.3
|
A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think
fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the
Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.
|
15.4
|
A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the
Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with
interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.
|
15.5
|
A certificate in writing under the hand of one Director or Officer that a Share has been forfeited on a specified date shall
be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the
person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in
reference to the forfeiture, sale or disposal of the Share.
|
15.6
|
The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of
issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.
|
16
|
Transmission of Shares
|
16.1
|
If a Member dies, the survivor or survivors (where he was a joint holder), or his legal personal representatives (where he
was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or
sole holder.
|
16.2
|
Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member
(or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some
person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in
either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.
|
16.3
|
A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in
any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in
respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be
registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a
transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received
or deemed to be received (as determined pursuant to the Articles), the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of
the notice have been complied with.
|
17
|
Class B Share Conversion
|
17.1
|
The rights attaching to all Shares shall rank pari passu in all respects, and the
Class A Shares and Class B Shares shall vote together as a single class on all matters (subject to the Variation of Rights of Shares Article and the Appointment and Removal of Directors Article) with the exception that the holder of a
Class B Share shall have the Conversion Rights referred to in this Article.
|
17.2
|
Class B Shares shall automatically convert into Class A Shares on a one-for-one basis (the “Initial Conversion
Ratio”): (a) at any time and from time to time at the option of the holders thereof, and (b) automatically on the day of the closing of a Business Combination.
|
17.3
|
Notwithstanding the Initial Conversion Ratio, in the case that additional Class A Shares or any other Equity-linked
Securities, are issued or deemed issued in connection with a Business Combination, all Class B Shares in issue shall automatically convert into Class A Shares at the time of the closing of a Business Combination at a ratio for which the
Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the Class B Shares in issue agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so
that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, on an as-converted basis, 20 per cent of the sum
|
17.4
|
Notwithstanding anything to the contrary contained herein, the foregoing adjustment to the Initial Conversion Ratio may be
waived as to any particular issuance or deemed issuance of additional Class A Shares or Equity-linked Securities by the written consent or agreement of holders of a majority of the Class B Shares then in issue consenting or agreeing
separately as a separate class in the manner provided in the Variation of Rights of Shares Article hereof.
|
17.5
|
The foregoing conversion ratio shall also be adjusted to account for any subdivision (by share split, subdivision, exchange,
capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by reverse share split, share consolidation, exchange, reclassification, recapitalisation or otherwise) or similar reclassification or
recapitalisation of the Class A Shares in issue into a greater or lesser number of shares occurring after the original filing of the Articles without a proportionate and corresponding subdivision, combination or similar reclassification
or recapitalisation of the Class B Shares in issue.
|
17.6
|
Each Class B Share shall convert into its pro rata number of Class A Shares pursuant to this Article. The pro rata share for
each holder of Class B Shares will be determined as follows: each Class B Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number
of Class A Shares into which all of the Class B Shares in issue shall be converted pursuant to this Article and the denominator of which shall be the total number of Class B Shares in issue at the time of conversion.
|
17.7
|
References in this Article to “converted”, “conversion”or
“exchange” shall mean the compulsory redemption without notice of Class B Shares of any Member and, on behalf of such Members, automatic application of such redemption proceeds in paying for such
new Class A Shares into which the Class B Shares have been converted or exchanged at a price per Class B Share necessary to give effect to a conversion or exchange calculated on the basis that the Class A Shares to be issued as part of
the conversion or exchange will be issued at par. The Class A Shares to be issued on an exchange or conversion shall be registered in the name of such Member or in such name as the Member may direct.
|
17.8
|
Notwithstanding anything to the contrary in this Article, in no event may any Class B Share convert into Class A Shares at a
ratio that is less than one-for-one.
|
18
|
Amendments of Memorandum and Articles of Association and Alteration of Capital
|
18.1
|
The Company may by Ordinary Resolution:
|
(a)
|
increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and
privileges annexed thereto, as the Company in general meeting may determine;
|
(b)
|
consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
|
(c)
|
convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;
|
(d)
|
by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller
amount than is fixed by the Memorandum or into Shares without par value; and
|
(e)
|
cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount of the Shares so cancelled.
|
18.2
|
All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of
the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
|
18.3
|
Subject to the provisions of the Statute, the provisions of the Articles as regards the matters to be dealt with by Ordinary
Resolution, Article 29.4, the Company may by Special Resolution:
|
(a)
|
change its name;
|
(b)
|
alter or add to the Articles;
|
(c)
|
alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
|
(d)
|
reduce its share capital or any capital redemption reserve fund.
|
19
|
Offices and Places of Business
|
|
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its
Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.
|
20
|
General Meetings
|
20.1
|
All general meetings other than annual general meetings shall be called extraordinary general meetings.
|
20.2
|
The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its
annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint. At these meetings the report of the Directors (if
any) shall be presented.
|
20.3
|
The Directors, the chief executive officer, the secretary or the chairman of the board of Directors may call general
meetings, and they shall on a Members’ requisition forthwith proceed to convene an extraordinary general meeting of the Company.
|
20.4
|
Members seeking to bring business before the annual general meeting or to nominate candidates for appointment as Directors at
the annual general meeting must deliver notice to the principal executive offices of the Company not less than 120 calendar days before the date of the Company’s proxy statement released to shareholders in connection with the previous
year’s annual meeting or, if the Company did not hold an annual meeting the previous year, or if the date of this year’s annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the
deadline shall be set by the board of Directors with such deadline being a reasonable time before the Company begins to print and send its related proxy materials.
|
21
|
Notice of General Meetings
|
21.1
|
At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the
hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a
general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly
convened if it is so agreed:
|
(a)
|
in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and
|
(b)
|
in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at
the meeting, together holding not less than ninety-five per cent in par value of the Shares giving that right.
|
21.2
|
The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any
person entitled to receive such notice shall not invalidate the proceedings of that general meeting.
|
22
|
Proceedings at General Meetings
|
22.1
|
No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the Shares
being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum.
|
22.2
|
A person may participate at a general meeting by conference telephone or other communications equipment by means of which all
the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
|
22.3
|
A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the
Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective
as if the resolution had been passed at a general meeting of the Company duly convened and held.
|
22.4
|
If a quorum is not present within half an hour from the time appointed for the meeting to commence, the meeting shall stand
adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting to commence, the Members present shall be a quorum.
|
22.5
|
The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman
of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall
not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
|
22.6
|
If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for
the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.
|
22.7
|
The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting)
adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
|
22.8
|
When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
|
22.9
|
If, prior to a Business Combination, a notice is issued in respect of a general meeting and the Directors, in their absolute
discretion, consider that it is impractical or undesirable for any reason to hold that general meeting at the place, the day and the hour specified in the notice calling such general meeting, the Directors may postpone the general
meeting to another place, day and/or hour provided that notice of the place, the day and the hour of the rearranged general meeting is promptly given to all Members. No business shall be transacted at any postponed meeting other than
the business specified in the notice of the original meeting.
|
22.10
|
When a general meeting is postponed for thirty days or more, notice of the postponed meeting shall be given as in the case of
an original meeting. Otherwise it shall not be necessary to give any such notice of a postponed meeting. All proxy forms submitted for the original general meeting shall remain valid for the postponed meeting. The Directors may postpone
a general meeting which has already been postponed.
|
22.11
|
A resolution put to the vote of the meeting shall be decided on a poll.
|
22.12
|
A poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general
meeting at which the poll was demanded.
|
22.13
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on
any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking
of the poll.
|
22.14
|
In the case of an equality of votes the chairman shall be entitled to a second or casting vote.
|
23
|
Votes of Members
|
23.1
|
Subject to any rights or restrictions attached to any Shares, including as set out at Article 29.4, every Member present in
any such manner shall have one vote for every Share of which he is the holder.
|
23.2
|
In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case
of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names
of the holders stand in the Register of Members.
|
23.3
|
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote
by his committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
|
23.4
|
No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such
meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
|
23.5
|
No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting
at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be
final and conclusive.
|
23.6
|
Votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly
authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall
specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.
|
23.7
|
A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and
therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under
one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is
appointed.
|
24
|
Proxies
|
24.1
|
The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his
attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member.
|
24.2
|
The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the
Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy
relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the
Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the
instrument proposes to vote.
|
24.3
|
The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly
deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.
|
24.4
|
The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and
may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
|
24.5
|
Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or
insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity,
revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
|
25
|
Corporate Members
|
25.1
|
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the
absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised
shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.
|
25.2
|
If a Clearing House (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it sees fit to
act as its representative at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of Shares in respect of which each such representative is so
authorised. Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the
Clearing House (or its nominee(s)) as if such person was the registered holder of such Shares held by the Clearing House (or its nominee(s)).
|
26
|
Shares that May Not be Voted
|
|
Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding Shares at any given time.
|
27
|
Directors
|
|
There shall be a board of Directors consisting of not less than one person provided however that the Company may by Ordinary
Resolution increase or reduce the limits in the number of Directors.
|
28
|
Powers of Directors
|
28.1
|
Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution,
the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would
have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
|
28.2
|
All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts
for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
|
28.3
|
The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held
any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
|
28.4
|
The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property
and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the
Company or of any third party.
|
29
|
Appointment and Removal of Directors
|
29.1
|
Prior to the closing of a Business Combination, the Company may by Ordinary Resolution of the holders of the Class B Shares
appoint any person to be a Director or may by Ordinary Resolution of the holders of the Class B Shares remove any Director. For the avoidance of doubt, prior to the closing of a Business Combination, holders of Class A Shares shall have
no right to vote on the appointment or removal of any Director.
|
29.2
|
The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that
the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors.
|
29.3
|
After the closing of a Business Combination, the Company may by Ordinary Resolution appoint any person to be a Director or
may by Ordinary Resolution remove any Director.
|
29.4
|
Prior to the closing of a Business Combination, Article 29.1 may only be amended by a Special Resolution passed by a majority
of at least 90 per cent of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution
has been given, or by way of unanimous written resolution.
|
30
|
Vacation of Office of Director
|
|
The office of a Director shall be vacated if:
|
(a)
|
the Director gives notice in writing to the Company that he resigns the office of Director; or
|
(b)
|
the Director absents himself (for the avoidance of doubt, without being represented by proxy) from three consecutive meetings
of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or
|
(c)
|
the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
|
(d)
|
the Director is found to be or becomes of unsound mind; or
|
(e)
|
all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a
resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.
|
31
|
Proceedings of Directors
|
31.1
|
The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be
two if there are two or more Directors, and shall be one if there is only one Director.
|
31.2
|
Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising
at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote.
|
31.3
|
A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other
communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that
meeting. Unless otherwise determined by the Directors, the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting.
|
31.4
|
A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the
Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution shall be as valid
and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.
|
31.5
|
A Director may, or other Officer on the direction of a Director shall, call a meeting of the Directors by at least two days’
notice in writing to every Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors either at, before or after the meeting is held. To any such notice of a
meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis.
|
31.6
|
The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of
Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose.
|
31.7
|
The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such
chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting.
|
31.8
|
All acts done by any meeting of the Directors or of a committee of the Directors shall, notwithstanding that it is afterwards
discovered that there was some defect in the appointment of any Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been
duly appointed and/or not disqualified to be a Director and/or had not vacated their office and/or had been entitled to vote, as the case may be.
|
31.9
|
A Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy
shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.
|
32
|
Presumption of Assent
|
|
A Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the
meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such
action.
|
33
|
Directors’ Interests
|
33.1
|
A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction
with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
|
33.2
|
A Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or
his firm shall be entitled to remuneration for professional services as if he were not a Director.
|
33.3
|
A Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or
in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or
from his interest in, such other company.
|
33.4
|
No person shall be disqualified from the office of Director or prevented by such office from contracting with the Company,
either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested be or be liable to be avoided, nor
shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director holding office or of the
fiduciary relationship thereby established. A Director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director in any such contract or
transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
|
33.5
|
A general notice that a Director is a shareholder, director, officer or employee of any specified firm or company and is to
be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general
notice it shall not be necessary to give special notice relating to any particular transaction.
|
34
|
Minutes
|
|
The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of Officers made by
the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors present at each meeting.
|
35
|
Delegation of Directors’ Powers
|
35.1
|
The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any
committee consisting of one or more Directors (including, without limitation, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee). Any such delegation may be made subject to any
conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee
of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
35.2
|
The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for
managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally
with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the
Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
35.3
|
The Directors may adopt formal written charters for committees. Each of these committees shall be empowered to do all things
necessary to exercise the rights of such committee set forth in the Articles and shall have such powers as the Directors may delegate pursuant to the Articles and as required by the rules and regulations of the Designated Stock
Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law. Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance
Committee, if established, shall consist of such number of Directors as the Directors shall from time to time determine (or such minimum number as may be required from time to time by the rules and regulations of the Designated Stock
Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law). For so long as any class of Shares is listed on the Designated Stock Exchange, the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee shall be made up of such number of Independent Directors as is required from time to time by the rules and regulations of the Designated Stock Exchange, the
Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law.
|
35.4
|
The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as
the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
|
35.5
|
The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under
the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such
attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
|
35.6
|
The Directors may appoint such Officers as they consider necessary on such terms, at such remuneration and to perform such
duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an Officer may be removed by resolution of the Directors or Members. An
Officer may vacate his office at any time if he gives notice in writing to the Company that he resigns his office.
|
36
|
No Minimum Shareholding
|
|
The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a
shareholding qualification is fixed a Director is not required to hold Shares.
|
37
|
Remuneration of Directors
|
37.1
|
The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine, provided
that no cash remuneration shall be paid to any Director by the Company prior to the consummation of a Business Combination. The Directors shall also, whether prior to or after the consummation of a Business Combination, be entitled to
be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders
of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by
the Directors, or a combination partly of one such method and partly the other.
|
37.2
|
The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the
Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his
remuneration as a Director.
|
38
|
Seal
|
38.1
|
The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or
of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some Officer or other person appointed by the
Directors for the purpose.
|
38.2
|
The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall
be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
|
38.3
|
A Director or Officer, representative or attorney of the Company may without further authority of the Directors affix the
Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
|
39
|
Dividends, Distributions and Reserve
|
39.1
|
Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors
may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an
interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out
of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.
|
39.2
|
Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid
according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
|
39.3
|
The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then
payable by him to the Company on account of calls or otherwise.
|
39.4
|
The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific
assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the
Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to
any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.
|
39.5
|
Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any
currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.
|
39.6
|
The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a
reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.
|
39.7
|
Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer
to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to
such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.
|
39.8
|
No Dividend or other distribution shall bear interest against the Company.
|
39.9
|
Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the
date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect
of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other
distribution becomes payable shall be forfeited and shall revert to the Company.
|
40
|
Capitalisation
|
|
The Directors may at any time capitalise any sum standing to the credit of any of the Company’s reserve accounts or funds
(including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to Members in the proportions in
which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued Shares for allotment
and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to the Directors
to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The
Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such
authority shall be effective and binding on all such Members and the Company.
|
41
|
Books of Account
|
41.1
|
The Directors shall cause proper books of account (including, where applicable, material underlying documentation including
contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and
the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books
|
41.2
|
The Directors shall determine whether and to what extent and at what times and places and under what conditions or
regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of
the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting.
|
41.3
|
The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance
sheets, group accounts (if any) and such other reports and accounts as may be required by law.
|
42
|
Audit
|
42.1
|
The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine.
|
42.2
|
Without prejudice to the freedom of the Directors to establish any other committee, if the Shares (or depositary receipts
therefor) are listed or quoted on the Designated Stock Exchange, and if required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or
otherwise under Applicable Law, the Directors shall establish and maintain an Audit Committee as a committee of the Directors and shall adopt a formal written Audit Committee charter and review and assess the adequacy of the formal
written charter on an annual basis. The composition and responsibilities of the Audit Committee shall comply with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other
competent regulatory authority or otherwise under Applicable Law.
|
42.3
|
If the Shares (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Company shall
conduct an appropriate review of all related party transactions on an ongoing basis and shall utilise the Audit Committee for the review and approval of potential conflicts of interest.
|
42.4
|
The remuneration of the Auditor shall be fixed by the Audit Committee (if one exists).
|
42.5
|
If the office of Auditor becomes vacant by resignation or death of the Auditor, or by his becoming incapable of acting by
reason of illness or other disability at a time when his services are required, the Directors shall fill the vacancy and determine the remuneration of such Auditor.
|
42.6
|
Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company
and shall be entitled to require from the Directors and Officers such information and explanation as may be necessary for the performance of the duties of the Auditor.
|
42.7
|
Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office
at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their
appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
|
43
|
Notices
|
43.1
|
Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier,
post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Notice may also be served by Electronic
Communication in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or by placing it on the Company’s Website.
|
43.2
|
Where a notice is sent by:
|
(a)
|
courier; service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be
deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier;
|
(b)
|
post; service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing
the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted;
|
(c)
|
cable, telex or fax; service of the notice shall be deemed to be effected by properly addressing and sending such notice and
shall be deemed to have been received on the same day that it was transmitted;
|
(d)
|
e-mail or other Electronic Communication; service of the notice shall be deemed to be effected by transmitting the e-mail to
the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient; and
|
(e)
|
placing it on the Company’s Website; service of the notice shall be deemed to have been effected one hour after the notice or
document was placed on the Company’s Website.
|
43.3
|
A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or
Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the
deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same
might have been given if the death or bankruptcy had not occurred.
|
43.4
|
Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an
entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon
whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting,
and no other person shall be entitled to receive notices of general meetings.
|
44
|
Winding Up
|
44.1
|
If the Company shall be wound up, the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims
in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:
|
(a)
|
if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued
share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or
|
(b)
|
if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the
Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a
deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.
|
44.2
|
If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a
Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or
not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such
assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
|
45
|
Indemnity and Insurance
|
45.1
|
Every Director and Officer (which for the avoidance of doubt, shall not include auditors of the Company), together with every
former Director and former Officer (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or
expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own
actual fraud, wilful neglect or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless
that liability arises through the actual fraud, wilful neglect or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud, wilful neglect or wilful default under this Article unless or until a
court of competent jurisdiction shall have made a finding to that effect.
|
45.2
|
The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in
connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person
shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article.
If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with
respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.
|
45.3
|
The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or Officer
against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
|
46
|
Financial Year
|
|
Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and,
following the year of incorporation, shall begin on 1st January in each year.
|
47
|
Transfer by Way of Continuation
|
|
If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the
approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
|
48
|
Mergers and Consolidations
|
|
The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the
Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.
|
49
|
Business Combination
|
49.1
|
Notwithstanding any other provision of the Articles, this Article shall apply during the period commencing upon the adoption
of the Articles and terminating upon the first to occur of the consummation of a Business Combination and the full distribution of the Trust Account pursuant to this Article. In the event of a conflict between this Article and any other
Articles, the provisions of this Article shall prevail.
|
49.2
|
Prior to the consummation of a Business Combination, the Company shall either:
|
(a)
|
submit such Business Combination to its Members for approval; or
|
(b)
|
provide Members with the opportunity to have their Shares repurchased by means of a tender offer for a per-Share repurchase
price payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of such Business
|
49.3
|
If the Company initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection
with a proposed Business Combination, it shall file tender offer documents with the Securities and Exchange Commission prior to completing such Business Combination which contain substantially the same financial and other information
about such Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act. If, alternatively, the Company holds general meeting to approve a proposed Business Combination, the Company will conduct
any redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, and not pursuant to the tender offer rules, and file proxy materials with the Securities and Exchange Commission.
|
49.4
|
At a general meeting called for the purposes of approving a Business Combination pursuant to this Article, in the event that
such Business Combination is approved by Ordinary Resolution, the Company shall be authorised to consummate such Business Combination, provided that the Company shall not consummate such Business Combination unless the Company has net
tangible assets of at least US$5,000,001 following the redemptions described below, or any greater net tangible asset or cash requirement that may be contained in the agreement relating to, such Business Combination.
|
49.5
|
Any Member holding Public Shares who is not the Sponsor, a Founder, Officer or Director may, in connection with any vote on a
Business Combination, elect to have their Public Shares redeemed for cash in accordance with any applicable requirements provided for in the related proxy materials (the “IPO Redemption”),
provided that no such Member acting together with any Affiliate of his or any other person with whom he is acting in concert or as a partnership, limited partnership, syndicate, or other group for the purposes of acquiring, holding, or
disposing of Shares may exercise this redemption right with respect to more than 15 per cent of the Public Shares in the aggregate without the prior consent of the Company. If so demanded, the Company shall pay any such redeeming
Member, regardless of whether he votes on such proposed Business Combination, and if he does vote, regardless of whether he is voting for or against such proposed Business Combination, a per-Share redemption price payable in cash, equal
to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable) earned on the Trust
Account and not previously released to the Company to pay its taxes, divided by the number of then issued Public Shares (such redemption price being referred to herein as the “Redemption Price”).
The Company shall not redeem Public Shares that would cause the Company’s net tangible assets to be less than US$5,000,001 following such redemptions (the “Redemption Limitation”).
|
49.6
|
A Member may not withdraw a Redemption Notice following the deadline for such Redemption Notice unless the Directors
determine (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part).
|
49.7
|
In the event that the Company does not consummate a Business Combination by 24 months from the consummation of the IPO, or
such later time as the Members may approve in accordance with the Articles, the Company shall:
|
(a)
|
cease all operations except for the purpose of winding up;
|
(b)
|
as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-Share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to US$100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by
the number of then Public Shares in issue, which redemption will completely extinguish the rights of the holders of Public Shares as Members (including the right to receive further liquidation distributions, if any); and
|
(c)
|
as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Members and
the Directors, liquidate and dissolve,
|
|
subject in each case, to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of
Applicable Law.
|
49.8
|
In the event that any amendment is made to the Articles:
|
(a)
|
to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination
or redeem 100 per cent of the Public Shares if the Company does not consummate a Business Combination within 24 months from the consummation of the IPO or such later time as the Members may approve in accordance with the Articles; or
|
(b)
|
with respect to any other provision relating to Members’ rights or pre-Business Combination activity,
|
|
each holder of Public Shares who is not the Sponsor, a Founder, Officer or Director shall be provided with the opportunity to
redeem their Public Shares upon the approval or effectiveness of any such amendment at a per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then outstanding Public Shares. The Company’s ability to provide such redemption in this Article is subject to the Redemption
Limitation.
|
49.9
|
A holder of Public Shares shall be entitled to receive distributions from the Trust Account only in the event of an IPO
Redemption, a repurchase of Shares by means of a tender offer pursuant to this Article, or a distribution of the Trust Account pursuant to this Article. In no other circumstance shall a holder of Public Shares have any right or interest
of any kind in the Trust Account.
|
49.10
|
After the issue of Public Shares, and prior to the consummation of a Business Combination, the Company shall not issue
additional Shares or any other securities that would entitle the holders thereof to:
|
(a)
|
receive funds from the Trust Account; or
|
(b)
|
vote as a class with Public Shares on a Business Combination.
|
49.11
|
The uninterested Independent Directors shall approve any transaction or transactions between the Company and any of the
following parties:
|
(a)
|
any Member owning an interest in the voting power of the Company that gives such Member a significant influence over the
Company; and
|
(b)
|
any Director or Officer and any Affiliate of such Director or Officer.
|
49.12
|
A Director may vote in respect of a Business Combination in which such Director has a conflict of interest with respect to
the evaluation of such Business Combination. Such Director must disclose such interest or conflict to the other Directors.
|
49.13
|
As long as the Company’s securities are listed on the Nasdaq Stock Market LLC, the Company must complete the Business
Combination with one or more operating businesses or assets with a fair market value equal to at least 80 per cent of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if
permitted, and excluding the amount of any deferred underwriting discount held in trust) at the time of signing the agreement to enter into the Business Combination. A Business Combination must not be effectuated solely with another
blank cheque company or a similar company with nominal operations
|
49.14
|
The Company may enter into a Business Combination with a target business that is Affiliated with the Sponsor, a Founder, a
Director or an Officer. In the event the Company seeks to complete a Business Combination with a target that is Affiliated with the Sponsor, a Founder, a Director or an Officer, the Company, or a committee of Independent Directors, will
obtain an opinion from an independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business the Company is seeking to acquire that such a Business
Combination is fair to the Company from a financial point of view.
|
50
|
Business Opportunities
|
50.1
|
To the fullest extent permitted by Applicable Law, no individual serving as a Director or an Officer (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of
business as the Company. To the fullest extent permitted by Applicable Law, the Company renounces any interest or expectancy of the
|
50.2
|
Except as provided elsewhere in this Article, the Company hereby renounces any interest or expectancy of the Company in, or
in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company and Management, about which a Director and/or Officer who is also a member of Management
acquires knowledge.
|
50.3
|
To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in
this Article to be a breach of duty to the Company or its Members, the Company hereby waives, to the fullest extent permitted by Applicable Law, any and all claims and causes of action that the Company may have for such activities. To
the fullest extent permitted by Applicable Law, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past.
|
1
|
The name of the Company is Waldencast plc.
|
2
|
The Company is a public par value company limited by shares.
|
3
|
The Company is to be of unlimited duration.
|
4
|
The liability of each Member is limited to the amount unpaid on such Member's shares.
|
5
|
The authorised share capital of the Company is US$[•] divided into [•] Class A ordinary shares of a par value of US$0.0001
each, [•] Class ordinary shares of a par value of US$0.0001 each and [•] Preference Shares of a par value of US$0.0001 each
|
6
|
Capitalised terms that are not defined in this Memorandum of Association bear the respective meanings given to them in the
Articles of Association of the Company.
|
1
|
Interpretation
|
1.1
|
In these Articles the Standard Table prescribed by the Statute does not apply to the Company and is expressly excluded in its
entirety and, unless there is something in the subject or context inconsistent therewith:
|
“Amended and Restated Waldencast
Partners LP Agreement”
|
| |
means the amended and restated limited partnership agreement of Waldencast LP.
|
|||
“Applicable Law”
|
| |
means, with respect to any person, all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates, judgments, decisions, decrees or orders of any governmental authority applicable to such person.
|
|||
“Articles”
|
| |
means these articles of association of the Company.
|
|||
“Audit Committee”
|
| |
means the audit committee of the Board established pursuant to the Articles, or
any successor committee.
|
|||
“Auditor”
|
| |
means the person for the time being performing the duties of auditor of the
Company.
|
|||
“Board”
|
| |
means the board of directors for the time being of the Company or the Directors
present or deemed to be present at a duly convened meeting of the Directors at which a quorum is present.
|
|||
“business day”
|
| |
means any day other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions or trust companies are authorised or obligated by law to close in Jersey or New York City.
|
|||
“Clearing House”
|
| |
means a clearing house recognised by the laws of the jurisdiction in which the
Shares (or depositary interests/receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction, and includes the DTC Depositary.
|
|||
“Class A Share”
|
| |
means a class A ordinary share of a par value of US$0.0001 in the share capital
of the Company.
|
|||
“Class B Share”
|
| |
means a class B ordinary share of a par value of US$0.0001 in the share capital
of the Company.
|
|||
“Company”
|
| |
means the above named company.
|
|||
“Company’s Website”
|
| |
means the website of the Company and/or its web-address or domain name, if any.
|
|||
“Compensation Committee”
|
| |
means the compensation committee of the Board established pursuant to the
Articles, or any successor committee.
|
|||
“Designated Stock Exchange”
|
| |
means any U.S. national securities exchange on which the securities of the
Company are listed for trading, including the Nasdaq Stock Market LLC.
|
|||
“Directors”
|
| |
means the directors for the time being of the Company.
|
|||
“distribution”
|
| |
in relation to a distribution by the Company means a distribution as defined in
the Statute including the direct or indirect transfer of an asset, to or for the benefit of a Member in relation to Shares held by a Member, and whether by means of a purchase of an asset, (unless the context requires otherwise) the
redemption or other acquisition of Shares, a distribution of indebtedness or otherwise, and includes a Dividend.
|
|||
“Disqualified Decision”
|
| |
has the meaning given to it by Article 28.2.
|
“Dividend”
|
| |
means any dividend (whether interim or final) resolved to be paid on Shares
pursuant to the Articles.
|
|||
“DTC”
|
| |
means the Depositary Trust Company or any successor corporation.
|
|||
“DTC Depositary”
|
| |
means Cede & Co. and/or any other custodian, depositary or nominee of DTC
which holds Shares under arrangements that facilitate the holding and trading of beneficial interests in such Shares in the DTC System.
|
|||
“DTC Proxy”
|
| |
means, in relation to any Shares held by the DTC Depositary, any person who is,
for the purposes of any general meeting or resolution, appointed a proxy (whether by way of instrument of proxy, power of attorney, mandate or otherwise) by:
|
|||
|
| |
(a)
|
| |
the DTC Depositary; or
|
|
| |
(b)
|
| |
a proxy, attorney or other agent appointed by any other person whose authority
is ultimately derived (whether directly or indirectly) from the DTC Depositary.
|
“DTC System”
|
| |
means the electronic system operated by DTC by which title to securities or
interests in securities may be evidenced and transferred in dematerialised form.
|
|||
“Electronic Communication”
|
| |
Means a communication sent by electronic means, including electronic posting to
the Company’s Website, transmission to any number, address or internet website (including the website of the Securities and Exchange Commission) or other electronic delivery methods as otherwise decided and approved by the Directors.
|
|||
“Exchange Act”
|
| |
means the United States Securities Exchange Act of 1934 or any similar U.S.
federal statute and the rules and regulations of the Securities and Exchange Commission thereunder, all as the same shall be in effect at the time.
|
|||
“Independent Director”
|
| |
has the same meaning as in the rules and regulations of the Designated Stock
Exchange or in Rule 10A-3 under the Exchange Act, as the case may be.
|
|||
“Investor Rights Agreement”
|
| |
means the Investor Rights Agreement, entered into on [ ] by and among the
Company, Cedarwalk Skincare Ltd., Waldencast Long-Term Capital LLC and the guarantor of Cedarwalk Skincare Ltd’s obligations thereunder.
|
|||
“Member”
|
| |
has the same meaning as in the Statute.
|
|||
“Memorandum”
|
| |
means the memorandum of association of the Company.
|
|||
“Nominating and Corporate Governance
Committee”
|
| |
means the nominating and corporate governance committee of the Board
established pursuant to the Articles, or any successor committee.
|
|||
“Officer”
|
| |
means a person appointed by the Directors to hold an office in the Company.
|
|||
“Ordinary Resolution”
|
| |
means a resolution passed by a simple majority of the Members as, being
entitled to do so, vote in person or by proxy at a general meeting, and includes a unanimous written resolution.
|
|||
“Preference Share”
|
| |
means a preference share of a par value of US$0.0001 in the share capital of
the Company.
|
|||
“Principal Register”
|
| |
means the Company's principal Register of Members that is maintained in Jersey.
|
|||
“Register of Members”
|
| |
means the register of Members maintained in accordance with the Statute and
includes (except where otherwise stated or the context otherwise requires) any branch register.
|
|||
“Registered Office”
|
| |
means the registered office for the time being of the Company.
|
|||
“Seal”
|
| |
means the common seal of the Company and includes every
|
|
| |
duplicate seal.
|
|||
“Securities and Exchange Commission”
|
| |
means the United States Securities and Exchange Commission.
|
|||
“Share”
|
| |
means a share in the Company and includes a fraction of a share in the Company.
|
|||
“Special Resolution”
|
| |
has the same meaning as in the Statute, and includes a unanimous written
resolution.
|
|||
“Statute”
|
| |
means the Companies (Jersey) Law 1991 and includes regulations and orders made
under it.
|
|||
“Treasury Share”
|
| |
means a Share held in the name of the Company as a treasury share in accordance
with the Statute.
|
|||
“United Kingdom”
|
| |
means the United Kingdom of Great Britain and Northern Ireland.
|
|||
“Waldencast LP”
|
| |
means Waldencast Partners LP, a Cayman Islands exempted limited partnership.
|
|||
“Waldencast LP Common Units”
|
| |
means limited partnership units of Waldencast LP that are redeemable at the
option of the holder of such units and, if such option is exercised, exchangeable at the option of the Company for Class A Shares or cash in accordance with the terms of the Amended and Restated Waldencast Partners LP Agreement.
|
1.2
|
In the Articles:
|
(a)
|
words importing the singular number include the plural number and vice versa;
|
(b)
|
words importing the masculine gender include the feminine gender;
|
(c)
|
words importing persons include corporations as well as any other legal or natural person;
|
(d)
|
“written” and “in writing” include all modes of representing or reproducing words in visible form;
|
(e)
|
“shall” shall be construed as imperative and “may” shall be construed as permissive;
|
(f)
|
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified,
re-enacted or replaced;
|
(g)
|
any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as
illustrative and shall not limit the sense of the words preceding those terms;
|
(h)
|
the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects
qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context
otherwise requires);
|
(i)
|
headings are inserted for reference only and shall be ignored in construing the Articles;
|
(j)
|
“present in person” in relation to general meetings of the Company and to meetings of the holders of any class of Shares
shall include present by attorney or by proxy or, in the case of a corporate Member, by representative;
|
(k)
|
the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received
or deemed to be received and the day for which it is given or on which it is to take effect;
|
(l)
|
the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of
such Share;
|
(m)
|
any reference to:
|
(i)
|
rights attaching to any Share;
|
(ii)
|
Members having a right to attend and vote at general meetings of the Company;
|
(iii)
|
Dividends being paid, or any other distribution of the Company's assets being made, to Members; or
|
(iv)
|
interests in a certain proportion or percentage of the issued share capital, or any class of share capital,
|
(n)
|
a Special Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under
any provision of these Articles or the Statute; and
|
(o)
|
references to the Memorandum or the Articles is a reference to the Memorandum or the Articles as amended from time to time.
|
2
|
Issue of Shares and other Securities
|
2.1
|
Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general
meeting), the Articles (including Article 17) and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under
Applicable Law, and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred
or other rights or restrictions, whether in regard to Dividends or other distributions, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the
Statute, the Articles and Applicable Law) vary such rights.
|
2.2
|
The Company may issue rights, options, warrants or convertible securities or securities of similar nature conferring the
right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company on such terms as the Directors may from time to time determine.
|
2.3
|
The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights,
options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as
the Directors may from time to time determine.
|
2.4
|
The Company shall not issue Shares to bearer.
|
2.5
|
The Company may by Special Resolution alter its Memorandum so as to increase its authorised share capital and make all such
other alterations and amendments to its share capital as may be permitted by the Statute.
|
2.6
|
The share capital of the Company is as specified in the Memorandum and the Shares shall have the rights and are subject to
the conditions set out in these Articles.
|
2.7
|
The par or nominal value paid up on any Share shall be transferred to a nominal capital account maintained in accordance with
the Statute.
|
2.8
|
The premium (if any) paid up on any Share shall be transferred to a share premium account maintained in accordance with the
Statute.
|
2.9
|
Unless otherwise specified in these Articles, a fraction of a Share shall be taken into account in determining the
entitlement of a Member in regards to distributions, dividends or on winding up, but a fraction of a Share shall not entitle a Member to a vote in respect thereof.
|
3
|
Register of Members
|
3.1
|
The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
|
3.2
|
The Directors may determine that the Company shall maintain in any country, territory or place one or more branch registers
of Members resident in such country, territory or place and all or any of its other Members in accordance with the Statute. Any branch registers of Members shall not be maintained in the United Kingdom. The Board may (subject to the
requirement that no branch register shall be kept in the United
|
3.3
|
For so long as the Shares are listed on Nasdaq, all Members shall have their Shares registered on a branch register
maintained in the United States of America (the “US Branch Register”) unless the Board otherwise resolves. The Board may take such action as it deems necessary to transfer any Shares from the
Principal Register or any other Register of Members to the US Branch Register. Each Director (acting alone) will be deemed to have been appointed as the agent of any Member with Shares registered on any Register of Members other than
the US Branch Register with full power to execute, complete and deliver, in the name of and on behalf of the Member, any transfer form or other documents necessary to transfer such Shares from the relevant Register of Members to the US
Branch Register. Such appointment is:
|
(a)
|
made with effect from the later of (i) the holder becoming the holder of such Shares and (ii) any Share in the Company being
listed on Nasdaq; and
|
(b)
|
irrevocable for a period of one year thereafter.
|
3.4
|
The Register of Members may be in any such form as the Directors may approve, but if it is in magnetic, electronic or other
data storage format, the Company must be able to produce legible evidence of its contents. Until the Directors otherwise determine, the magnetic, electronic or other data storage form shall be the original Register of Members.
|
3.5
|
The Directors shall, subject always to the Statute and these Articles, have power to implement and/or approve any
arrangements they may, in their absolute discretion, determine in relation to the evidencing of title to and transfer of interests in Shares in the form of depositary interests/receipts or similar interests, instruments or securities,
and to the extent such arrangements are so implemented, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer thereof or the Share represented
thereby. The Directors may from time to time take such actions and do such things as they may, in their absolute discretion, determine in relation to the operation of any such arrangements.
|
4
|
Closing Register of Members or Fixing Record Date
|
4.1
|
For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment
thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may, after notice has been given by advertisement in an appointed
newspaper or any other newspaper or by any other means in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise
under Applicable Law, provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.
|
4.2
|
In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record
date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other
distribution, or in order to make a determination of Members for any other purpose.
|
4.3
|
If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice
of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay
such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this
Article, such determination shall apply to any adjournment thereof.
|
5
|
Certificates for Shares
|
5.1
|
Subject to the Statute, a Member shall only be entitled to a share certificate if the Directors resolve that share
certificates shall be issued either to that Member or Members generally. Share certificates representing Shares,
|
5.2
|
The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and
delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
|
5.3
|
If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and
indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
|
5.4
|
Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled
to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.
|
5.5
|
Share certificates shall be issued within the relevant time limit as prescribed by the Statute, if applicable, or as the
rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law may from time to time require, whichever is shorter, after
the allotment or, except in the case of a Share transfer which the Company is for the time being entitled to refuse to register and does not register, after lodgement of a Share transfer with the Company.
|
5.6
|
For the avoidance of doubt, nothing in these Articles shall require title to any Shares or other securities to be evidenced
by a certificate if the Statute (including, for the avoidance of doubt, the Companies (Transfers of Shares – Exemptions) (Jersey) Order 2014) and Exchange Act permit otherwise.
|
6
|
Transfer of Shares
|
6.1
|
Subject to the terms of the Articles (including Article 17(e)), any Member may transfer all or any of his Shares by an
instrument of transfer provided that such transfer complies with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under
Applicable Law. If the Shares in question were issued in conjunction with rights, options or warrants issued pursuant to the Articles on terms that one cannot be transferred without the other, the Directors shall refuse to register the
transfer of any such Share without evidence satisfactory to them of the like transfer of such option or warrant.
|
6.2
|
Subject to the terms of these Articles, the instrument of transfer of any Share shall be in writing in the usual or common
form or in a form prescribed by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law or in any other form
approved by the Directors and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee) and may be under hand or, if the transferor or transferee is a Clearing House
or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the Directors may approve from time to time. The transferor shall be deemed to remain the holder of a Share until the name of the
transferee is entered in the Register of Members.
|
7
|
Redemption and Repurchase of Shares
|
7.1
|
Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange,
the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or
the Company. The redemption of such Shares, except a redemption of Class B Shares pursuant to Article 17(g), shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the
issue of such Shares.8
|
7.2
|
Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange,
the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms
as the Directors may agree with the relevant Member.
|
7.3
|
The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the
Statute, including out of capital.
|
8
|
Treasury Shares
|
8.1
|
Subject to the terms of an Ordinary Resolution to hold Shares as Treasury Shares as required by the Statute, the Directors
may, prior to the purchase or redemption of any Share, determine that such Share shall be held as a Treasury Share.
|
8.2
|
The Directors may determine to cancel a Treasury Share, sell a Treasury Share or transfer a Treasury Share on such terms as
they determine (including for nil consideration) in accordance with, and subject to, the Statute.
|
9
|
Variation of Rights of Shares
|
9.1
|
Subject to Article 3.1, if at any time the share capital of the Company is divided into different classes of Shares, all or
any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares
of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two
thirds of the issued Shares of that class, or with the approval of Special Resolution passed at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding
that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class
present in person may demand a poll.
|
9.2
|
For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one
class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.
|
9.3
|
The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless
otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or Shares issued with preferred or other rights, or by any
purchase or redemption by the Company of its own Shares.
|
10
|
Commission on Sale of Shares
|
|
The Company may pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether
absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up
Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
|
11
|
Non Recognition of Trusts
|
|
The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future
or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.
|
12
|
All shares to be fully paid up
|
|
The Company shall not issue any Shares unless such Shares are fully paid.
|
13
|
Transmission of Shares
|
13.1
|
If a Member dies, the survivor or survivors (where he was a joint holder), or their executor, administrator or legal personal
representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for
which he was a joint or sole holder.
|
13.2
|
Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member
(or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some
person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in
either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.
|
13.3
|
A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in
any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in
respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be
registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a
transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received
or deemed to be received (as determined pursuant to the Articles), the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of
the notice have been complied with.
|
14
|
Ordinary Shares
|
|
The Class A Shares and Class B Shares shall vote together as a single class on all matters with one vote per share (subject
to Articles 10 and 29) and shall rank parri passu in all respects save that;
|
(a)
|
the Class B Shares shall not have any economic rights;
|
(b)
|
Dividends and other distributions shall not be declared or paid on the Class B Shares;
|
(c)
|
in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the
holders of Class B Shares shall be entitled to receive the par value of such Class B Shares ratably on a per share basis with the Class A Shares. Other than as set forth in the preceding sentence, the holders of Class B Shares shall not
be entitled to receive any assets of the Company in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company;
|
(d)
|
in the event of a merger, consolidation or other business combination requiring the approval of Members (whether or not the
Company is the surviving entity) or a tender or exchange offer to acquire any Shares by the Company or by any third party pursuant to an agreement which the Company is a party, the holders of Class B Shares shall not be entitled to
receive consideration consisting of cash or property (other than stock consideration) in respect of such shares in connection with any such merger, consolidation or other business combination;
|
(e)
|
no holder of Class B Shares shall be permitted to transfer Class B Shares other than as part of a concurrent transfer of an
equal number of Waldencast LP Common Units made to the same transferee in compliance with the restrictions on transfer contained in the Amended and Restated Waldencast Partners LP Agreement;
|
(f)
|
the Company shall not issue additional Class B Shares;
|
(g)
|
each holder of a Waldencast LP Common Unit (other than the Company and its subsidiaries) shall, upon the terms and subject to
the conditions set forth in the Amended and Restated Waldencast
|
(h)
|
No holders of Class B Shares shall be entitled to pre-emptive, subscription rights or similar rights.
|
15
|
Amendments of Memorandum and Articles of Association and Alteration of Capital
|
15.1
|
The Company may by Special Resolution:
|
(a)
|
increase its share capital by such sum as the Special Resolution shall prescribe and with such rights, priorities and
privileges as may be set out in the Special Resolution, as the Company in general meeting may determine;
|
(b)
|
consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
|
(c)
|
convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;
|
(d)
|
by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller
amount than is fixed by the Memorandum;
|
(e)
|
convert its status to that of a no par value company;
|
(f)
|
cancel any Shares that at the date of the passing of the Special Resolution have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount of the Shares so cancelled;
|
(g)
|
change its name;
|
(h)
|
alter or add to the Articles;
|
(i)
|
alter or add to the Memorandum; and
|
(j)
|
reduce its share capital or any capital redemption reserve fund.
|
15.2
|
All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of
the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
|
16
|
Offices and Places of Business
|
|
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its
Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine. The Company may not maintain an office or place of business in the United Kingdom,
and any resolution or determination by the Directors to that effect shall be invalid and not binding on the Company.
|
17
|
General Meetings
|
17.1
|
All general meetings other than annual general meetings shall be called extraordinary general meetings.
|
17.2
|
An annual general meeting of the Company shall be held at least once in each calendar year in addition to any other meetings
which may be held in that year, and such meeting shall be specified as an annual general meeting in the notices calling it. Not more than 18 months shall lapse between the date of one annual general meeting and the next.
|
17.3
|
General meetings shall be held at such time and place as the Directors shall appoint.
|
17.4
|
The Directors may call general meetings, and they shall on a Members' requisition forthwith proceed to convene an
extraordinary general meeting of the Company within 2 months of the date of the deposit of the requisition.
|
17.5
|
A Members' requisition is a requisition of Members holding, at the date of deposit of the requisition, not less than 10% in
par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company.
|
17.6
|
The Members' requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the
Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
|
17.7
|
If there are no Directors as at the date of the deposit of the Members' requisition or if the Directors do not within 21 days
from the date of the deposit of the Members' requisition duly proceed to convene a general meeting to be held within a further 21 days, the requisitionists, or any of them representing more than one-half of the total voting rights of
all of the requisitionists, may themselves convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said 21 day period.
|
17.8
|
A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that
in which general meetings are to be convened by Directors.
|
17.9
|
Members seeking to bring business before the annual general meeting or to nominate candidates for appointment as Directors at
the annual general meeting must deliver notice to the Registered Office not less than 120 calendar days before the date of the Company's proxy statement released to Members in connection with the previous year's annual general meeting
or, if the Company did not hold an annual general meeting the previous year, or if the date of the current year's annual general meeting has been changed by more than 30 days from the date of the previous year's annual general meeting,
then the deadline shall be set by the Board with such deadline being a reasonable time before the Company begins to print and send its related proxy materials.
|
18
|
Notice of General Meetings
|
18.1
|
At least fourteen clear days' notice shall be given of any general meeting, including any general meeting at which a Special
Resolution is proposed. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in
such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles
regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
|
(a)
|
in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and
|
(b)
|
in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at
the meeting, together holding not less than ninety per cent in par value of the Shares giving that right.
|
18.2
|
The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any
person entitled to receive such notice shall not invalidate the proceedings of that general meeting.
|
19
|
Proceedings at General Meetings
|
19.1
|
No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the Shares
being individuals present in person shall be a quorum.
|
19.2
|
The Board may resolve to enable persons entitled to attend a general meeting to do so by participation by electronic means
and the members participating in person by such means shall be counted in the quorum for and be entitled to speak and vote at the general meeting in question, provided that the chairman of the general meeting is satisfied that the
member or members participating by electronic means can be identified and are able to:
|
(a)
|
communicate to all other persons attending the meeting, during the meeting, any information or opinions which they have on
the business of the meeting and to have communicated to them any information or opinions which any other person attending the meeting may wish to communicate; and
|
(b)
|
vote, during the meeting, on any resolution on which they are entitled to vote which is put to the vote at the meeting and
that their votes can be taken into account in determining whether or not such resolutions are passed at the same time as the votes of all the other persons attending the meeting
|
19.3
|
In the case of any general meeting the Board may, notwithstanding the specification in the notice of the place of the general
meeting (the “principal place”) at which the chairman of the meeting shall preside, make arrangements for simultaneous attendance and participation at other places by members and proxies entitled
to attend the general meeting but excluded from the principal place under the provisions of this Article. Such arrangements for simultaneous attendance at the meeting may include arrangements regarding the level of attendance at places
other than the principal place provided that they shall operate so that any member and proxy excluded from attendance at the principal place is entitled to attend at one of the other places. For the purpose of all other provisions of
these Articles any such meeting shall be treated as being held and taking place at the principal place.
|
19.4
|
The Board may, for the purpose of facilitating the organisation and administration of any general meeting to which any of the
arrangements referred to in Articles 22.3 apply, from time to time make arrangements, whether involving the issue of tickets (on a basis intended to afford to all members and proxies entitled to attend the meeting an equal opportunity
of being admitted to the principal place) or the imposition of some random means of selection or otherwise as the Board shall in its absolute discretion consider to be appropriate, and may from time to time vary any such arrangements or
make new arrangements in their place and the entitlement of any member or proxy to attend a general meeting at the principal place shall be subject to such arrangements as may be for the time being in force whether stated in the notice
convening the meeting to apply to that meeting or notified to the members concerned subsequent to the notice convening the meeting.
|
19.5
|
Without prejudice, and in addition, to the powers of the Board under Article 22.2, if it appears to the chairman that the
meeting place specified in the notice convening the meeting is inadequate to accommodate all members entitled and wishing to attend, the meeting is duly constituted and its proceedings valid if the chairman is satisfied that adequate
facilities are available to ensure that a member who is unable to be accommodated is able:
|
(a)
|
to participate in the business for which the meeting has been convened;
|
(b)
|
to hear all persons present who speak (whether by the use of microphones, loud-speakers, audio-visual communications
equipment or otherwise), whether in the meeting place or elsewhere; and
|
(c)
|
to be heard by all other persons present in the same way.
|
19.6
|
The Board may make any arrangement and impose any restriction it considers appropriate to ensure the security of a meeting
including, without limitation, the searching of a person attending the meeting and the restriction of the items of personal property that may be taken into the meeting place. The Board is entitled to refuse entry to a meeting to a
person who refuses to comply with these arrangements.
|
19.7
|
The Board may direct that members or proxies wishing to attend any general meeting should provide such evidence of identity
and submit to such searches or other security arrangements or restrictions as the Board shall consider appropriate in the circumstances and shall be entitled in its absolute discretion to refuse entry to any general meeting to any
member or proxy who fails to provide such evidence of identity or to submit to such searches or otherwise to comply with such security arrangements or restrictions or to eject any such member or proxy from any general meeting.
|
19.8
|
A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the
Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective
as if the resolution had been passed at a general meeting of the Company duly convened and held.
|
19.9
|
If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such meeting
a quorum ceases to be present, the meeting, if convened on a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day,
time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum.
|
19.10
|
The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman
of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the Board shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not be present
within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
|
19.11
|
If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for
the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.
|
19.12
|
The chairman of the meeting may at any time without the consent of the meeting adjourn any general meeting (whether or not it
has commenced or a quorum is present) either indefinitely or to another time or place where it appears to him that the Members wishing to attend cannot conveniently be accommodated in the place appointed for the meeting or where the
conduct of persons present prevents or is likely to prevent the orderly continuation of business or where an adjournment is otherwise necessary or desirable so that the business of the meeting may be properly conducted. In addition the
chairman of the meeting may with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time (or indefinitely) and from place to place, but no business
shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned indefinitely, the time and place for the adjourned
meeting shall be fixed by the Board.
|
19.13
|
When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of
an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
|
19.14
|
When a general meeting is postponed for thirty days or more, notice of the postponed meeting shall be given as in the case of
an original meeting. Otherwise it shall not be necessary to give any such notice of a postponed meeting. All proxy forms submitted for the original general meeting shall remain valid for the postponed meeting. The Directors may postpone
a general meeting which has already been postponed.
|
19.15
|
A resolution put to the vote of the meeting shall be decided on a poll.
|
19.16
|
A poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general
meeting at which the poll was demanded.
|
19.17
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on
any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking
of the poll.
|
20
|
Votes of Members
|
20.1
|
Subject to any rights or restrictions attached to any Shares, including as set out at Article 17, every Member present in any
such manner shall have one vote for every Share of which he is the holder.
|
20.2
|
In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case
of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names
of the holders stand in the Register of Members.
|
20.3
|
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction regarding capacity,
may vote by his curator, committee, receiver, curator bonis, or other person on such Member's behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
|
20.4
|
No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such
meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
|
20.5
|
No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting
at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be
final and conclusive.
|
20.6
|
Votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly
authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall
specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.
|
20.7
|
A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and
therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under
one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is
appointed.
|
21
|
Proxies
|
21.1
|
The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his
attorney duly authorised in writing, or, if the appointor is a body corporate or other non-natural person, under the hand of its duly authorised representative. A proxy need not be a Member.
|
21.2
|
The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the
Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy
relates and not earlier than 48 hours before the time appointed for the meeting or any adjourned meeting) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the
notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time
appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote. Unless the Directors otherwise resolve, no account shall be taken of any day or part thereof which is not a
“working day” for the purposes of article 96(4B) of the Statute in determining any such 48 hour period.
|
21.3
|
The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly
deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.
|
21.4
|
The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and
may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
|
21.5
|
Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or
insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity,
revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
|
21.6
|
A proxy shall have the right to speak at general meetings.
|
22
|
DTC Arrangements
|
22.1
|
Subject to the Statutes, for the purpose of facilitating the giving of voting instructions for any general meeting by any
person who holds, or holds interests in, beneficial interests in Shares that are held and traded in the DTC System:
|
(a)
|
each DTC Proxy may appoint (whether by way of instrument of proxy, power of attorney, mandate or otherwise) more than one
person as its proxy in respect of the same general meeting or resolution provided that the instrument of appointment shall specify the number of Shares in respect of which the proxy is appointed and only one proxy may attend the general
meeting and vote in respect of any one Share;
|
(b)
|
each DTC Proxy may appoint (by power of attorney, mandate or otherwise) an agent (including, without limitation, a proxy
solicitation agent or similar person) for the purposes of obtaining voting instructions and submitting them to the Company on behalf of that DTC Proxy, whether in hard copy form or electronic form;
|
(c)
|
each instrument of appointment made by a DTC Proxy or its agent shall, unless the Company is notified to the contrary in
writing at least three hours before the start of the meeting (or adjourned meeting), be deemed to confer on the relevant proxy or agent the power and authority to appoint one or more sub proxies or sub agents or otherwise sub delegate
any or all of its powers to any person;
|
(d)
|
the Board may accept any instrument of appointment made by a DTC Proxy or its agent as sufficient evidence of the authority
of that DTC Proxy or agent or require evidence of the authority under which any such appointment has been made; and
|
(e)
|
the Board may, to give effect to the intent of this Article:
|
(i)
|
make such arrangements, either generally or in any particular case, as it thinks fit (including, without limitation, making
or facilitating arrangements for the submission to the Company of voting instructions on behalf of DTC Proxies, whether in hard copy form or electronic form);
|
(ii)
|
make such regulations, either generally or in any particular case, as it thinks fit, whether in addition to, or in
substitution for, any other provision of these Articles; and
|
(iii)
|
do such other acts and things as it considers necessary or desirable (including, without limitation, approving the form of
any instrument of appointment of proxy or agent, whether in hard copy form or electronic form).
|
22.2
|
If any question arises at or in relation to a general meeting as to whether any person has been validly appointed as a proxy
or agent by a DTC Proxy or its agent to vote (or exercise any other right) in respect of any Shares:
|
(a)
|
if the question arises at a general meeting, the question will be determined by the chairman of the meeting in his sole
discretion; or
|
(b)
|
if the question arises otherwise than at a general meeting, the question will be determined by the Board in its sole
discretion.
|
|
The decision of the chairman of the meeting or the Board (as applicable), which may include declining to recognise a
particular appointment as valid, will, if made in good faith, be final and binding on all persons interested.
|
23
|
Corporate Members
|
23.1
|
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the
absence of such provision by resolution of its directors or other governing body, authorise such person(s) as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person(s) so
authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member. The Directors or chairperson of the meeting may require a
representative of a non-natural person to produce certified copy evidence of their authority to act. Where more than one person is authorised to represent a body
|
23.2
|
If a Clearing House (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it sees fit to
act as its representative at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of Shares in respect of which each such representative is so
authorised. Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the
Clearing House (or its nominee(s)) as if such person was the registered holder of such Shares held by the Clearing House (or its nominee(s)).
|
24
|
Directors
|
|
There shall be not less than 5 but no more than 15 Directors, the exact number of which shall initially be 9, provided
however that the Company may, subject to the Statute, by Ordinary Resolution increase or reduce the limits in the number of Directors, provided that the number of Directors cannot be reduced below 5.
|
25
|
Powers of Directors
|
25.1
|
Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution,
the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would
have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. This Article 28.1 is
subject to the provisions of Article 28.2.
|
25.2
|
Any decision of:
|
(a)
|
any meeting of the Directors at which the majority of Directors are physically present in the United Kingdom;
|
(b)
|
any meeting of the Directors at which the appointed chairman of the meeting is physically present in the United Kingdom;
|
(c)
|
any meeting of the Directors at which a quorum of Directors are present in the United Kingdom;
|
(d)
|
any Director acting alone on behalf of the Company while being physically present in the United Kingdom;
|
(e)
|
any resolution of the Directors in writing which is signed by a majority of Directors physically present in the United
Kingdom at the time of signing or in respect of which the final signature is given by a Director physically present in the United Kingdom at the time of signing; or
|
(f)
|
any person or committee to whom the Directors have delegated their powers (including but not limited to any proxies or
alternate Directors), which would fall within paragraphs (a) to (e) above,
|
|
(each such decision, a “Disqualified Decision”), in each case, shall be invalid and
not binding on the Company.
|
25.3
|
All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts
for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
|
25.4
|
The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held
any other salaried office or place of profit with the Company or to their surviving spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
|
25.5
|
The Directors may exercise all the powers of the Company to borrow money and to mortgage, create a security interest over or
charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt,
liability or obligation of the Company or of any third party.
|
26
|
Appointment and Removal of Directors
|
26.1
|
There shall be a minimum number of 5 Directors of the Company provided that (i) at least one of whom shall be resident in
Jersey, and (ii) there shall not be a majority of Directors resident (for United Kingdom tax purposes) in the United Kingdom at any one time. The maximum number of Directors appointed at any time shall be 15, and Directors of the
Company must be natural persons.
|
26.2
|
The Directors shall, at the discretion of the Board, be divided into three classes, Class I Directors, Class II Directors and
Class III Directors, such that each class is comprised of (i) an equal number of Directors if the total number of Directors appointed is an even number, or (ii) as close as possible to an equal number of Directors of the total number of
Directors appointed is an odd number. The term of the initial Class I Directors assigned at the time of the filing of the Articles shall terminate on the date of the first general meeting of Members held following the date of the
adoption of the Articles; the term of the initial Class II Directors assigned at the time of the adoption of the Articles shall terminate on the date of the second general meeting of Members held following the date of the adoption of
the Articles; and the term of the initial Class III Directors assigned at the time of the adoption of the Articles shall terminate on the date of the third general meeting of Members held following the date of the adoption of the
Articles or, in each case, and subject to the terms of the Investor Rights Agreement, upon such Director’s earlier resignation or removal. At each succeeding general meeting of Members beginning with the first general meeting of Members
held following the date of the adoption of the Articles, successors to the class of Directors whose term expires at that general meeting shall be elected for a three-year term and until their successors are duly elected and qualified.
If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any additional Director of any class elected
to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the directors of that class, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A Director
shall hold office until the general meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or
removal from office, in each case, subject to the terms of the Investor Rights Agreement.
|
26.3
|
Subject to the terms of any other agreement between the parties (including any agreement which may grant specific Members a
right to appoint Directors, including the Investor Rights Agreement), only the Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director, by the affirmative vote of a majority of the
Directors then in office, even if less than a quorum, or by a sole remaining Director, provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum
number of Directors.
|
27
|
Vacation of Office of Director
|
|
The office of a Director shall be vacated if:
|
(a)
|
the Director gives notice in writing to the Company that he resigns the office of Director; or
|
(b)
|
the Director absents himself (for the avoidance of doubt, without being represented by proxy) from three consecutive meetings
of the Board without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or
|
(c)
|
the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
|
(d)
|
the Director ceases to be a director pursuant to the Statute or is disqualified
|
(e)
|
the Director is found to be or becomes of unsound mind; or
|
(f)
|
all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a
resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.
|
28
|
Proceedings of Directors
|
28.1
|
Subject to Article 28.2, the quorum for the transaction of the business of the Directors may be fixed by the Directors, and
unless so fixed shall be a majority of the Directors then in office with at least two persons physically present in Jersey, one of whom must be the Director who is a Jersey resident. In any event, no quorum shall be constituted and any
decisions taken shall be void unless at least two Directors are physically present in Jersey, one of whom must be the Director who is Jersey resident. For the avoidance of doubt, regardless of the number of Directors present, in the
event that the majority of the Directors are physically present in the United Kingdom at the time of the meeting, no quorum shall be constituted and any decisions taken shall be void. A person who holds office as an alternate Director
shall, if their appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if their appointor is not present, count twice towards the quorum. Notwithstanding the foregoing, any decision
regarding the transaction of any business of the Company which constitutes a Disqualified Decision shall be invalid and not binding on the Company.
|
28.2
|
Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising
at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall not have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of their
appointer to a separate vote on behalf of their appointer in addition to their own vote. Notwithstanding the foregoing, any decision regarding the transaction of any business of the Company which constitutes a Disqualified Decision
shall be invalid and not binding on the Company.
|
28.3
|
Meetings of the Directors shall be held at least quarterly, and shall be held only in Jersey. A person may participate in a
meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. The
meeting shall be deemed to be held at the place where the chairman is physically present at the start of the meeting. Notwithstanding the foregoing, any decision regarding the transaction of any business of the Company which constitutes
a Disqualified Decision shall be invalid and not binding on the Company.
|
28.4
|
If any Director (or alternate Director) participates in a meeting of Directors while physically present in the United
Kingdom, then:
|
(a)
|
the meeting of the Board may only be for discussion and informational purposes, and the Board may not make any decision
regarding the transaction of any business of the Company at the meeting itself; any decision shall instead be made by resolution in writing circulated upon adjournment of the meeting of the Board pursuant to paragraph (c);
|
(b)
|
the agenda and minutes of the meeting should confirm that the meeting of the Board is for discussion and informational
purposes only; and
|
(c)
|
a resolution in writing shall be circulated upon adjournment of the meeting of the Board for execution by the Directors in
accordance with Article 31.5.
|
28.5
|
Subject to Article 28.2, a resolution in writing (in one or more counterparts) signed by all the Directors or all the members
of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such
resolution (an alternate Director being entitled to sign such a resolution on behalf of their appointor and if such alternate Director is also a Director, being entitled to sign such resolution both on behalf of their appointor and in
their capacity as a Director) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held, provided that such resolution is not signed by a
majority of Directors who, at the time of signing, are physically present in the United Kingdom. Notwithstanding the foregoing, any decision regarding the transaction of any business of the Company which constitutes a Disqualified
Decision shall be invalid and not binding on the Company.
|
28.6
|
A Director or alternate Director may, or other Officer on the direction of a Director or alternate Director shall, call a
meeting of the Directors by at least ten business days' notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by an individual
Director (or their alternate) in respect of themselves only, either at, before or after the
|
28.7
|
The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors or the number of Directors required to hold office pursuant to Article 29.1, the continuing
Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose.
|
28.8
|
The Directors may elect a chairman of their Board and determine the period for which he is to hold office. At any meeting of
the Board, the Directors present may choose one of their number to be chairman of that meeting, provided that the chairman of the meeting must be physically present at the meeting in Jersey. Notwithstanding the foregoing, any decision
regarding the transaction of any business of the Company which constitutes a Disqualified Decision shall be invalid and not binding on the Company.
|
28.9
|
All acts done by any meeting of the Directors or of a committee of the Directors (including any person acting as an alternate
Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their office
and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the
case may be. This Article 31.9 shall not apply where the defect in appointment, disqualification or lack of entitlement to vote was caused by a breach of the requirements of the Articles relating to a Director's residence or physical
presence.
|
29
|
Presumption of Assent
|
|
A Director or alternate Director who is present at a meeting of the Board at which action on any Company matter is taken
shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of
the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director or alternate Director who
voted in favour of such action.
|
30
|
Directors' Interests
|
30.1
|
A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of
Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
|
30.2
|
A Director or alternate Director may act by himself or by, through or on behalf of his firm in a professional capacity for
the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director.
|
30.3
|
A Director or alternate Director may be or become a director or other officer of or otherwise interested in any company
promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits
received by him as a director or officer of, or from his interest in, such other company.
|
30.4
|
No person shall be disqualified from the office of Director or alternate Director or prevented by such office from
contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any
way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such
contract or transaction by reason of such Director or alternate Director holding office or of the fiduciary relationship thereby established. A Director or alternate Director who has, directly or indirectly, an interest, including but
not limited to, an interest specified in this Article 33.4 or
|
30.5
|
A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm
or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting and counting in the quorum on a resolution in respect of a contract or transaction in
which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.
|
31
|
Minutes
|
|
The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of Officers made by
the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors or alternate Directors present at each
meeting.
|
32
|
Delegation of Directors' Powers
|
32.1
|
The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any
committee consisting of one or more Directors (including the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee). Any such delegation may be made subject to any conditions the Directors may
impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be
governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
32.2
|
The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for
managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally
with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the
Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
32.3
|
The Directors may adopt formal written charters for committees. Each of these committees shall be empowered to do all things
necessary to exercise the rights of such committee set forth in the Articles and shall have such powers as the Directors may delegate pursuant to the Articles (which may include authority to sub-delegate all or any of the powers so
delegated) and as required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law. Each of the Audit
Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, if established, shall consist of such number of Directors as the Directors shall from time to time determine (or such minimum number as may be
required from time to time by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law). For so long as any
class of Shares is listed on the Designated Stock Exchange, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be made up of such number of Independent Directors as is required
from time to time by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law.
|
32.4
|
The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as
the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
|
32.5
|
The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under
the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such
attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
|
32.6
|
The Directors may appoint such Officers (including, for the avoidance of doubt any secretary or assistance secretary) as they
consider necessary on such terms, at such remuneration and to perform such duties, and subject to the Statute and to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the
terms of his appointment an Officer may be removed by resolution of the Directors or Members. An Officer may vacate his office at any time if he gives notice in writing to the Company that he resigns his office.
|
32.7
|
Any delegation of powers under this Article 35 is only valid if the respective board, committee, agency, agent or other
person or body acts on behalf of the Company in accordance with the provisions made for the transacting of the business of the Company by the Directors in these Articles (in particular Articles 28 and 31 above). For the avoidance of
doubt, any decision regarding the transaction of any business of the Company which constitutes a Disqualified Decision shall be invalid and not binding on the Company.
|
33
|
Alternate Directors
|
33.1
|
Any Director (but not an alternate Director) may by writing (and with the consent of (i) the Board, and (ii) any Member who
has, pursuant to any other agreement between the parties, appointed such Director) appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director
so appointed by them. The requirements relating to a Director's residence and physical presence shall apply mutatis mutandis.
|
33.2
|
An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of
Directors of which their appointor is a member, to attend and vote at every such meeting at which the Director appointing them is not personally present, to sign any written resolution of the Directors, and generally to perform all the
functions of their appointor as a Director in their absence.
|
33.3
|
An alternate Director shall cease to be an alternate Director if their appointor ceases to be a Director.
|
33.4
|
Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or
revoking the appointment or in any other manner approved by the Directors.
|
33.5
|
Subject to the provisions of these Articles, an alternate Director shall be deemed for all purposes to be a Director and
shall alone be responsible for their own acts and defaults and shall not be deemed to be the agent of the Director appointing them.
|
34
|
No Minimum Shareholding
|
|
The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a
shareholding qualification is fixed, a Director is not required to hold Shares.
|
35
|
Remuneration of Directors
|
35.1
|
The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The
Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company,
or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in
respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other.
|
35.2
|
The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the
Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his
remuneration as a Director.
|
36
|
Seal
|
36.1
|
The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or
of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some Officer or other person appointed by the
Directors for the purpose.
|
36.2
|
The Company may have for use in any place or places outside Jersey a duplicate Seal or Seals each of which shall be a
facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
|
36.3
|
A Director or Officer, representative or attorney of the Company may without further authority of the Directors affix the
Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in Jersey or elsewhere wheresoever.
|
37
|
Dividends, Distributions and Reserve
|
37.1
|
Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors
may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an
interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out
of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.
|
37.2
|
Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid
according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
|
37.3
|
The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then
payable by him to the Company on account of calls or otherwise.
|
37.4
|
The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific
assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the
Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to
any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.
|
37.5
|
Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any
currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.
|
37.6
|
The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a
reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.
|
37.7
|
Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer
to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to
such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.
|
37.8
|
No Dividend or other distribution shall bear interest against the Company.
|
37.9
|
Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the
date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company's name, provided that the Company shall not be constituted as a trustee in respect
of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other
distribution becomes payable shall be forfeited and shall revert to the Company.
|
38
|
Capitalisation
|
|
The Directors may at any time capitalise any sum standing to the credit of any of the Company's reserve accounts or funds
(including, to the extent permitted by Statute, the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such
sum to Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in
full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with
full power given to the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than
to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and
any agreement made under such authority shall be effective and binding on all such Members and the Company.
|
39
|
Books of Account
|
39.1
|
The Directors shall, in accordance with the Statute, cause proper books of account (including, where applicable, material
underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and
purchases of goods by the Company and the assets and liabilities of the Company. Such books of account shall be sufficient to show and explain the Company's transactions and shall (i) disclose with reasonable accuracy, at any time, the
financial position of the Company at that time; and (ii) enable the Directors to ensure that any accounts prepared by the Company under the Statute comply with the requirements of the Statute. Such books of account must be retained for
a minimum period of ten years from the date on which they are prepared.
|
39.2
|
The Directors shall determine whether and to what extent and at what times and places and under what conditions or
regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of
the Company except as conferred by Statute or authorised by the Directors.
|
39.3
|
The Directors shall, in accordance with the Statute, cause to be prepared and to be laid before the Company in general
meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by the Statute.
|
39.4
|
The Directors shall deliver to the Registrar of Companies a copy of the accounts of the Company signed on behalf of the
Directors by one of them together with a copy of the report thereon by the Auditors prepared in accordance with the Statute.
|
40
|
Audit
|
40.1
|
The Directors or the Company by Ordinary Resolution shall appoint an Auditor of the Company who shall hold office on such
terms as the Directors determine or as stipulated by the Company by Ordinary Resolution in accordance with the Statute.
|
40.2
|
Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company
and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.
|
40.3
|
Auditors shall make a report on the accounts of the Company during their tenure in accordance with the Statute and otherwise
upon request of the Directors.
|
40.4
|
Without prejudice to the freedom of the Directors to establish any other committee, if the Shares (or depositary receipts
therefor) are listed or quoted on the Designated Stock Exchange, and if required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or
otherwise under Applicable Law, the Directors shall establish and maintain an Audit Committee as a committee of the Directors and shall adopt a formal written Audit Committee charter and review and assess the adequacy of the formal
written charter on an annual basis. The composition and responsibilities of the Audit Committee shall comply with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other
competent regulatory authority or otherwise under Applicable Law.
|
40.5
|
If the Shares (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Company shall
conduct an appropriate review of all related party transactions on an ongoing basis and shall utilise the Audit Committee for the review and approval of potential conflicts of interest.
|
40.6
|
Subject to the Statute, the remuneration of the Auditor shall be fixed by the Audit Committee (if one exists).
|
40.7
|
If the office of Auditor becomes vacant by resignation or death of the Auditor, or by his becoming incapable of acting by
reason of illness or other disability at a time when his services are required, the Directors shall fill the vacancy and determine the remuneration of such Auditor.
|
41
|
Notices
|
41.1
|
Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier,
post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Notice may also be served by Electronic
Communication in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or by placing it on the Company’s Website.
|
41.2
|
Subject to the Statute, a notice, a document or information may be sent or supplied by the Company to a Member by being made
available on a website. A notice, a document or information sent or supplied by means of a website must be made available in a form, and by a means, that the Company reasonably considers will enable the recipient to read it and to
retain a copy of it. If a notice, a document or information is sent or supplied by means of a website, the Company must notify the intended recipient of:
|
(a)
|
the presence of the notice, document or information on the website;
|
(b)
|
the address of the website and the place on the website where it may be accessed; and
|
(c)
|
how to access the notice, document or information.
|
41.3
|
Where a notice is sent by:
|
(a)
|
courier; service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be
deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier;
|
(b)
|
post; service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing
the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in Jersey) following the day on which the notice was posted;
|
(c)
|
cable, telex or fax; service of the notice shall be deemed to be effected by properly addressing and sending such notice and
shall be deemed to have been received on the same day that it was transmitted;
|
(d)
|
e-mail or other electronic communication; service of the notice shall be deemed to be effected by transmitting the e-mail to
the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient; and
|
(e)
|
placing it on the Company’s Website; service of the notice shall be deemed to have been effected at the time the notification
given pursuant to Article 44.2 is deemed delivered pursuant to this Article 44.3.
|
41.4
|
A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or
Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the
deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same
might have been given if the death or bankruptcy had not occurred.
|
41.5
|
Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an
entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon
whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting,
and no other person shall be entitled to receive notices of general meetings.
|
42
|
Winding Up
|
42.1
|
If the Company shall be wound up, subject to the Articles (including Article 17), the liquidator (if any) or the Directors
shall apply the assets of the Company in satisfaction of creditors' claims in such manner and order as the Directors or such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:
|
(a)
|
if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company's issued
share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or
|
(b)
|
if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the
Company's issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a
deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.
|
42.2
|
If the Company shall be wound up the liquidator (if any) or the Directors may, subject to the rights attaching to any Shares
and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of
property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator (if any) or the Directors may, with
the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator (if any) or the Directors, with the like approval, shall think fit, but so that no Member shall
be compelled to accept any asset upon which there is a liability.
|
43
|
Indemnity and Insurance
|
43.1
|
To the fullest extent permitted by the Statute, every Director and Officer (which for the avoidance of doubt, shall not
include auditors of the Company), together with every former Director and former Officer (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability,
action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability
(if any) that they may incur by reason of their own actual fraud, wilful neglect or wilful default.
|
43.2
|
The Company shall advance to each Indemnified Person reasonable attorneys' fees and other costs and expenses incurred in
connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person
shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article.
If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with
respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.
|
43.3
|
The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or Officer
against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
|
44
|
Financial Year
|
|
Unless the Directors otherwise determine, the financial year of the Company shall end on 31st December in each year and,
following the year of incorporation, shall begin on 1st January in each year.
|
45
|
Business Opportunities
|
45.1
|
To the fullest extent permitted by Applicable Law, no individual serving as a Director or an Officer (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of
business as the Company. To the fullest extent permitted by Applicable Law, the Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter
which may be a corporate opportunity for Management, on the one hand, and the Company, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by Applicable Law, Management shall have no duty to
communicate or offer any such corporate opportunity to the Company and shall not be liable to the Company or its Members for breach of any fiduciary duty as a Member, Director and/or Officer solely by reason of the fact that such party
pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company.
|
45.2
|
Except as provided elsewhere in this Article, the Company hereby renounces any interest or expectancy of the Company in, or
in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company and Management, about which a Director and/or Officer who is also a member of Management
acquires knowledge.
|
45.3
|
To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in
this Article to be a breach of duty to the Company or its Members, the Company hereby waives, to the fullest extent permitted by Applicable Law, any and all claims and causes of action that the Company may have for such activities. To
the fullest extent permitted by Applicable Law, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past.
|
46
|
Untraced Members
|
46.1
|
The Company shall, subject to the Statute, be entitled to sell the Shares of a Member or the Shares to which a person is
entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that during the previous period of 12 years no communication has been received by the Company from the Member or the person
entitled by transmission or otherwise by operation of law and no cheque or
|
46.2
|
To give effect to any such sale the Company may appoint any person to execute as transferor an instrument of transfer of the
said Shares and such instrument of transfer shall be as effective as if it had been executed by the registered holder of or person entitled by transmission or otherwise by operation of law to such Shares and the title of the transferee
shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of the sale shall belong to the Company which shall be obliged to account to the former Member or other person previously
entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former Member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust
shall be created in respect of the debt, no interest shall be payable in respect of the debt and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company
or invested in such investments (other than Shares or the shares of its holding company if any) as the Directors may from time to time determine.
|
Name of Investor:
|
|||
By:
|
| |
|
Name:
|
| |
|
Title:
|
| |
|
|
| |
|
Name in which Shares are to be registered (if different):
|
|||
Investor’s EIN:
|
|||
Business Address-Street:
|
|||
City, State, Zip:
|
|||
Attn:
|
| |
|
Telephone No.:
|
|||
Facsimile No.:
|
|||
Number of Shares subscribed for:
|
|||
Aggregate Subscription Amount: $
|
State/Country of Formation or Domicile:
|
|||
|
| |
|
|
| |
|
|
| |
|
Date: , 2021
|
|||
|
| |
|
|
| |
|
Mailing Address-Street (if different):
|
|||
City, State, Zip:
|
|||
Attn:
|
| |
|
Telephone No.:
|
|||
Facsimile No.:
|
|||
|
| |
|
Price Per Share: $10.00
|
|
| |
Waldencast Acquisition Corp.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
|
|||
|
| |
|
| |
Name:
|
| |
|
|
| |
|
| |
Title:
|
| |
|
A.
|
| |
QUALIFIED INSTITUTIONAL BUYER STATUS
|
|
| |
(Please check the applicable subparagraphs):
|
|
| |
☐ We are a “qualified institutional buyer” (as
defined in Rule 144A under the Securities Act (a “QIB”)).
|
B.
|
| |
ACCREDITED INVESTOR STATUS
|
|
| |
(Please check the applicable subparagraphs):
|
1. ☐ We are
an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act), and have marked
and initialed the appropriate box on the following page indicating the
provision under which we qualify as an “accredited investor.”
|
|||
2. ☐ We are not a natural person.
|
|||
Rule 501(a), under the Securities Act, in relevant part, states that an
“accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that
person. The Investor has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to the Investor and under which the Investor accordingly qualifies as an “accredited investor.”
|
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|
| |
☐ Any bank, registered broker or dealer,
insurance company, registered investment company, business development company, or small business investment company;
|
|
| |
☐ Any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
|
|
| |
☐ Any employee benefit plan, within the
meaning of the Employee Retirement Income Security Act of 1974, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000;
|
|
| |
☐ Any organization described in Section
501(c)(3) of the Internal Revenue Code, corporation, similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
|
|
| |
☐ Any “family office,” as defined in rule
202(a)(11)(g)-1 under the Investment Advisers Act of 1940, as amended, with assets under management in excess of $5,000,000, not formed to acquire the securities offered, and whose prospective investment is directed by a person who
has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;
|
|
| |
☐ Any natural person whose individual net
worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured
by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding
at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c)
indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;
|
|
| |
☐ Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current
year;
|
|
| |
☐ Any trust with assets in excess of
$5,000,000, not formed to acquire the securities offered, whose purchase is directed by a sophisticated person; or
|
|
| |
☐ Any entity in which all of the equity owners
are accredited investors meeting one or more of the above tests.
|
|
| |
COMPANY:
|
|||
|
| |
|
| |
|
|
| |
WALDENCAST plc
|
|||
|
| |
a public limited company incorporated under the laws of Jersey
|
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|
| |||||
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
| |
|
|
| |
HOLDERS:
|
|||
|
| |
|
| |
|
|
| |
WALDENCAST LONG-TERM CAPITAL LLC
|
|||
|
| |
a Cayman Islands limited liability company
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
| |
|
|
| |
[Entity Target Holders]
|
|||
|
| |
a [•]
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
|||
|
| |
[Individual Target Holders]
|
|||
|
| |
|
| |
|
|
| |
[Entity Investor Stockholder]
|
|||
|
| |
a [•]
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
|||
|
| |
[Individual Investor Stockholders]
|
|
| |
|
|||
|
| |
Signature of Stockholder
|
|||
|
| |
|
|||
|
| |
Print Name of Stockholder
|
|||
|
| |
Its:
|
| |
|
|
| |
Address:
|
|||
|
| |
|
|||
|
| |
|
Waldencast plc
|
| |
|
||||||
By:
|
| |
|
| |
|
|||
Name:
|
| |
|
| |
|
|||
Its:
|
| |
|
| |
|
| |
|
Exhibit Number
|
| |
Description
|
| |
Agreement and Plan of Merger, dated as of November 15, 2021, by and among
the Registrant, Obagi Merger Sub, Inc. and Obagi Global Holdings Limited (included as Annex A to the proxy statement/prospectus).
|
|
| |
Equity Purchase Agreement, dated as of November 15, 2021, by and among the
Registrant, Waldencast Partners LP, Obagi Holdco 1 Limited, Milk Makeup LLC, the members of Milk Makeup LLC and Shareholder Representative Services LLC, as Equityholder Representative (included as Annex B to the proxy
statement/prospectus).
|
|
2.3*
|
| |
Plan of Domestication, dated as of , 2021.
|
| |
Amended and Restated Memorandum and Articles of Association of Waldencast
Acquisition Corp (included as Annex F to the proxy statement/prospectus).
|
|
| |
Form of Memorandum and Articles of Association of Waldencast plc, to become
effective upon Domestication (included as Annex G to the proxy statement/prospectus).
|
|
| |
Specimen Unit Certificate of Waldencast Acquisition Corp.
|
|
| |
Specimen Class A Ordinary Share Certificate of Waldencast Acquisition Corp.
|
|
| |
Specimen Warrant Certificate of Waldencast Acquisition Corp.
|
|
| |
Warrant Agreement, dated March 15, 2021, between the Registrant and
Continental Stock Transfer & Trust Company, as warrant agent.
|
|
4.5*
|
| |
Specimen Class A Ordinary Share Certificate of Waldencast plc.
|
5.1*
|
| |
Opinion of Maples and Calder as to the validity of the Waldencast plc Ordinary
Shares.
|
5.2*
|
| |
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the validity of
the Waldencast plc Warrants.
|
| |
Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
|
|
| |
Sponsor Support Agreement, dated November 15, 2021, by and among Waldencast
Long-Term Capital LLC, the Registrant, certain directors of the Registrant and Obagi Global Holdings Limited (included as Annex C to the proxy statement/prospectus).
|
|
| |
Sponsor Support Agreement, dated November 15, 2021, by and among Waldencast
Long-Term Capital LLC, the Registrant and Milk Makeup LLC (included as Annex D to the proxy statement/prospectus).
|
Exhibit Number
|
| |
Description
|
| |
Stockholder Support Agreement, dated November 15, 2021, by and among the
Registrant, Cedarwalk Skincare Ltd. and Obagi Global Holdings Limited (included as Annex E to the proxy statement/prospectus).
|
|
| |
Form of Subscription Agreement, by and between the Registrant and the
undersigned subscriber party thereto.
|
|
| |
Form of Amended and Restated Registration Rights Agreement, by and among
Waldencast plc, Waldencast Long-Term Capital LLC, certain former shareholders of Obagi Global Holdings Limited and certain former members of Milk Makeup LLC.
|
|
| |
Letter Agreement, dated March 15, 2021, among the Registrant, Waldencast
Long-Term Capital LLC and the Registrant’s officers and directors.
|
|
| |
Investment Management Trust Agreement, dated March 15, 2021, between the
Registrant and Continental Stock Transfer & Trust Company, as trustee.
|
|
| |
Administrative Services Agreement, dated March 15, 2021, between the
Registrant and Waldencast Long-Term Capital LLC.
|
|
| |
Sponsor Warrants Purchase Agreement, dated March 15, 2021, between the
Registrant and Waldencast Long-Term Capital LLC.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Michel
Brousset.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Felipe
Dutra.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Cristiano
Souza.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Hind
Sebti.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Sarah J.
Brown.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Juliette
Hickman.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Lindsay
Pattison.
|
|
| |
Indemnity Agreement, dated March 15, 2021, between the Registrant and Zack
Werner.
|
|
| |
Indemnity Agreement, dated August 17, 2021, between the Registrant and Tassilo
Festetics.
|
|
| |
Promissory Note, dated January 12, 2021, issued to Waldencast Long-Term Capital
LLC.
|
|
| |
Promissory Note, dated August 18, 2021, issued to Waldencast Long-Term Capital
LLC.
|
|
| |
Milk Makeup LLC Appreciation Rights Plan.
|
|
| |
Obagi Global Holdings Limited 2021 Stock Incentive Plan.
|
|
| |
Form of Share Options Agreement under the Obagi Global Holdings Limited 2021
Stock Incentive Plan.
|
|
| |
Form of Restricted Stock Issuance Agreement under the Obagi Global Holdings
Limited 2021 Stock Incentive Plan.
|
|
| |
Forward Purchase Agreement, dated February 22, 2021, by and among the
Registrant, Waldencast Long-Term Capital LLC and Dynamo Master Fund.
|
|
| |
Forward Purchase Agreement, dated March 1, 2021, between the Registrant and
Beauty Ventures LLC.
|
|
| |
Assignment, Assumption and Joinder Agreement to the Forward Purchase
Agreement, dated December 20, 2021, between Waldencast Long-Term Capital LLC and Burwell Mountain Trust.
|
|
| |
Form of Investor Rights Agreement, by and among Waldencast plc, Cedarwalk
Skincare Ltd., Waldencast Long-Term Capital LLC and the guarantor of Cedarwalk Skincare Ltd.’s obligations thereunder.
|
|
| |
Financing Agreement, dated as of March 16, 2021, by and among Obagi, Obagi
Holdco, Obagi Cosmeceuticals, the subsidiary guarantors party thereto, the lenders from time to time party thereto and TCW Asset Management Company LLC.
|
|
| |
Distribution Services Agreement, dated as of June 27, 2018, by and between
Boxout, LLC (f/k/a WBC Group, LLC) and Obagi Cosmeceuticals LLC.
|
|
| |
Distribution Agreement, dated as of October 19, 2018, by and between Obagi
Cosmeceuticals LLC and Gevie, Inc., and amended as of January 27, 2022, by and among Obagi Cosmeceuticals LLC, Gevie, Inc. and LEMED, Inc.
|
|
| |
Form of Milk Makeup Terms Agreement, dated as of September 1, 2015, as
amended July 1, 2017, January 9, 2019, January 1, 2020, and February 26, 2021, by and between Milk Makeup LLC and Sephora USA, Inc.
|
Exhibit Number
|
| |
Description
|
| |
Form of Milk Makeup Vendor Agreement, dated as of May 16, 2019, and amended
as of March 25, 2021, by and between Milk Makeup LLC and Sephora Beauty Canada, Inc.
|
|
| |
Form of Exclusive Distribution Agreement, dated as of July 1, 2020, by and
between Milk Makeup LLC and Sephora Middle East FZE.
|
|
| |
Form of Exclusive Distribution Agreement, dated as of January 20, 2021, by
and between Milk Makeup LLC and Sephora Australia Pty Ltd.
|
|
| |
Form of Exclusive Distribution Agreement, dated as of June 19, 2019, and
amended as February 26, 2021 by and between Milk Makeup LLC and Sephora S.A.S.
|
|
| |
Indemnity Agreement, dated December 16, 2021, between the Registrant and Aaron
Chatterley.
|
|
| |
List of subsidiaries of the Registrant.
|
|
| |
Consent of Marcum LLP.
|
|
| |
Consent of Deloitte & Touche LLP.
|
|
| |
Consent of WithumSmith+Brown, PC.
|
|
23.4*
|
| |
Consent of Maples and Calder (included as part of Exhibit 5.1).
|
23.5*
|
| |
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of
Exhibit 5.2).
|
| |
Power of Attorney (included on the signature page of this Registration
Statement).
|
|
99.1*
|
| |
Form of Proxy Card for the Registrant’s Extraordinary General Meeting.
|
| |
Consent of Aaron Chatterley.
|
|
| |
Consent of Simon Dai.
|
|
| |
Filing Fee Table.
|
|
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 Label Linkbase Document.
|
101.PRE
|
| |
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
To be filed by amendment.
|
†
|
Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Regulation S-K, Item 601(b)(10).
|
+
|
Schedules and exhibits have been omitted pursuant to Item 601 (b)(2) of Regulation S-K. The Registrant agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
|
(1)
|
Incorporated by reference to Exhibit 4.1 filed with the Form S-1 filed by the Registrant on February 22, 2021.
|
(2)
|
Incorporated by reference to Exhibit 4.2 filed with the Form S-1 filed by the Registrant on February 22, 2021.
|
(3)
|
Incorporated by reference to Exhibit 4.3 filed with the Form S-1 filed by the Registrant on February 22, 2021.
|
(4)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 18, 2021.
|
(5)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K/A filed on November 17, 2021.
|
(6)
|
Incorporated by reference to Exhibit 10.1 filed with the Form S-1 filed by the Registrant on February 22, 2021.
|
(7)
|
Incorporated by reference to Exhibit 10.9 filed with the Form S-1 filed by the Registrant on February 22, 2021.
|
(8)
|
Incorporated by reference to Exhibit 10.10 filed with the Form S-1/A filed by the Registrant on March 1, 2021.
|
(9)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 22, 2021.
|
1.
|
The undersigned Registrant hereby undertakes:
|
2.
|
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
|
3.
|
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
|
4.
|
The registrant undertakes that every prospectus: (1) that is filed pursuant to the immediately preceding paragraph, or
(2) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415 under the Securities Act, will be filed as
|
5.
|
The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request.
|
6.
|
The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective.
|
|
| |
WALDENCAST ACQUISITION CORP.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
Title:
|
| |
Chief Executive Officer
|
Signature
|
| |
Title
|
| |
Date
|
|
| |
|
| |
|
/s/ Michel Brousset
|
| |
Chief Executive Officer and Director (Principal Executive Officer and Principal
Accounting Officer)
|
| |
February 14, 2022
|
Michel Brousset
|
| |
|
|||
|
| |
|
|||
|
| |
|
| |
|
/s/ Felipe Dutra
|
| |
Executive Chairman of the
Board of Directors
|
| |
February 14, 2022
|
Felipe Dutra
|
| |
|
|||
|
| |
|
| |
|
/s/ Tassilo Festetics
|
| |
Chief Financial Officer and
Chief Technology Officer
(Principal Financial Officer)
|
| |
February 14, 2022
|
Tassilo Festetics
|
| |
|
|||
|
| |
|
|||
|
| |
|
| |
|
/s/ Hind Sebti
|
| |
Chief Operating Officer
|
| |
February 14, 2022
|
Hind Sebti
|
| |
|
| |
|
|
| |
|
| |
|
/s/ Sarah Brown
|
| |
Director
|
| |
February 14, 2022
|
Sarah Brown
|
| |
|
| |
|
|
| |
|
| |
|
/s/ Juliette Hickman
|
| |
Director
|
| |
February 14, 2022
|
Juliette Hickman
|
| |
|
| |
|
|
| |
|
| |
|
/s/ Lindsay Pattison
|
| |
Director
|
| |
February 14, 2022
|
Lindsay Pattison
|
| |
|
| |
|
|
| |
|
| |
|
/s/ Cristiano Souza
|
| |
Director
|
| |
February 14, 2022
|
Cristiano Souza
|
| |
|
| |
|
|
| |
|
| |
|
/s/Zack Werner
|
| |
Director
|
| |
February 14, 2022
|
Zack Werner
|
| |
|
| |
|
|
| |
|
| |
|
/s/ Aaron Chatterley
|
| |
Director
|
| |
February 14, 2022
|
Aaron Chatterley
|
| |
|
| |
|
|
| |
WALDENCAST ACQUISITION CORP.
|
|||
|
| |
|
| ||
|
| |
By:
|
| |
/s/ Michel Brousset
|
|
| |
Name:
|
| |
Michel Brousset
|
|
| |
Title:
|
| |
Chief Executive Officer
|
Skadden, Arps, Slate, Meagher & Flom llp
|
|||
|
ONE MANHATTAN WEST
NEW YORK, NY 10001
________
TEL: (212) 735-3000
FAX: (212) 735-2000
|
FIRM/AFFILIATE OFFICES
-----------
BOSTON
CHICAGO
HOUSTON
LOS ANGELES
PALO ALTO
WASHINGTON, D.C.
WILMINGTON
-----------
BEIJING
BRUSSELS
FRANKFURT
HONG KONG
LONDON
MOSCOW
MUNICH
PARIS
SÃO PAULO
SEOUL
SHANGHAI
SINGAPORE
TOKYO
TORONTO
|
|
|
|
February 14, 2022
|
|
|
|
RE: |
United States Federal Income Tax Considerations
|
|
Very truly yours,
|
|
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
|
(1) |
WALDENCAST ACQUISITION CORP., an exempted company incorporated under the laws of the Cayman Islands with registered office at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the
“Company”); and
|
(2) |
Tassilo Festetics (“Indemnitee”).
|
(A) |
Highly competent persons have become more reluctant to serve publicly-held companies as directors, officers or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such companies;
|
(B) |
The board of directors of the Company (the “Board”) has
determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and any of its subsidiaries from
certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among publicly traded companies and other business enterprises, the Company believes that, given current market conditions and
trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to companies or business enterprises are being increasingly
subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The amended and restated memorandum and articles
of association of the Company (the “Articles”) provide for the indemnification of the officers and directors of the Company. The Articles
expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with
respect to indemnification, hold harmless, exoneration, advancement and reimbursement rights;
|
(C) |
The uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
|
(D) |
The Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s shareholders and
that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
|
(E) |
It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to advance expenses on behalf of,
such persons to the fullest extent permitted by applicable law and the Articles so that they will serve or continue to serve the Company free from undue concern that they will not be so protected against liabilities;
|
(F) |
This Agreement is a supplement to and in furtherance of the Articles and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder;
|
(G) |
Indemnitee may not be willing to serve as an officer or director, advisor or in another capacity without adequate protection, and the Company desires Indemnitee to
serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified; and
|
1 |
SERVICES TO THE COMPANY
|
2 |
DEFINITIONS
|
2.1 |
References to “agent” shall mean any person who is or was a
director, officer or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, advisor, fiduciary
or other official of another company, corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the
Company.
|
2.2 |
The terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.
|
2.3 |
A “Change in Control” shall be deemed to occur upon the earliest
to occur after the date of this Agreement of any of the following events:
|
|
(a) |
Acquisition of Shares by Third Party. Other than an affiliate
of Waldencast Long-Term Capital LLC, any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the
Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the
aggregate number of outstanding shares entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change
in Control under part (c) of this definition;
|
|
(b) |
Change in Board of Directors. Individuals who, as of the date
hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who were directors on
the date hereof or whose election or nomination for election was previously so approved (collectively, the “Continuing Directors”), cease
for any reason to constitute at least a majority of the members of the Board;
|
|
(c) |
Corporate Transactions. The effective date of a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business
Combination”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of
directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty-one percent (51%) of the combined voting power of the then outstanding securities of the Company entitled to vote generally in
the election of directors resulting from such Business Combination (including, without limitation, a company or corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more Subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (2) other than
an affiliate of Waldencast Long-Term Capital LLC, no Person (excluding any company or corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of fifteen percent (15%) or more of the combined
voting power of the then outstanding securities entitled to vote generally in the election of directors of the surviving company or corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at
least a majority of the Board of Directors of the company or corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors,
providing for such Business Combination;
|
|
(d) |
Liquidation. The approval by the shareholders of the Company of
a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows
due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or
|
|
(e) |
Other Events. There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to
such reporting requirement.
|
2.4 |
“Corporate Status” describes the status of a person who is or was
a director, director nominee, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the
Company.
|
2.5 |
“Delaware Court” shall mean the Court of Chancery of the State of
Delaware.
|
2.6 |
“Disinterested Director” shall mean a director of the Company who
is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
|
2.7 |
“Enterprise” shall mean the Company and any other company,
corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent.
|
2.8 |
“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
|
2.9 |
“Expenses” shall include all direct and indirect costs, fees and
expenses of any type or nature whatsoever, including, without limitation, all attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional
advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in, a Proceeding, including reasonable compensation for time spent by Indemnitee for which
Indemnitee is not otherwise compensated by the Company or any third party. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the principal, premium,
security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against
Indemnitee.
|
2.10 |
“Independent Counsel” shall mean a law firm or a member of a law
firm with significant experience in matters of corporate law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with
respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
|
2.11 |
References to “fines” shall include any excise tax assessed on
Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a
director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
|
2.12 |
The term “Person” shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii)
any Subsidiaries (as defined below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary of the Company or of any corporation owned, directly or indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of shares of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary of the Company or of a company or corporation owned
directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
|
2.13 |
The term “Proceeding” shall include any threatened, pending or
completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, or investigative or related nature, in which Indemnitee was, is, will or might be involved as a party or otherwise by reason of
the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director, director nominee or
officer of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, director nominee or officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of
any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.
|
2.14 |
The term “Subsidiary,” with respect to any Person, shall mean any
company, corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
|
3 |
INDEMNITY IN THIRD-PARTY PROCEEDINGS
|
4 |
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY
|
5 |
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL
|
6 |
INDEMNIFICATION FOR EXPENSES OF A WITNESS
|
7 |
ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS
|
7.1 |
Notwithstanding any limitation in Section 3, 4, or 5, except for Section 27, the Company shall, to the fullest extent permitted by applicable law and the Articles,
indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding. No indemnification, hold harmless or exoneration rights shall be available under this Section 7.1 on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duties to the Company or its shareholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of applicable law.
|
7.2 |
Notwithstanding any limitation in Section 3, 4, 5 or 7.1, except for Section 27, the Company shall, to the fullest extent permitted by applicable law and the Articles,
indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.
|
8 |
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
|
8.1 |
To the fullest extent permissible under applicable law and the Articles, if the indemnification, hold harmless and/or exoneration rights provided for in this Agreement
are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying, holding harmless or exonerating Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether
for judgments, liabilities, fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and
relinquishes any right of contribution it may have at any time against Indemnitee.
|
8.2 |
The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding)
unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
|
8.3 |
The Company hereby agrees to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors or
employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.
|
9 |
EXCLUSIONS
|
|
(a) |
for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision and which payment has
not subsequently been returned, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;
|
|
(b) |
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Exchange Act (or any successor rule) or similar provisions of state statutory law or common law; or
|
|
(c) |
prior to a Change in Control, other than as provided in Sections 14.5 and 14.6 hereof, in connection with any Proceeding (or any part of any Proceeding) initiated by
Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any
Proceeding) prior to its initiation or (ii) the Company provides the indemnification, hold harmless or exoneration payment, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
|
10 |
ADVANCES OF EXPENSES; DEFENSE OF CLAIM
|
10.1 |
Notwithstanding any provision of this Agreement to the contrary except for Section 27, and to the fullest extent not prohibited by applicable law or the Articles, the
Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a
statement or statements requesting such advances from time to time, prior to the final disposition of any Proceeding. Advances shall, to the fullest extent permitted by law, be unsecured and interest free. Advances shall be made without
regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include any and all
reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. To the fullest extent required by
applicable law, such payments of Expenses in advance of the final disposition of the Proceeding shall be made only upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Articles, applicable law or otherwise. This Section 10.1 shall not apply to any claim made by Indemnitee for
which an indemnification, hold harmless or exoneration payment is excluded pursuant to Section 9.
|
10.2 |
The Company will be entitled to participate in the Proceeding at its own expense.
|
10.3 |
The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on Indemnitee
without Indemnitee’s prior written consent.
|
11 |
PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION
|
11.1 |
Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document
relating to any Proceeding or matter which may be subject to indemnification, hold harmless or exoneration rights, or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company
of any obligation which it may have to Indemnitee under this Agreement, or otherwise.
|
11.2 |
Indemnitee may deliver to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this Agreement. Such application(s)
may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. Following such a written application for indemnification by Indemnitee, Indemnitee’s entitlement to indemnification shall
be determined according to Section 12.1 of this Agreement.
|
12 |
PROCEDURE UPON APPLICATION FOR INDEMNIFICATION
|
12.1 |
A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the specific case by one of the following
methods, which shall be at the election of Indemnitee: (i) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board (ii) by Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee; or (iii) by vote of the shareholders by ordinary resolution. The Company will promptly advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification,
including a description of any reason or basis for which indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such
determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses
(including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby agrees to indemnify and to hold Indemnitee harmless therefrom.
|
12.2 |
In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12.1 hereof, the Independent Counsel shall be
selected as provided in this Section 12.2. The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising
it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel is
selected by the Board, the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of
“Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as
defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written
objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without
merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11.2 hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee
may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by
the Delaware Court, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12.1 hereof. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 14.1 of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
|
12.3 |
The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all
Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
|
13 |
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
|
13.1 |
In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11.2 of this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination
prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its
directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
|
13.2 |
If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have
made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall, to the fullest extent
permitted by applicable law and the Articles, be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially
misleading, in connection with the request for indemnification, or (ii) a final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not
to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto.
|
13.3 |
The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
|
13.4 |
For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of
account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors, managers, managing members, or officers of the Enterprise in the course of their duties, or on the advice of legal counsel
for the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member or on information or records given or reports made to the Enterprise, its Board, any committee of the Board or any
director, trustee, general partner, manager or managing member by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee of the Board or any director, trustee,
general partner, manager or managing member. The provisions of this Section 13.4 shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement.
|
13.5 |
The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, manager, managing member, fiduciary, agent or employee of the
Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
|
14 |
REMEDIES OF INDEMNITEE
|
14.1 |
In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses, to the fullest extent permitted by applicable law and the Articles, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant
to Section 12.1 of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 5, 6, 7 or the last sentence of Section 12.1 of this
Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, (vi) payment of indemnification pursuant to Section
3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless or exoneration rights under this
Agreement or otherwise is not made within ten (10) days after receipt by the Company of a written request therefor, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification, hold harmless, exoneration,
contribution or advancement rights. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules and Mediation Procedures of the
American Arbitration Association. Except as set forth herein, the provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any
such adjudication or award in arbitration.
|
14.2 |
In the event that a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to be indemnified, held harmless, exonerated and to receive advances of Expenses under this Agreement and the Company shall
have the burden of proving Indemnitee is not entitled to be indemnified, held harmless, exonerated and to receive advances of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant
to Section 12.1 of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances
pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
|
14.3 |
If a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not
materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
|
14.4 |
The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of
this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
|
14.5 |
The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law and the Articles against all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) pay to Indemnitee, to the fullest extent permitted by applicable law and the Articles, such Expenses which are incurred by Indemnitee in connection
with any judicial proceeding or arbitration brought by Indemnitee (i) to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement or any other indemnification, hold harmless, exoneration, advancement or
contribution agreement or provision of the Articles now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless of the outcome and whether
Indemnitee ultimately is determined to be entitled to such indemnification, hold harmless or exoneration right, advancement, contribution or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not
brought by Indemnitee in good faith).
|
14.6 |
Interest shall be paid by the Company to Indemnitee at a rate to be agreed between the Company and Indemnitee for amounts which the Company indemnifies, holds harmless
or exonerates, or is obliged to indemnify, hold harmless or exonerate for the period commencing with the date on which Indemnitee requests indemnification, to be held harmless, exonerated, contribution, reimbursement or advancement of any
Expenses and ending with the date on which such payment is made to Indemnitee by the Company.
|
15 |
SECURITY
|
16 |
NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION
|
16.1 |
The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under
applicable law, the Articles, any agreement, a vote of shareholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee
under this Agreement in respect of any Proceeding (regardless of when such Proceeding is first threatened, commenced or completed) arising out of, or related to, any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status
prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would
be afforded currently under the Articles or this Agreement, then this Agreement (without any further action by the parties hereto) shall automatically be deemed to be amended to require that the Company indemnify Indemnitee to the fullest
extent permitted by law. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
|
16.2 |
The Articles permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a
trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted
against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director, officer, employee or agent of the Company, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to
indemnify Indemnitee against such liability under the provisions of this Agreement, as it may then be in effect. The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the
rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights
and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.
|
16.3 |
To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers, managing
members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a
Proceeding as to which Indemnitee is a party or a participant (as a witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.
|
16.4 |
In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
|
16.5 |
The Company’s obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a
director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or
advancement of expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary except for Section 27, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any
indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this
Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or
insurance coverage rights against any person or entity other than the Company.
|
17 |
DURATION OF AGREEMENT
|
18 |
SEVERABILITY
|
19 |
ENFORCEMENT AND BINDING EFFECT
|
19.1 |
The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to
serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.
|
19.2 |
Without limiting any of the rights of Indemnitee under the Articles as they may be amended from time to time, this Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
|
19.3 |
The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be
enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the
Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of any other
Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
|
19.4 |
The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a
substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
|
19.5 |
The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of
proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance
hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may
be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without
the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a Court of competent jurisdiction and the Company
hereby waives any such requirement of such a bond or undertaking.
|
20 |
MODIFICATION AND WAIVER
|
21 |
NOTICES
|
|
(a) |
If to Indemnitee, at the address indicated on the signature page of this Agreement or such other address as Indemnitee shall provide in writing to the Company.
|
|
(b) |
If to the Company, to:
|
22 |
APPLICABLE LAW AND CONSENT TO JURISDICTION
|
23 |
IDENTICAL COUNTERPARTS
|
24 |
MISCELLANEOUS
|
25 |
PERIOD OF LIMITATIONS
|
26 |
ADDITIONAL ACTS
|
27 |
WAIVER OF CLAIMS TO TRUST ACCOUNT
|
28 |
INTERPRETATION
|
|
(a) |
“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
|
|
(b) |
“shall” shall be construed as imperative and “may” shall be construed as permissive;
|
|
(c) |
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced;
|
|
(d) |
any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of
the words preceding those terms;
|
By:
|
/s/ Tassilo Festetics
|
||
Name:
|
Tassilo Festetics
|
||
Address:
|
c/o Waldencast Acquisition Corp.
10 Bank Street, Suite 560
White Plains, NY 10606
|
||
WALDENCAST ACQUISITION CORP.
|
|||
By:
|
/s/ Michel Brousset
|
||
Name:
|
Michel Brousset
|
||
Title:
|
Authorized Signatory
|
Principal Amount: Up to $1,500,000
(See Schedule A)
|
Dated as of August 18th, 2021
|
WALDENCAST ACQUISITION CORP.
|
|||
By:
|
/s/ Michel Brousset
|
||
Name:
|
Michel Brousset
|
||
Title:
|
CEO/Founder
|
By:
|
/s/ Michel Brousset
|
||
Name:
|
Michel Brousset
|
||
Title:
|
CEO/Founder
|
Date
|
Drawing
|
Interest Earned
|
Principal Balance
|
|
I. |
PURPOSE OF THE PLAN
|
|
II. |
DEFINITIONS
|
|
III. |
AWARDS
|
|
IV. |
ADMINISTRATION OF THE PLAN
|
|
V. |
ELIGIBILITY
|
|
VI. |
STOCK SUBJECT TO THE PLAN
|
|
VII. |
TERMS OF OPTIONS
|
|
VIII. |
TERMS OF STOCK AWARDS
|
|
IX. |
TERMS OF RESTRICTED STOCK UNITS
|
|
X. |
TRANSFERABILITY OF AWARDS
|
|
XI. |
RESTRICTIONS ON SHARES; RECOUPMENT
|
|
XII. |
CHANGE IN CONTROL
|
|
XIII. |
EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN
|
|
XIV. |
GENERAL
|
Grant Date:
|
|
Number of RSUs Subject to Award:
|
__________
|
Vesting Schedule:
|
[The RSUs shall vest in a series of five equal, successive, annual installments upon the Participant’s completion of each year of Service over the
five (5) year period measured from the Grant Date; provided, however, that prior to the consummation of a Qualifying Transaction, no RSUs
shall vest until the date that a Qualifying Transaction is consummated, at which time any RSUs that have met the Service based vesting requirement shall vest in full. Notwithstanding the foregoing, no RSUs shall vest after the 10th
anniversary of the Grant Date set forth above.]
|
Issuance Schedule:
|
The Shares underlying the RSUs in which the Participant vests in accordance with the vesting schedule above (the “Issued Shares”) shall be issued,
subject to the Company’s collection of all applicable Withholding Taxes, on the date those particular RSUs vest or as soon after that scheduled vesting date as administratively practicable, but in no event later than the later of (i) the
close of the calendar year in which such vesting date occurs or (ii) the fifteenth day of the third calendar month following such vesting date (the “Issue Date”). The issuance of the Shares shall be subject to the Company’s collection of all
applicable Withholding Taxes. The procedures pursuant to which the applicable Withholding Taxes are to be collected are set forth in Paragraph 9 of this Agreement.
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OBAGI GLOBAL HOLDINGS LIMITED
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By:
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Name:
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Title:
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Date:
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PARTICIPANT NAME:
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Date:
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Address:
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(A) |
The Sponsor organized Waldencast as a newly incorporated blank check company, incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or
similar business combination with one or more businesses.
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(B) |
The Guarantor owns all of the shares of Cedarwalk, and Cedarwalk owns and the Guarantor indirectly owns all of the shares of Obagi Global Holdings Limited, a limited liability company organized under the laws of the Cayman Islands (“Obagi Global”).
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(C) |
Obagi Global owns all of the shares of Obagi Holdings Company Limited, a limited liability company organized under the laws of the Cayman Islands (“Obagi Holdings”), which in turn owns all of the
shares of Obagi Hong Kong Limited, a limited liability company organized under the laws of the Hong Kong Special Administrative Region (“Obagi Hong Kong”).
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(D) |
Obagi Hong Kong owns all of the shares of Obagi (Shanghai) Cosmeceuticals Co., Ltd. (“Obagi Shanghai”) and Obagi (Xi’an) Pharmaceutical Technology Co., Ltd. (“Obagi
Xi’an”), each of which is a limited liability company organized under the laws of the People’s Republic of China.
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(E) |
Pursuant to the distribution agreements by and between Obagi Holdings and Obagi Global and Obagi Global and Cedarwalk, in each case, dated as of [●], 202[●], Obagi Holdings will distribute to Obagi Global and immediately thereafter,
Obagi Global will distribute to Cedarwalk, all of the shares of Obagi Hong Kong and a US$2.5 million promissory note by way of dividend distribution in specie to its sole shareholder Cedarwalk.
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(F) |
Waldencast entered into a merger agreement with Obagi Global, and Obagi Merger Sub Inc., a wholly owned subsidiary of Waldencast (“Merger Sub”), dated as of November 15, 2021, pursuant to which,
among other things and subject to the terms therein, Merger Sub will merge with and into Obagi Global with Obagi Global surviving such merger as a wholly owned subsidiary of Waldencast. The distributions in specie referred to in recital
(E) above are expected to happen before the closing of such merger (the “Merger Closing”).
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(G) |
Waldencast, Cedarwalk and the Guarantor agree that substantial damage may be suffered by Waldencast in the event the controlling interests of Obagi Hong Kong, Obagi Shanghai or Obagi Xi’an are transferred from the Guarantor or
Cedarwalk to third-party buyers.
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(H) |
The Guarantor is entering into this Agreement for the purposes of (i) guaranteeing the obligations of Cedarwalk and (ii) undertaking to Waldencast that, subject to certain exceptions of Permitted Transfers (as defined herein), it will
not, without the prior written consent of Waldencast, Transfer the shares of Cedarwalk to third parties.
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(I) |
The Parties have determined that it is advisable and in each of their best interests to enter into this Agreement to establish their respective rights and obligations with respect to the shares of Obagi Hong Kong, Obagi Shanghai and
Obagi Xi’an.
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1. |
Certain Definitions.
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1.1 |
Definitions. As used in this Agreement, the following terms shall have the following meanings:
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2. |
Right of First Offer/Right of First Refusal.
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2.1 |
Proposed ROFO Offer. In the event Cedarwalk or any of its Subsidiaries or controlled Affiliates (a “Transferring Shareholder”) proposes to Transfer any of the Equity Securities of a
Company (a “Subject Company”) held (directly or indirectly) by it in a transaction or a series of transactions, Cedarwalk must first offer to Transfer such Company Equity Securities to Waldencast by
serving a written offer notice (the “ROFO Sale Notice”) on it, which notice shall set forth:
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|
2.1.1 |
the number of the Company Equity Securities (including the identity of the Companies) proposed to be Transferred (the “ROFO Offer Shares”) and the minimum purchase price at which Cedarwalk would agree to Transfer the ROFO Offer Shares (the “Minimum Purchase Price”), provided that no such Transfer of Company Equity Securities to a third party (other than Waldencast) may be for less than the Minimum Purchase Price; and
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|
2.1.2 |
the audited financial statements of each of the Companies for the three most recent financial years to the extent available and unaudited financial statements for such periods in which audited financial
statements are not available.
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2.2 |
ROFO Acceptance Period. The ROFO Sale Notice will be valid for the Requisite Time Period from the date of receipt by Waldencast of the ROFO Sale Notice (the “ROFO Acceptance Period”).
Waldencast may, during the ROFO Acceptance Period, (i) subject to its delivering to Cedarwalk a confidentiality agreement in form and substance reasonably satisfactory to Cedarwalk, conduct due diligence and raise questions with Cedarwalk
relating to the Companies and their respective businesses, and (ii) provide a binding offer to Cedarwalk for the purchase of the ROFO Offer Shares at a purchase price at least equal to the Minimum Purchase Price (the “ROFO Offer”) or decline to provide the ROFO Offer to Cedarwalk. The ROFO Offer must state that it will remain open for sixty (60) days. Cedarwalk may seek other offers to purchase the ROFO Offer Shares
at a price greater than the purchase price set forth in the ROFO Offer provided that, if Cedarwalk seeks such other offers, Cedarwalk shall be bound by the ROFR mechanism contained in Article 2.6
below for the sale of the ROFO Offer Shares. Cedarwalk shall use its reasonable best efforts to assist with the due diligence investigation carried out by Waldencast and provide answers to any questions reasonably raised by Waldencast.
In the event the due diligence investigation is not completed within the ROFO Acceptance Period, Waldencast may, at its option, extend the ROFO Acceptance Period by a period of thirty (30) days. If at any time during the Requisite Time
Period Waldencast determines not to submit a ROFO Offer, Waldencast shall promptly notify Cedarwalk of such determination, whereupon Cedarwalk may seek other offers to purchase the ROFO Offer Shares at a price at least equal to the
Minimum Purchase Price subject to compliance with any applicable provisions of Article 2.6 below.
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2.3 |
No ROFO Offer. In the event Waldencast notifies Cedarwalk that it is not providing a binding offer for the purchase of the ROFO Offer Shares or fails to make a binding offer prior to the end of the ROFO Acceptance Period,
Cedarwalk may solicit interests from one or more third-party buyers for the ROFO Offer Shares in accordance with Article 2.5 below; provided that Cedarwalk shall be bound by the ROFR mechanism
contained in Article 2.6 below for the sale of the ROFO Offer Shares.
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2.4 |
ROFO Offer. In the event Waldencast elects to submit the ROFO Offer for the purchase of the ROFO Offer Shares prior to the end of the ROFO Acceptance Period, it shall serve a written notice to Cedarwalk, which notice shall set
forth:
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2.4.1 |
the number of the Company Equity Securities (including the identity of the Companies) proposed to be purchased by Waldencast or its Permitted Designee; and
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|
2.4.2 |
the purchase price for such Company Equity Securities proposed to be so purchased which must equal or exceed the Minimum Purchase Price.
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2.5 |
Acceptance or Rejection of the ROFO Offer. Cedarwalk shall have a period of one hundred twenty (120) days following the receipt of the ROFO Offer to either (i) accept the ROFO Offer or (ii) procure a bona fide binding third
party offer for such Company Equity Securities at a price higher than the ROFO Offer. Any such bona fide binding third party offer (the “Third Party Offer”) shall (a) state the identity and
background (including the ultimate controller) of the offeror, (b) be for cash, equity securities, debt, any other form of securities, or a combination thereof (including, without limitation, earn-out provisions), with closing to happen
no later than ninety (90) days from the date of such offer (subject to any regulatory approval or filing requirements), (c) state that such offeror is not an Affiliate of Cedarwalk or the Guarantor, (d) represent that the Third Party
Offer was obtained through an arms’ length process between such third party and the Guarantor, Cedarwalk or any of their Affiliates (e) equal or exceed the Minimum Purchase Price and (f) state that the offeror has been informed of
Waldencast’s right of first refusal provided for in this Agreement. From time to time, during such one hundred twenty (120) day period, subject to requirements of applicable Law and contractual obligations of Cedarwalk, Cedarwalk shall
provide updates to Waldencast as to the status of its efforts to procure a Third Party Offer.
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2.6 |
ROFR Offer. In the event (i) the Transfer of the ROFO Offer Shares, if consummated, would result in Cedarwalk ceasing to control 50% or more of the Equity Securities of any of the Companies, and (ii) Cedarwalk submits a Third
Party Offer at a price higher than the ROFO Offer (which must equal or exceed the Minimum Purchase Price) to Waldencast, Cedarwalk must at the same time of such submission provide to Waldencast an offer for Waldencast to purchase the ROFO
Offer Shares for the same consideration and on substantially equal terms as set out in the Third Party Offer (the “ROFR Offer”). Waldencast shall have a period of forty-five (45) days from the date
of receipt of the ROFR Offer to accept the offer contained therein. In the event Waldencast elects not to submit the ROFO Offer to Cedarwalk, Waldencast shall still be provided with the ROFR Offer and may choose to accept the ROFR Offer
in its sole discretion.
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2.7 |
Rejection of the ROFR Offer. In the event Waldencast elects not to accept the terms of the ROFR Offer and notifies Cedarwalk of such election or fails to accept such terms within such forty-five (45) day-period, Cedarwalk may
proceed to Transfer the ROFO Offer Shares to the relevant third party offeror stated in the Third Party Offer; provided that the requirements set forth in Article 2.5 are complied with. Any
Transfer in violation of this Article 2 shall be null and void and shall not be recorded by the corporate secretary of the Companies in the books and records of the Companies, and Cedarwalk shall use its best efforts to unwind any such
Transfer.
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2.8 |
Subsequent Transfers. In the event closing for the sale of the ROFO Offer Shares does not occur as a result of (i) the terms of the Third Party Offer not having been met or (ii) the requirements of Article 3.1 not having been
met, Cedarwalk shall be required to follow the requirements of this Article 2 again in subsequent proposals to Transfer the Company Equity Securities. The terms of this Article 2 shall not apply with respect to a Company after any
Transfer of Equity Securities of such Company made in compliance with this Article 2.
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2.9 |
Inapplicability of this Article. Notwithstanding any provision of this Agreement to the contrary, this Article 2 and Article 3 shall not apply to or in any way restrict any Transfer or series of Transfers of Equity Securities
of any of the Companies (i) pursuant to any Encumbrance in favor of any one or more bona fide financial institutions licensed to operate as commercial banks in connection with any loan or credit
facility obtained by Cedarwalk or any realization upon any such Encumbrance, provided that in the case of (i), such loan or credit facility or any realization upon any Encumbrance is entered into
in the ordinary course of business of the financial institution, the terms of such transaction are made at arms’ length and on normal commercial terms, (ii) by way of gift or other Transfer to any Permitted Holder; provided that in the case of (ii), any such transferee shall agree in writing, as a condition to such Transfer, to be bound by all of the provisions of this Article 2 and 3 to the same extent as if
such transferee were Cedarwalk transferring such Equity Securities; (iii) by the will of Steven Dai or the laws of descent and distribution applicable to Steven Dai upon his death; provided that
in the case of (iii), such Equity Securities shall thereafter remain subject to the provisions of this Agreement to the same extent they would be if held by Steven Dai; and (iv) any requirement of applicable Law or order of any
Governmental Authority (the Transfers referred to in this Article 2.9 being referred to as “Permitted Transfers”).
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3. |
Closing.
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3.1 |
Closing. In the event either (i) Cedarwalk elects to accept the ROFO Offer in accordance with Article 2.5 or (ii) Waldencast elects to accept the ROFR Offer in accordance with Article 2.6, Cedarwalk and Waldencast shall use
their respective best efforts to ensure that closing of the ROFO Offer Shares (“Closing”) will take place on a date that is no later than the time period set forth in Article 2.5 or 2.6, as
applicable; provided that such applicable period may be extended for up to another sixty (60) days by either Waldencast or Cedarwalk if closing cannot occur due to one or more regulatory approvals
not having been issued. If closing cannot occur notwithstanding such extension, Cedarwalk shall be required to reinitiate the process set forth in Article 2 for any subsequent Transfer of the Equity Securities of such Company.
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4. |
Sale and Voluntary Liquidation.
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4.1 |
Waldencast Competitor. Notwithstanding Article 2 hereof, in the event Cedarwalk proposes to Transfer any of the Company Equity Securities to a Waldencast Competitor, Cedarwalk shall be required to seek the prior written consent
of Waldencast (such consent may be given or withheld in Waldencast’s reasonable discretion).
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4.2 |
Voluntary Liquidation. In the event Cedarwalk or any of its Subsidiaries proposes to wind up, liquidate or dissolve one or more of the Companies, Cedarwalk shall provide written notice thereof to Waldencast no later than ninety
(90) days prior to the initiation of such winding up, liquidation or dissolution, and Waldencast shall have the right, exercisable within sixty (60) days of receipt of such notice, to purchase each such Company proposed to be wound up
liquidated or dissolved at an amount equal to its net asset value as determined by an independent financial expert appointed by Waldencast; provided that if Waldencast offers to acquire any such
Companies at its net asset value, Cedarwalk must sell such Company to Waldencast, and Waldencast shall be required to purchase such Company, for an amount equal to such Company’s net asset value.
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5. |
Governance.
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5.1 |
Board of Directors. At and following the Closing, for so long as Cedarwalk holds of record or beneficially owns common stock of Waldencast equal to or exceeding the Minimum Ownership Threshold (as defined below), Waldencast
will take all necessary action to cause the Board to be comprised one (1) director nominated by Cedarwalk (the “Cedarwalk Director”). Mr. Simon Dai shall be nominated for election to the Board as
the initial Cedarwalk Director and shall be nominated to serve in the class of Waldencast directors having the longest prospective term (i.e., at least three years). For so long as the Permitted Holders hold of record or beneficially own
common stock of Waldencast in an aggregate amount equal to or exceeding the Minimum Ownership Threshold, Waldencast shall cause the Cedarwalk Director to be nominated as a director of Waldencast and Waldencast shall take all action
necessary or appropriate to cause the Cedarwalk Director to be nominated for election to the Board and shall use substantially the same efforts to support the Cedarwalk Director’s election to the Board as the other Board nominees.
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5.2 |
Replacement Directors. If the then current Cedarwalk Director is unable or unwilling to serve as a director, resigns as a director, is removed as a director or is otherwise not serving as a director prior to termination of this
Agreement, and at such time (A) the Permitted Holders’ aggregate beneficial ownership of Waldencast common stock (which, for purposes of this Agreement, shall be determined under Rule 13d-3 promulgated under the Exchange Act is at least
5.0% of the then-outstanding common stock of Waldencast (the “Minimum Ownership Threshold”) and (B) Cedarwalk or the Guarantor has not committed a material breach of this Agreement, Cedarwalk shall
have the ability to name a replacement director, subject to the approval of the Board of Directors of Waldencast (such approval not to be unreasonably withheld, conditioned or delayed) (any such replacement director shall be referred to
as the “Replacement Director”). Any Replacement Director named by Cedarwalk shall be required to satisfy the guidelines and policies with respect to service on the Board applicable to all
non-management directors. Subject to applicable rules of Nasdaq and the rules and regulations of the SEC, Waldencast shall take all necessary action to nominate or cause the Board to appoint, as applicable, the Replacement Director to
the Board and to any applicable committee of the Board of which the Cedarwalk Director was a member of immediately prior to such director’s resignation or removal; provided that such Replacement
Director is qualified to serve on any such committee of the Board. The terms and conditions applicable to the Cedarwalk Director under this Agreement shall apply to any such Replacement Director as if such person were the Cedarwalk
Director.
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5.3 |
Indemnification. Waldencast shall provide each of its directors with the same expense reimbursement, benefits, indemnity, exculpation and other arrangements provided to the other directors of Waldencast and Waldencast shall not
amend, alter or repeal any right to indemnification or exculpation covering or benefiting any director nominated or appointed pursuant to this Agreement as and to the extent consistent with applicable Law, the Organizational Documents of
Waldencast and any indemnification agreements with directors (whether such right is contained in the Organizational Documents or another document) (except to the extent such amendment or alteration permits Waldencast to provide broader
indemnification or exculpation rights on a retroactive basis than permitted prior thereto). Waldencast shall at all times purchase and maintain directors’ and officers’ liability insurance with liability limits, exclusions and
self-retention amounts substantially comparable to those maintained by public companies of a similar size, industry and risk profile as Waldencast.
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5.4 |
Reimbursement of Expenses. Waldencast shall reimburse the directors for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the Board and any committees thereof, including travel,
lodging and meal expenses.
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6. |
Termination.
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6.1 |
Termination Generally. This Agreement shall terminate in its entirety immediately upon the occurrence of any of the following events:
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|
6.1.1 |
on the date on which this Agreement is terminated by the written agreement of the Parties;
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6.1.2 |
with respect to any Company, on the date on which such Company is wound up, liquidated or dissolved or a Transfer of the Equity Securities of such Company directly or indirectly owned by Waldencast has been
effected in accordance with the terms of this Agreement, provided that this Article 6.1.2 shall not apply in the event Waldencast chooses to exercise its right of purchase provided under Article
4.2;
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6.1.3 |
on the date on which Waldencast is wound up, liquidated or dissolved; or
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|
6.1.4 |
on the date on which a Change of Control shall have occurred.
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6.2 |
Consequences of Termination. In the event of termination of this Agreement pursuant to this Article 6, this Agreement shall become null and void and have no effect, and the further obligations of the Parties under this
Agreement shall terminate, and there will be no liability on the part of any Party; provided that:
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6.2.1 |
Articles 9, 10 and 11 and this Article 6 shall survive any termination of this Agreement; and
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|
6.2.2 |
no Party shall be relieved or released from any liability arising (i) as a result of a breach occurring at or before termination or (ii) out of fraud.
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7. |
Guarantee and Covenant to Own Cedarwalk.
|
7.1 |
Guarantee. The Guarantor hereby guarantees as principal obligor to Waldencast the due and punctual payment of all amounts payable by Cedarwalk under this Agreement. The Guarantor will maintain at all times assets sufficient to
satisfy its obligations under this Agreement including in accordance with this Section 7.1. The obligations of the Guarantor hereunder are unconditional and absolute and will not be released, discharged or otherwise affected by (i) any
change in the corporate existence, structure or ownership of Cedarwalk or any insolvency, bankruptcy, reorganization or other similar proceeding affecting Cedarwalk or its assets or any resulting release or discharge of any obligation of
Cedarwalk contained in this Agreement; (ii) the existence of any claim, set-off or other rights which the Guarantor may have at any time against Cedarwalk or Waldencast, whether in connection with this Agreement or any unrelated
transactions; (iii) any invalidity, irregularity or unenforceability relating to or against Cedarwalk for any reason of this Agreement; (iv) any Permitted Transfers; or (v) any other act or omission to act or delay of any kind by
Cedarwalk or Waldencast.
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7.2 |
Covenant to Own Cedarwalk. Except for (i) Permitted Transfers and (ii) Transfers made in accordance with this Agreement, the Guarantor hereby undertakes to directly or indirectly own and control at least 60% of the outstanding
shares of Cedarwalk, to control voting power over all outstanding shares of Cedarwalk and to vote all such shares in a block for so long as this Agreement shall remain effective.
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7.3 |
Non-Disparagement. Subject to any applicable legal obligation to do so in response to or compliance with a subpoena, a validly issued legal process or a request by a Governmental Authority, each of the Parties covenants and
agrees that, during the term of this Agreement, or until such earlier time as Waldencast and the Sponsor, on the one hand, and the Guarantor and Cedarwalk on the other hand, or any of their respective Representatives (as defined below)
shall have breached this Article 7.3, none of the Parties nor any of their respective agents, Subsidiaries, Affiliates, successors, assigns, principals, equityholders, officers, employees or directors (collectively, “Representatives”) shall publicly criticize, attempt to discredit, disparage, call into disrepute, or otherwise defame or slander, with respect to Waldencast and the Sponsor, the brands or products, of
the Guarantor, Cedarwalk, or their respective Subsidiaries and Affiliates, and with respect to Cedarwalk and the Guarantor, the brands or products of Waldencast, the Sponsor or their respective subsidiaries, except that the Parties may
(i) make any factual statement required by law or (ii) respond to any breach by the other Parties of this Article 7.3.
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7.4 |
Non-Solicitation. During the term of this Agreement, Waldencast and the Sponsor, and their respective Subsidiaries, on the one hand, and the Guarantor and Cedarwalk and their respective Subsidiaries (including the Companies),
on the other hand, shall not (i) solicit, induce or attempt to solicit or induce any employee, consultant or independent contractor of the other Parties to leave the employ or engagement of such Parties, or in any way materially interfere
with the relationship between such Parties and any employees, consultant or independent contractor thereof, or (ii) hire or engage any person who was an employee, or known by such Person to be a consultant or independent contractor of any
of the other Parties at any time during the three (3) month period immediately prior to the date on which such hiring or engagement would take place; provided that the foregoing shall not prohibit soliciting by general advertisements or
other general recruitment techniques so long as such advertisements or techniques are not specifically directed at the employees, consultants or independent contractors of such other Party or Parties or any hiring resulting from such
general advertisements or recruitment techniques.
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8. |
Representations and Warranties.
|
8.1 |
Representations and Warranties. Each Party severally warrants to each of the other Parties that:
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|
8.1.1 |
such Party is duly organized and validly existing under the Laws of the jurisdiction of its organization.
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8.1.2 |
such Party has the requisite organizational power and authority to enter into and to perform its obligations under this Agreement.
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8.1.3 |
all organizational actions on the part of such Party necessary for the authorization of this Agreement have been taken.
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8.1.4 |
assuming the due authorization, execution and delivery of this Agreement by the other Parties, this Agreement constitutes legally binding and enforceable obligations of such Party (i) except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other Laws of general application affecting enforcement of creditors’ rights, and (ii) subject to general principles of equity.
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8.1.5 |
the execution, delivery and performance by such Party of this Agreement will not: (i) breach or violate any provision of such Party’s Organizational Documents; (ii) result in a breach or violation of any
applicable Law; or (iii) result in a breach of, or constitute a default under, any contract or agreement to which such Party is a party or by which such Party is bound, except in any of the cases under sub-clauses (ii) or (iii) where such
breach, violation or default would not materially and adversely affect such Party’s ability to enter into or perform its obligations under this Agreement.
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|
8.1.6 |
all necessary consents, licenses, approvals or authorizations of, exemptions by or registrations with or declarations by, any Governmental Authority required by such Party for the execution and delivery of this
Agreement have been obtained or made, are valid and subsisting and will not be contravened by the execution and delivery of this Agreement.
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8.2 |
Other Guarantor Representations and Warranties.
|
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8.2.1 | The Guarantor is a creditworthy entity and has assets sufficient to satisfy its obligations under this Agreement, including in accordance with Section 7.1. |
8.2 |
Governing Law. This Agreement shall be governed by the laws of the Hong Kong Special Administrative Region, without reference to any choice of law principle or rule that would require the application of the law of any other
jurisdiction.
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9. |
Governing Law; Dispute Resolution.
|
9.1 |
Governing Law. This Agreement shall be governed by the laws of the Hong Kong Special Administrative Region, without reference to any choice of law principle or rule that would require the application of the law of any other
jurisdiction.
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9.2 |
Dispute Resolution. Any dispute, controversy, difference or claim arising out of or relating to this Agreement, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute
regarding non-contractual obligations arising out of or relating to it (each, a “Dispute”) that is not resolved by negotiation between the parties shall be submitted to mediation pursuant to the
Mediation Rules of the Hong Kong International Arbitration Centre (“HKIAC”). The submission or reference to mediation does not prevent the parties from seeking any urgent interim measure or urgent
relief in any court or before any arbitral tribunal as referred to in clause 7 below. Any Dispute that is not resolved in writing within 60 days following submission to mediation (and any question of the arbitral tribunal’s jurisdiction)
shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (“HKIAC”) under the HKIAC Administered Arbitration Rules in force when the
Notice of Arbitration is submitted (the “Rules”), except as modified herein.
|
9.3 |
The seat of arbitration shall be Hong Kong, and the arbitration shall be conducted in the English language. The arbitration proceedings shall be governed by, and the law of the arbitration clause shall be, Hong
Kong law.
|
9.4 |
The arbitration shall be conducted by three arbitrators, two of whom who shall be designated by the parties in Notice of Arbitration and the Answer to the Notice of Arbitration. If there are two or more than
two parties to an arbitration, then any of Waldencast or Sponsor that are parties to the arbitration shall designate one arbitrator, and any of Cedarwalk or Guarantor that are parties to the arbitration shall designate one arbitrator.
The two arbitrators so designated shall designate the third and presiding arbitrator within twenty (20) days of the confirmation of the second arbitrator. Any arbitrator not timely designated as provided herein shall be appointed by
HKIAC in accordance with the Rules.
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9.5 |
The parties agree that any claims arising under this Agreement and any of the Obagi China Distribution Agreement, dated as of [_], by and between Obagi Holdings and Cedarwalk; the Transition Services Agreement,
dated as of [_], by and between Obagi Cosmeceuticals LLC, a Delaware limited liability company (“Obagi Cosmeceuticals”) Obagi Netherlands B.V., (“Obagi Netherlands”), Obagi Holdings and Obagi Hong Kong (the “TSA”); the Global Supply Services Agreement dated as of [_] by and between Obagi Cosmeceuticals and Obagi Hong Kong (the “Supply Agreement”); the Intellectual Property License
Agreement by and between Obagi Cosmeceuticals, Obagi Holdings and Obagi Hong Kong (the “License Agreement”); and the Letter Agreement dated as of [_] by and between Obagi Holdings, Obagi
Cosmeceuticals and Cedarwalk (the “Obagi License Letter Agreement”), can be made in a single arbitration as though all of the claims had arisen under the same agreement. The parties agree that when
two or more arbitrations have been commenced pursuant to this Agreement and any of such agreements referenced in the preceding sentence, they can be consolidated in a single arbitration as though all of the claims in the arbitrations were
made under the same arbitration agreement.
|
9.6 |
In addition to monetary damages, the arbitral tribunal shall be empowered to award equitable relief, including, but not limited to an injunction and specific performance of any obligation under this Agreement.
|
9.7 |
By agreeing to arbitration, the parties do not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings.
With-out prejudice to such provisional remedies that may be granted by a court, the arbitral tribunal shall have full authority to grant provisional reme-dies, to order a party to request that a court modify or vacate any temporary or
preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitrator’s orders to that effect.
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9.8 |
The award of the arbitral tribunal shall be final and binding upon the parties thereto, and shall be the sole and exclusive remedy between the parties regarding any disputes presented to the arbitrators.
Judgment upon any award may be entered in any court having jurisdiction over any party or any of its assets.
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9.9 |
Any arbitration hereunder shall be confidential, and the parties and their agents agree not to disclose to any third party (i) the existence or status of the arbitration, (ii) all information made known and
documents produced in the arbitration not otherwise in the public domain, and (iii) all awards arising from the arbitration, except and to the extent that disclosure is required by applicable Law or is required to protect or pursue a
legal right.
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9.10 |
Notwithstanding any provision of this Agreement or rules of HKIAC to the contrary, each party shall be solely responsible for all costs and expenses of such party (including without limitation attorneys’ and
experts’ fees and expenses and costs of investigation) relating to any mediation or arbitration relating to this Agreement.
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10. |
Notices.
|
10.1 |
Form of Notice. Unless otherwise expressly stated, any notice to be given hereunder shall be in writing and signed by or on behalf of the Person giving it. Any such notice shall be given either:
|
|
10.1.1 |
by email;
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|
10.1.2 |
by hand delivery; or
|
|
10.1.3 |
by sending it via reputable international courier service to the Party to be served.
|
10.2 |
Notice Addresses. The addresses for notices for the Parties are set forth as follows:
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Address:
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Waldencast Acquisition Corp.
10 Bank Street, Suite 560, White Plains, NY 10606
|
Attention:
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Tassilo Festetics
|
Email:
|
tassilo@waldencast.com
|
with a copy to (which will not constitute notice):
|
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, New York 10001
|
||
Attention:
|
Paul T. Schnell
Maxim Mayer-Cesiano
|
|
Email:
|
paul.schnell@skadden.com
maxim.mayercesiano@skadden.com
|
Address:
|
Maples Corporate Services Limited
PO Box 309, Ugland House Grand Cayman E9
KY1-1104
|
Attention:
|
Emerson Melo
|
Email:
|
emersonm@dynamo.com.br
|
with a copy to (which will not constitute notice):
|
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, New York 10001
|
||
Attention:
|
Paul T. Schnell
Maxim Mayer-Cesiano
|
Email:
|
paul.schnell@skadden.com
maxim.mayercesiano@skadden.com
|
Address:
|
Cedarwalk Skincare Limited
Rm 3001-3010
30/F, China Resource Building
26 Harbour Rd
Wanchai, Hong Kong
|
Attention:
|
Mr. Simon Dai
|
Email:
|
Simon-dsc@hotmail.com
|
with a copy to (which will not constitute notice):
|
Nixon Peabody LLP
Tower 46
55 West 46th Street
New York, New York 10036-4120
|
||
Attention:
|
David Cheng, Esq.
Richard F. Langan, Jr., Esq.
|
Email:
|
dcheng@nixonpeabody.com
rlangan@nixonpeabody.com
|
Address:
|
[Name of Guarantor]
Rm 3001-3010
30/F, China Resource Building
26 Harbour Rd
Wanchai, Hong Kong
|
Attention:
|
Mr. Steven Dai
|
Email:
|
steve.dai@zhfinh.com
|
with a copy to (which will not constitute notice):
|
Nixon Peabody LLP
Tower 46
55 West 46th Street
New York, New York 10036-4120
|
||
Attention:
|
David Cheng, Esq.
Richard F. Langan, Jr., Esq.
|
Email:
|
dcheng@nixonpeabody.com
rlangan@nixonpeabody.com
|
10.3 |
Service of Notice. Any notice given pursuant to:
|
|
10.3.1 |
Article 10.1.1 shall be deemed to be given at the time the email containing or attaching the notice was sent to the email address referred to in Article 10.2, as recorded on the email account on the sender’s
machine; provided that (i) if such time shall not be during a Business Day or is after 5:30 p.m. on a Business Day (addressee’s local time), such notice shall be deemed to be given at 9:00 a.m. (addressee’s local time) on the next
following Business Day and (ii) receipt shall not occur if the sender receives an automated message indicating that the message has not been delivered to the recipient; and
|
|
10.3.2 |
Article 10.1.2 or Article 10.1.3 shall be deemed to be given at the time of delivery (with proof of receipt), unless such time shall not be during a Business Day or is after 5:30 p.m. on a Business Day
(addressee’s local time), in which event it shall be deemed to be given at 9:00 a.m. (addressee’s local time) on the next following Business Day.
|
11. |
Miscellaneous.
|
11.1 |
Entire Agreement. This Agreement supersedes all prior agreements, whether written or oral, between the Parties with respect to its subject matter and constitutes a complete and exclusive statement of the
terms of the agreement between the Parties with respect to the subject matter of this Agreement.
|
11.2 |
Specific Performance. The Parties hereby acknowledge and agree that the failure of a Party to perform its agreements and covenants hereunder may cause irreparable injury to the other Parties, for which
damages alone, even if available, will not be an adequate remedy. Accordingly, each Party hereby consents that, notwithstanding Article 9.2, the Parties shall be entitled to seek the remedies of injunction, specific performance or other
equitable relief from any court or tribunal of competent jurisdiction for any threatened or actual breach of the terms of this Agreement, to enforce specifically the terms and provisions hereof and to compel performance of such Party’s
obligations, this being in addition to and without prejudice to any other rights or remedies to which any Party is entitled under this Agreement. The Parties further agree to waive any requirement for the securing or posting of any bond
in connection with any such remedy, and that, such remedy shall be in addition to any other remedy to which a Party is entitled at law or in equity.
|
11.3 |
No Assignments Generally. Except in connection with Permitted Transfers, no Party may assign the benefit of this Agreement (in whole or in part) or transfer, declare a trust over or otherwise
dispose of in any manner whatsoever its rights or obligations under this Agreement or subcontract or delegate in any manner whatsoever its performance under this Agreement (each of the above, a “dealing”) without the prior written consent of the other Parties. Except as expressly permitted by this Article 11.3, any dealing or purported dealing with respect to the whole or any part of this Agreement shall be
void.
|
11.4 |
Amendments and Waivers. No variation of this Agreement shall be effective unless in writing and signed by or on behalf of the Parties. Any amendment, termination or waiver of any term of this Agreement
effected in accordance with this Article 11.4 shall be binding upon each of the Parties hereto and their respective successors and assigns.
|
11.5 |
Remedies and Waivers.
|
|
11.5.1 |
No waiver of any right under this Agreement shall be effective unless in writing. Unless expressly stated otherwise a waiver shall be effective only in the circumstances for which it is given.
|
|
11.5.2 |
No delay or omission by any Party in exercising any right or remedy provided by law or under this Agreement shall constitute a waiver of such right or remedy.
|
|
11.5.3 |
The single or partial exercise of a right or remedy under this Agreement shall not preclude any other nor restrict any further exercise of any such right or remedy.
|
|
11.5.4 |
The rights and remedies provided in this Agreement are cumulative and do not exclude any rights or remedies provided by law.
|
|
11.5.5 |
Without prejudice to any other rights or remedies that a Party may have, the Parties acknowledge and agree that damages may not be an adequate remedy for any breach of this Agreement and that the remedies of
injunction, specific performance and other equitable remedies will be available where appropriate.
|
11.6 |
Counterparts. This Agreement may be executed in two or more counterparts, and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document,
but all of which together shall constitute one and the same instrument. Copies of executed counterparts of this Agreement transmitted by electronic transmission (including by email or in .pdf format) or facsimile as well as
electronically or digitally executed counterparts (such as DocuSign) shall have the same legal effect as original signatures and shall be considered original executed counterparts of this Agreement.
|
11.7 |
Severability and Validity. If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the Law of any jurisdiction, it shall be deemed to be severed from this
Agreement and the Parties shall use all reasonable endeavors to replace such provision with one having an effect as close as possible to the deficient provision. The remaining provisions will remain in full force in that jurisdiction and
all provisions will continue in full force in any other jurisdiction.
|
11.8 |
Costs and Expenses. Save as otherwise expressly provided in this Agreement, each Party shall pay its own costs, charges and expenses (including legal fees) in relation to the negotiation, preparation,
execution and implementation of this Agreement and all other documents mentioned herein.
|
11.9 |
Third Parties. This Agreement is binding upon, inures to the benefit of and is enforceable by, the Parties and their respective successors and assigns. A Person who is not a Party to this Agreement
shall have no right under this Agreement to enforce any of the terms of this Agreement. The Parties may amend or vary this Agreement in accordance with its terms without the consent of any other Person.
|
11.10 |
Further Assurance. Each of the Parties severally undertakes that it shall take all reasonable steps within their powers to perform or procure the performance of all such acts and execute and deliver or
procure the execution and delivery of all such documents (in each case at its own expense), as may be required by applicable Law or as any other Party may reasonably require in order to secure to the other Parties the full benefit of this
Agreement.
|
11.11 |
Designee. Where Waldencast has the right to designate a designee under this Agreement, it may designate any of its controlled Affiliates (a “Permitted
Designee”) as its designee to accept or exercise the applicable right or power hereunder for such designee’s own account; provided, however, that no such designation shall relieve Waldencast of any of its obligations under this Agreement.
|
Waldencast Acquisition Corp.
|
|||
By:
|
|||
Name:
|
[●]
|
||
Title:
|
[●]
|
Waldencast Long-Term Capital LLC
|
|||
By:
|
|||
Name:
|
[●]
|
||
Title:
|
[●]
|
Cedarwalk Skincare Ltd.
|
|||
By:
|
|||
Name:
|
[●]
|
||
Title:
|
[●]
|
[The Guarantor]
|
|||
By:
|
|||
Name:
|
[●]
|
||
Title:
|
[●]
|
Exhibit 10.29
EXECUTION VERSION
FINANCING AGREEMENT
Dated as of March 16, 2021
by and among
OBAGI GLOBAL HOLDINGS LIMITED,
as Ultimate Parent
OBAGI HOLDINGS COMPANY LIMITED,
as Parent
OBAGI COSMECEUTICALS LLC,
as Borrower,
AND EACH SUBSIDIARY
LISTED AS A GUARANTOR ON THE SIGNATURE PAGES HERETO,
as Guarantors,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders,
TCW ASSET MANAGEMENT COMPANY LLC,
as Collateral Agent,
and
TCW ASSET MANAGEMENT COMPANY LLC,
as Administrative Agent
Table of Contents
Page | ||
ARTICLE I DEFINITIONS; CERTAIN TERMS | 1 | |
Section 1.01 | Definitions | 1 |
Section 1.02 | Terms Generally | 41 |
Section 1.03 | Certain Matters of Construction | 41 |
Section 1.04 | Accounting and Other Terms | 42 |
Section 1.05 | Time References | 42 |
Section 1.06 | Obligation to Make Payments in Dollars | 43 |
Section 1.07 | Pro Forma Calculations | 43 |
ARTICLE II THE LOANS | 44 | |
Section 2.01 | Commitments | 44 |
Section 2.02 | Making the Loans | 44 |
Section 2.03 | Repayment of Loans; Evidence of Debt | 47 |
Section 2.04 | Interest | 48 |
Section 2.05 | Reduction of Commitment; Prepayment of Loans | 49 |
Section 2.06 | Fees | 52 |
Section 2.07 | LIBOR Option | 53 |
Section 2.08 | Funding Losses | 56 |
Section 2.09 | Taxes | 56 |
Section 2.10 | Increased Costs and Reduced Return | 59 |
Section 2.11 | Changes in Law; Impracticability or Illegality | 60 |
Section 2.12 | Mitigation Obligations; Replacement of Lenders | 61 |
ARTICLE III [INTENTIONALLY OMITTED] | 62 | |
ARTICLE IV APPLICATION OF PAYMENTS; DEFAULTING LENDERS; JOINT AND SEVERAL LIABILITY OF BORROWERS | 62 | |
Section 4.01 | Payments; Computations and Statements | 62 |
Section 4.02 | Sharing of Payments | 62 |
Section 4.03 | Apportionment of Payments | 63 |
Section 4.04 | Defaulting Lenders | 64 |
Section 4.05 | Administrative Borrower; Joint and Several Liability of the Borrowers | 65 |
ARTICLE V CONDITIONS TO LOANS | 66 | |
Section 5.01 | Conditions Precedent to Effectiveness | 66 |
Section 5.02 | Conditions Precedent to All Loans | 69 |
ARTICLE VI REPRESENTATIONS AND WARRANTIES | 71 | |
Section 6.01 | Representations and Warranties | 71 |
ARTICLE VII COVENANTS OF THE LOAN PARTIES AND OTHER COLLATERAL MATTERS | 78 | |
Section 7.01 | Affirmative Covenants | 78 |
Section 7.02 | Negative Covenants | 87 |
Section 7.03 | Financial Covenants | 92 |
ARTICLE VIII CASH MANAGEMENT ARRANGEMENTS AND OTHER COLLATERAL MATTERS | 93 | |
Section 8.01 | Cash Management Arrangements | 93 |
ARTICLE IX EVENTS OF DEFAULT | 94 | |
Section 9.01 | Events of Default | 94 |
Section 9.02 | Cure Right | 97 |
ARTICLE X AGENTS | 98 | |
Section 10.01 | Appointment | 98 |
Section 10.02 | Nature of Duties; Delegation | 99 |
Section 10.03 | Rights, Exculpation, Etc. | 99 |
Section 10.04 | Reliance | 100 |
Section 10.05 | Indemnification | 100 |
Section 10.06 | Agents Individually | 100 |
Section 10.07 | Successor Agent | 101 |
Section 10.08 | Collateral Matters | 101 |
Section 10.09 | Agency for Perfection | 103 |
Section 10.10 | No Reliance on any Agent’s Customer Identification Program | 104 |
Section 10.11 | No Third-Party Beneficiaries | 104 |
Section 10.12 | No Fiduciary Relationship | 104 |
Section 10.13 | Reports; Confidentiality; Disclaimers | 104 |
Section 10.14 | Collateral Custodian | 105 |
Section 10.15 | [Reserved] | 105 |
Section 10.16 | [Reserved] | 105 |
Section 10.17 | Collateral Agent May File Proofs of Claim | 105 |
ARTICLE XI GUARANTY | 106 | |
Section 11.01 | Guaranty | 106 |
Section 11.02 | Guaranty Absolute | 106 |
Section 11.03 | Waiver | 107 |
Section 11.04 | Continuing Guaranty; Assignments | 107 |
Section 11.05 | Subrogation | 108 |
Section 11.06 | Contribution | 108 |
ARTICLE XII MISCELLANEOUS | 109 | |
Section 12.01 | Notices, Etc. | 109 |
Section 12.02 | Amendments, Etc. | 110 |
Section 12.03 | No Waiver; Remedies, Etc. | 112 |
Section 12.04 | Expenses; Attorneys’ Fees | 113 |
Section 12.05 | Right of Set-off | 113 |
Section 12.06 | Severability | 113 |
Section 12.07 | Assignments and Participations | 114 |
Section 12.08 | Counterparts | 117 |
Section 12.09 | GOVERNING LAW | 117 |
Section 12.10 | CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE | 117 |
Section 12.11 | WAIVER OF JURY TRIAL, ETC. | 118 |
Section 12.12 | Consent by the Agents and Lenders | 119 |
Section 12.13 | No Party Deemed Drafter | 119 |
Section 12.14 | Reinstatement; Certain Payments | 119 |
Section 12.15 | Indemnification; Limitation of Liability for Certain Damages | 119 |
Section 12.16 | Records | 120 |
Section 12.17 | Binding Effect | 120 |
Section 12.18 | Highest Lawful Rate | 120 |
Section 12.19 | Confidentiality | 121 |
Section 12.20 | Public Disclosure | 122 |
Section 12.21 | Integration | 122 |
Section 12.22 | USA PATRIOT Act | 122 |
Section 12.23 | Judgment Currency | 122 |
Section 12.24 | Waiver of Immunity | 123 |
Section 12.25 | English Language | 123 |
SCHEDULE AND EXHIBITS
FINANCING AGREEMENT
Financing Agreement, dated as of March 16, 2021, by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” hereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages hereto (together with the Ultimate Parent and each other Personthat executes a joinder agreementand becomes a “Guarantor” hereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party hereto (each, a “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”).
R E C I T A L S:
The Borrowers have asked the Lenders to extend credit to the Borrowers consisting of (a) a term loan in the aggregate principal amount of $110,000,000 and (b) a revolving credit facility in an aggregate principal amount not to exceed $40,000,000 at any time outstanding. The proceeds of the term loan and the loans made under the revolving credit facility shall be used to refinance existing indebtedness of the Borrowers, for general working capital purposes of the Borrowers and to pay fees and expenses related to this Agreement. The Lenders are severally, and not jointly, willing to extend such credit to the Borrowers subject to the terms and conditions hereinafter set forth.
In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the following terms shall have the respective meanings indicated below:
“Account Debtor” means, with respect to any Person, each debtor, customer or obligor in any way obligated on or in connection with any Account of such Person.
“Acquisition” means the acquisition (whether by means of a merger, consolidation or otherwise) of all of the Equity Interests of any Person or all or substantially all of the assets of (or any division or business line of) any Person.
“Action” has the meaning specified therefor in Section 12.12.
“Additional Amount” has the meaning specified therefor in Section 2.09(a).
“Administrative Agent” has the meaning specified therefor in the preamble.
“Administrative Agent’s Account” means an account at a bank designated by the Administrative Agent from time to time as the account into which the Loan Parties shall make all payments to the Administrative Agent for the benefit of the Agents and the Lenders under this Agreement and the other Loan Documents.
“Administrative Borrower” has the meaning specified therefor in Section 4.05(a).
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the Equity Interests having ordinary voting power for the election of members of the Board of Directors of such Person or (b) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender be considered an “Affiliate” of any Loan Party.
“After Acquired Property” has the meaning specified therefor in Section 6.01(a).
“Agent” and “Agents” have the respective meanings specified therefor in the preamble.
“Agreement” means this Financing Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative.
“Anti-Corruption Laws” means all Requirements of Law concerning or relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the UK Bribery Act of 2010, the Prevention of Bribery Ordinance (Chapter 201 of the laws of Hong Kong), and the anti-bribery and anti-corruption laws and regulations of those jurisdictions in which the Loan Parties do business.
“Anti-Money Laundering Laws” means all Requirements of Law concerning or relating to terrorism or money laundering, including, without limitation, the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956-1957), the USA PATRIOT Act and the Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5332 and 12 U.S.C. §§ 1818(s), 1820(b) and §§ 1951-1959), the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the laws of Hong Kong), and, in each case, the rules and regulations thereunder, and any law prohibiting or directed against the financing or support of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B).
“Applicable Margin” means, as of any date of determination, with respect to the interest rate of any Revolving Loan or the Term Loan (or any portion thereof):
(a) From the Effective Date until the date that is 2 Business Days after the date on which the Loan Parties are required to deliver to the Agents and the Lenders the quarterly financial statements and a certificate of an Authorized Officer of the Ultimate Parent for the fiscal quarter of the Ultimate Parent and its Subsidiaries ending December 31, 2021 in accordance with Sections 7.01(a)(ii) and 7.01(a)(iv) (the “Initial Applicable Margin Period”), the relevant Applicable Margin shall be set at Level I in the table below.
(b) After the Initial Applicable Margin Period, the relevant Applicable Margin shall be set at the respective level indicated below based upon the Leverage Ratio set forth opposite thereto, which ratio shall be calculated as of the end of the most recent fiscal quarter of the Ultimate Parent and its Subsidiaries for which quarterly financial statements and a certificate of an Authorized Officer of the Ultimate Parent are received by the Agents and the Lenders in accordance with Sections 7.01(a)(ii) and 7.01(a)(iv):
Reference Rate Loans | LIBOR Rate Loans | ||||
Level | Leverage Ratio | ||||
Revolving | Term | Revolving | |||
Loans | Loan | Loans | Term Loan | ||
I | Greater than or equal to 5.00 to 1:00 | 6.50% | 6.50% | 7.50% | 7.50% |
II | Less than 5.00 to 1:00 and equal to or greater than 4.25 to 1:00 | 6.00% | 6.00% | 7.00% | 7.00% |
III | Less than 4.25 to 1:00 and equal to or greater than 3.50 to 1:00 | 5.50% | 5.50% | 6.50% | 6.50% |
IV | Less than 3.50 to 1:00 | 5.00% | 5.00% | 6.00% | 6.00% |
(c) Subject to clause (d) below, the adjustment of the Applicable Margin (if any) will occur 2 Business Days after the date on which the Loan Parties are required to deliver to the Agents and the Lenders the quarterly financial statements of the Ultimate Parent and its Subsidiaries and a certificate of an Authorized Officer of the Ultimate Parent in accordance with Sections 7.01(a)(ii) and 7.01(a)(iv).
(d) Notwithstanding the foregoing:
(i) the Applicable Margin shall be set at Level I in the table above (A) upon the occurrence and during the continuation of a Default or Event of Default or (B) if for any period, the Administrative Agent does not receive the financial statements and certificates described in clause (c) above, for the period commencing on the date such financial statements and certificate were required to be delivered through the date on which such financial statements and certificate are actually received by the Administrative Agent and the Lenders; and
(ii) in the event that any financial statement or certificate described in clause (c) above is inaccurate (regardless of whether this Agreement or any Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any fiscal period, then the Applicable Margin for such fiscal period shall be adjusted retroactively (to the effective date of the determination of the Applicable Margin that was based upon the delivery of such inaccurate financial statement or certificate) to reflect the correct Applicable Margin, and the Borrowers shall promptly make payments to the Agents and the Lenders to reflect such adjustment.
“Applicable Premium” means
(a) as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (c), (d) or (e) of the definition thereof:
(i) during the period from and after the Effective Date up to and including the date that is the first anniversary of the Effective Date (the “First Period”), an amount equal to 4.00% times the sum of (A) the aggregate amount of all Obligations (other than the Applicable Premium) outstanding on the date of such Applicable Premium Trigger Event and (B) the aggregate amount of undrawn Revolving Credit Commitments immediately prior to such Applicable Premium Trigger Event;
(ii) during the period after the First Period up to and including the date that is the second anniversary of the Effective Date (the “Second Period”), an amount equal to 3.00% times the sum of (A) the aggregate amount of all Obligations (other than the Applicable Premium) outstanding on the date of such Applicable Premium Trigger Event and (B) the aggregate amount of undrawn Revolving Credit Commitments immediately prior to such Applicable Premium Trigger Event;
(iii) during the period after the Second Period up to and including the date that is the third anniversary of the Effective Date (the “Third Period”), an amount equal to 2.00% times the sum of (A) the aggregate amount of all Obligations (other than the Applicable Premium) outstanding on the date of such Applicable Premium Trigger Event and (B) the aggregate amount of undrawn Revolving Credit Commitments immediately prior to such Applicable Premium Trigger Event;
(iv) during the period after the Third Period up to and including the date that is the fourth anniversary of the Effective Date (the “Fourth Period”), an amount equal to 1.00% times the sum of (A) the aggregate amount of all Obligations (other than the Applicable Premium) outstanding on the date of such Applicable Premium Trigger Event and (B) the aggregate amount of undrawn Revolving Credit Commitments immediately prior to such Applicable Premium Trigger Event; and
(v) thereafter, zero;
(b) | as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (a) of the definition thereof: |
(i) during the First Period, an amount equal to 4.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date;
(ii) during the Second Period, an amount equal to 3.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date;
(iii) during the Third Period, an amount equal to 2.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date;
(iv) during the Fourth Period, an amount equal to 1.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date; and
(v) thereafter, zero; and
(c) | as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (b) of the definition thereof: |
(i) during the First Period, an amount equal to 4.00% times the amount of the Term Loan Obligations (other than the Applicable Premium) being paid on such date;
(ii) during the Second Period, an amount equal to 3.00% times the amount of the Term Loan Obligations (other than the Applicable Premium) being paid on such date;
(iii) during the Third Period, an amount equal to 2.00% times the amount of the Term Loan Obligations (other than the Applicable Premium) being paid on such date;
(iv) during the Fourth Period, an amount equal to 1.00% times the amount of the Term Loan Obligations (other than the Applicable Premium) being paid on such date; and
(v) thereafter, zero.
“Applicable Premium Trigger Event” means
(a)
any permanent reduction of the Total Revolving Credit Commitment pursuant to Section 2.05 or Section 9.01;
(b)
any payment by any Loan Party of all, or any part, of the principal balance of any Term Loan for any reason (including any optional prepayments (to the extent that the aggregate amount of optional prepayments made in any Fiscal Year exceeds $5,000,000) and any mandatory prepayments (but excluding any mandatory prepayments made pursuant to Section 2.05(c)(i))) whether before or after (i) the occurrence of an Event of Default, or (ii) the commencement of any Insolvency Proceeding, and notwithstanding any acceleration (for any reason) of the Obligations;
(c)
the acceleration of the Obligations for any reason, including, without limitation, acceleration in accordance with Section 9.01, including as a result of the commencement of an Insolvency Proceeding;
(d)
the satisfaction, release, payment, restructuring, reorganization, replacement, reinstatement, defeasance or compromise of any of the Obligations in any Insolvency Proceeding, foreclosure (whether by power of judicial proceeding or otherwise) or deed in lieu of foreclosure or the making of a distribution of any kind in any Insolvency Proceeding to the Administrative Agent, for the account of the Lenders in full or partial satisfaction of the Obligations; or
(e)
the termination of this Agreement for any reason prior to the Final Maturity Date.
“Assignment and Acceptance” means an assignment and acceptance entered into by an assigning Lender and an assignee, and accepted by the Collateral Agent (and the Administrative Agent, if applicable), in accordance with Section 12.07 and substantially in the form of Exhibit B or such other form acceptable to the Collateral Agent.
“Authorized Officer” means, with respect to any Person, the chief executive officer, chief operating officer, chief financial officer, treasurer or other financial officer performing similar functions, president or executive vice president of such Person.
“Availability” means, at any time, the difference between (a) the Total Revolving Credit Commitment and (b) the aggregate outstanding principal amount of all Revolving Loans.
“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time and any successor statute or any similar federal or state law for the relief of debtors.
“Board” means the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Board of Directors” means with respect to (a) any corporation or company, the board of directors of the corporation or company or any committee thereof duly authorized to act on behalf of such board, (b) a partnership, the board of directors of the general partner of the partnership, (c) a limited liability company, the managing member or members or any controlling committee or board of directors of such company or the sole member or the managing member thereof, and (d) any other Person, the board or committee of such Person serving a similar function.
“Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble hereto.
“Business Day” means (a) for all purposes other than as described in clause (b) below, any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required to close, and (b) with respect to the borrowing, payment or continuation of, or determination of interest rate on, LIBOR Rate Loans, any day that is a Business Day described in clause (a) above and on which dealings in Dollars may be carried on in the interbank eurodollar markets in New York City and London.
“Capital Expenditures” means, with respect to any Person for any period, the sum of (a) the aggregate of all expenditures by such Person and its Subsidiaries during such period that in accordance with GAAP are or should be included in “property, plant and equipment” or in a similar fixed asset account on its balance sheet, whether such expenditures are paid in cash or financed, including all Capitalized Lease Obligations, obligations under synthetic leases and capitalized software costs that are paid or due and payable during such period and (b) to the extent not covered by clause (a) above, the aggregate of all expenditures by such Person and its Subsidiaries during such period to acquire by purchase or otherwise the business or fixed assets of, or the Equity Interests of, any other Person.
“Capitalized Lease” means, with respect to any Person, any lease of (or other arrangement conveying the right to use) real or personal property by such Person as lessee that is required under GAAP to be capitalized on the balance sheet of such Person.
“Capitalized Lease Obligations” means, with respect to any Person, obligations of such Person and its Subsidiaries under Capitalized Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within six months from the date of acquisition thereof; (b) commercial paper, maturing not more than 270 days after the date of issue rated P 1 by Moody’s or A 1 by Standard & Poor’s; (c) certificates of deposit maturing not more than 270 days after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000; (d) repurchase agreements having maturities of not more than 90 days from the date of acquisition which are entered into with major money center banks included in the commercial banking institutions described in clause (c) above and which are secured by readily marketable direct obligations of the United States Government or any agency thereof; (e) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000, which assets are primarily comprised of Cash Equivalents described in another clause of this definition; (f) marketable tax exempt securities rated A or higher by Moody’s or A+ or higher by Standard & Poor’s, in each case, maturing within 270 days from the date of acquisition thereof and (g) in the case of any Foreign Subsidiary, cash and cash equivalents that are substantially equivalent in such jurisdiction to those described in clauses (a) through (f) above in respect of each country that is a member of the Organization for Economic Co-operation and Development.
“Cash Management Accounts” means the bank accounts of each Loan Party maintained at one or more Cash Management Banks listed on Schedule 8.01 hereto.
“Cash Management Bank” has the meaning specified therefor in Section 8.01(a).
“Cayman Islands Security Documents” means any document governed by the laws of the Cayman Islands to provide security for any or all of the Obligations as may reasonably be required by the Collateral Agent (acting on advice of local counsel), as each such Cayman Islands Security Document is amended, restated, supplemented or otherwise modified from time to time.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means each occurrence of any of the following:
(a)
(i) the Permitted Holders (other than Yellow Sea Investment Holdings Limited) cease to beneficially and of record own and control, directly or indirectly, at least 50.1% on a fully diluted basis of the aggregate outstanding voting power of the Equity Interests of the Ultimate Parent or (ii) the Permitted Holders cease to beneficially and of record own and control, directly or indirectly, at least 50.1% on a fully diluted basis of the aggregate outstanding economic power of the Equity Interests of the Ultimate Parent;
(b)
the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) other than a Permitted Holder of beneficial ownership of more than 33% of the aggregate outstanding voting or economic power of the Equity Interests of the Ultimate Parent;
(c)
during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Ultimate Parent (or its direct or indirect ultimate parent holding company) (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Ultimate Parent (or its direct or indirect ultimate parent holding company) was approved by a vote of at least a majority of the directors of the Ultimate Parent (or its direct or indirect ultimate parent holding company) then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the Board of Directors of the Ultimate Parent (or its direct or indirect ultimate parent holding company);
(d)
the Ultimate Parent shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting or economic power of the Equity Interests of each other Loan Party and each of its Subsidiaries (other than (i) in connection with any transaction permitted pursuant to Section 7.02(c)(i), (ii) directors’ qualifying shares or shares required by law to be owned by a resident of the relevant jurisdiction and (iii) in connection with the sale or issuance of up to 30% in the aggregate of the Equity Interests in ClinActiv Technology Limited or ClinActiv(US) LLC to any Person on terms and conditions reasonably acceptable to the Collateral Agent), free and clear of all Liens (other than Permitted Specified Liens); or
(e)
Jaime Castle shall cease to be involved in the day to day operations and management of the business of the Ultimate Parent, the Parent or the Borrowers, and a successor reasonably acceptable to the Collateral Agent and the Required Lenders is not appointed on terms reasonably acceptable to the Collateral Agent and the Required Lenders within 60 days of such cessation of involvement.
“Collateral” means all of the property(ies) and asset(s) and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations.
“Collateral Agent” has the meaning specified therefor in the preamble.
“Collateral Agent Advances” has the meaning specified therefor in Section 10.08(a).
“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).
“Commitments” means, with respect to each Lender, such Lender’s Revolving Credit Commitment and Term Loan Commitment.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” means a Compliance Certificate, substantially in the form of Exhibit E hereto, duly executed by an Authorized Officer of the Ultimate Parent.
“Consolidated EBITDA” means, with respect to any Person for any period:
(a) the Consolidated Net Income of such Person for such period,
plus
(b) without duplication, the sum of the following amounts for such period to the extent deducted in the calculation of Consolidated Net Income for such period:
(i) any provision for United States federal income taxes or other taxes measured by net income,
(ii) Consolidated Net Interest Expense,
(iii) any depreciation and amortization expense,
(iv) any aggregate net loss on the Disposition of property (other than accounts and Inventory) outside the ordinary course of business,
(v) any non-cash loss from extraordinary items,
(vi) any other non-cash expenditure, charge or loss for such period (other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or reserves with respect to accounts and Inventory),
(vii)
any costs and expenses incurred in connection with the closing of the transactions contemplated by this Agreement and the other Loan Documents in an aggregate amount for all such costs and expenses added back pursuant to this clause (vii) not to exceed $3,500,000,
(viii)
any costs and expenses incurred in connection with any amendment or waiver of the Loan Documents; provided, that such costs and expenses are reasonably identifiable, factually supportable, and certified by an Authorized Officer of the Parent,
(ix)
any net operating expense reductions or net cost savings initiatives, inclusive of (A) amendments, renegotiations or replacements of long-term supply contracts, (B) restructuring costs and (C) integration costs but exclusive of (1) severance costs, relocation costs, retention costs and recruiting costs, (2) pricing changes for goods and services and (3) costs to provide goods and services, other than net cost savings obtained from amendments, renegotiations or replacements of long-term supply contracts (calculated on a pro forma basis as though such expense reductions or cost savings initiatives had been realized on the first day of such period and as if such expense reductions or cost savings initiatives were realized during the entirety of such period); provided that (w) such expense reductions or cost savings initiatives have already been taken, (x) such expense reductions or cost savings initiatives are reasonably identifiable, factually supportable and reasonably attributable to the actions taken, (y) the full “run-rate” benefits resulting therefrom are anticipated by the Parent to be fully realized (in the good faith determination of the Parent) within 12 months after the consummation of such actions taken and (z) such expense reductions or cost savings initiatives are described in a reasonably detailed statement certified by an Authorized Officer of the Parent; provided, further, that (I) the aggregate amount added back pursuant to this clause (ix) for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed 5.0% of Consolidated EBITDA (without giving effect to such addback) and (II) the aggregate amount added back pursuant to this clause (ix) and clause (x) below and the aggregate amount of pro forma adjustments made pursuant to Section 1.07(c) for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed (I) for the period ending March 31, 2021, 20.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (II) for the period ending June 30, 2021, 15.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (III) for the period ending September 30, 2021, 12.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (IV) for the period ending December 31, 2021, 10.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments) and (V) for any period ending thereafter, 7.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), and
(x)
any severance costs, relocation costs, retention costs and recruiting costs; provided that (A) the aggregate amount added back pursuant to this clause (x) for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed 5.0% of Consolidated EBITDA (without giving effect to such addback) and (B) the aggregate amount added back pursuant to clause (ix) above and this clause (x) and the aggregate amount of pro forma adjustments made pursuant to Section 1.07(c) for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed (I) for the period ending March 31, 2021, 20.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (II) for the period ending June 30, 2021, 15.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (III) for the period ending September 30, 2021, 12.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (IV) for the period ending December 31, 2021, 10.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments) and (V) for any period ending thereafter, 7.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments),
minus
(c) without duplication, the sum of the following amounts for such period to the extent included in the calculation of such Consolidated Net Income for such period:
(i)
any credit for United States federal income taxes or other taxes measured by net income,
(ii)
any aggregate net gain from the Disposition of property (other than accounts and Inventory) outside the ordinary course of business,
(iii)
any gain from extraordinary items, and
(iv)
any non-cash gain, including any reversal of a charge referred to in clause (b)(vi) above by reason of a decrease in the value of any Equity Interest;
in each case, determined on a consolidated basis in accordance with GAAP.
“Consolidated Net Income” means, with respect to any Person, for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period; provided, however, that the following shall be excluded: (a) the net income of any other Person in which such Person or one of its Subsidiaries has a joint interest with a third-party (which interest does not cause the net income of such other Person to be consolidated into the net income of such Person), except to the extent of the amount of dividends or distributions paid to such Person or Subsidiary, (b) the net income of any Subsidiary of such Person that is, on the last day of such period, subject to any restriction or limitation on the payment of dividends or the making of other distributions, to the extent of such restriction or limitation, and (c) the net income of any other Person arising prior to such other Person becoming a Subsidiary of such Person or merging or consolidating into such Person or its Subsidiaries.
“Consolidated Net Interest Expense” means, with respect to any Person for any period, (a) gross interest expense of such Person and its Subsidiaries for such period determined on a consolidated basis and in accordance with GAAP (including, without limitation, interest expense paid to Affiliates of such Person), less (b) the sum of (i) interest income for such period and (ii) gains for such period on Hedging Agreements (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), plus (c) the sum of (i) losses for such period on Hedging Agreements (to the extent not included in gross interest expense) and (ii) the upfront costs or fees for such period associated with Hedging Agreements (to the extent not included in gross interest expense), in each case, determined on a consolidated basis and in accordance with GAAP.
“Contingent Indemnity Obligations” means any Obligation constituting a contingent, unliquidated indemnification obligation of any Loan Party, in each case, to the extent (a) such obligation has not accrued and is not yet due and payable and (b) no claim has been made or is reasonably anticipated to be made with respect thereto.
“Contingent Obligation” means, with respect to any Person, any obligation of such Person guaranteeing or intending to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, and (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control Agreement” means, with respect to any deposit account, any securities account, commodity account, securities entitlement or commodity contract, an agreement, in form and substance satisfactory to the Collateral Agent, among the Collateral Agent, the financial institution or other Person at which such account is maintained or with which such entitlement or contract is carried and the Loan Party maintaining such account, effective to grant “control” (as defined under the applicable UCC) over such account to the Collateral Agent.
“Controlled Investment Affiliate” means, as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
“Cure Right” has the meaning specified in Section 9.02.
“Current Value” has the meaning specified therefor in Section 7.01(m).
“Dai Family” means Yumin Dai, Sujie Dai, Sicong Dai and their respective Controlled Investment Affiliates.
“Debtor Relief Law” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, winding up order, or similar debtor relief law of the United States or other applicable jurisdiction from time to time in effect.
“Default” means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
“Defaulting Lender” means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Administrative Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Administrative Borrower, or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Administrative Borrower, to confirm in writing to the Administrative Agent and the Administrative Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Administrative Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity. Notwithstanding anything to the contrary herein, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to the Administrative Borrower and each Lender.
“Disbursement Letter” means a disbursement letter, in form and substance satisfactory to the Collateral Agent, by and among the Loan Parties, the Agents, the Lenders and the other Persons party thereto, and the related funds flow memorandum describing the sources and uses of all cash payments in connection with the transactions contemplated to occur on the Effective Date.
“Disposition” means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, leases, licenses (as licensor) or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person. For purposes of clarification, “Disposition” shall include (a) the sale or other disposition for value of any contracts, (b) any disposition of property through a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law, (c) the early termination or modification of any contract resulting in the receipt by any Loan Party of a cash payment or other consideration in exchange for such event (other than payments in the ordinary course for accrued and unpaid amounts due through the date of termination or modification) or (d) any sale of merchant accounts (or any rights thereto (including, without limitation, any rights to any residual payment stream with respect thereto)) by any Loan Party.
“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations and the termination of the Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for the scheduled payments of dividends or distributions in cash, or (d) is convertible into or exchangeable for (i) Indebtedness or (ii) any other Equity Interests that would constitute Disqualified Equity Interests, in each case of clauses (a) through (d), prior to the date that is six months after the Final Maturity Date.
“Dollar”, “Dollars” and the symbol “$” each means lawful money of the United States of America.
“Domestic Loan Party” means any Loan Party that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.
“Domestic Subsidiary” means any Subsidiary that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia.
“Effective Date” has the meaning specified therefor in Section 5.01.
“Employee Plan” means an employee benefit plan within the meaning of Section 3(3) of ERISA (other than a Multiemployer Plan), regardless of whether subject to ERISA, that any Loan Party or any of its ERISA Affiliates maintains, sponsors or contributes to or is obligated to contribute to or otherwise has any liability.
“Environmental Claim” means any action, suit, complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication, from any Person or Governmental Authority relating to or arising out of any threatened, alleged or actual (a) violation of, non-compliance with, or liability under, any Environmental Law, or (b) the manufacture, use, handling, processing, distribution, labeling, generation, transportation, storage, treatment, Release, threatened Release, disposal or arranging for the disposal of, or exposure to, any Hazardous Materials.
“Environmental Law” means any Requirement of Law relating to, regulating or governing (i) the pollution or protection of the environment, any environmental media, natural resources, human health or safety, or (ii) the manufacture, use, handling, processing, distribution, labeling, generation, transportation, storage, treatment, Release, threatened Release, disposal or arranging for the disposal of, or exposure to, any Hazardous Materials.
“Environmental Liability” means all liabilities (contingent or otherwise, known or unknown), monetary obligations, losses (including monies paid in settlement), damages, natural resource damages, costs and expenses (including all reasonable fees, costs, client charges and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest arising directly or indirectly as a result of, from, or based upon (a) any Environmental Claim, (b) any actual, alleged or threatened violation of or non-compliance with any Environmental Law or Environmental Permit, (c) any actual, alleged or threatened Release of, or exposure to, Hazardous Materials, (d) any Remedial Action, (f) any environmental condition or (g) any contract, agreement or other arrangement pursuant to which liability is assumed or imposed contractually or by operation of law with respect to any of the foregoing (a)-(f).
“Environmental Lien” means any Lien in favor of any Governmental Authority arising out of any Environmental Liability.
“Environmental Permit” means any permit, license, authorization, approval, registration or entitlement required by or issued pursuant to any Environmental Law or by any Governmental Authority pursuant to Environmental Law.
“Equity Interests” means (a) all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations, or other ownership, profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting, and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable or exercisable.
“Equity Issuance” means either (a) the sale or issuance by any Loan Party or any of its Subsidiaries of any shares of its Equity Interests or (b) the receipt by any Loan Party or any of its Subsidiaries of any cash capital contributions.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.
“ERISA Affiliate “ means, with respect to any Person, any trade or business (whether or not incorporated) that, together with such Person is, or within the last six (6) years was, treated as a single employer under Section 414 of the Internal Revenue Code or Section 4001 of ERISA.
“ERISA Event” means (a) the occurrence of a Reportable Event with respect to any Pension Plan; (b) the failure to meet the minimum funding standards of Section 412 or 430 of the Internal Revenue Code or Section 302 or 303 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA) or the failure to make a contribution or installment required under Section 412 or 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) a determination that any Pension Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA); (d) a determination that any Multiemployer Plan is, or is expected to be, in “critical,” “endangered” or “critical and declining” status, in each case, within the meaning of Title IV of ERISA; (e) the filing of a notice of intent to terminate a Pension Plan or the treatment of an amendment to a Pension Plan as a termination under Section 4041 of ERISA; (f) the withdrawal by any Loan Party or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Loan Party or any of its ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (g) the institution by the PBGC of proceedings to terminate any Pension Plan or appoint a trustee to administer any Pension Plan, or the occurrence of any event or condition that might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (h) the imposition of liability on any Loan Party or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069(a) of ERISA or by reason of the application of Section 4212(c) of ERISA; (i) the withdrawal of any Loan Party or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan or the receipt by any Loan Party or any of its ERISA Affiliates of notice from any Multiemployer Plan that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (j) the occurrence of an act, circumstance, transaction, failure or omission which results in, or which could reasonably be expected to give result in, liability to a Loan Party under Title I of ERISA or a tax under any of Sections 4971 through 5000 of the Internal Revenue Code; (k) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent, upon any Loan Party or any of its ERISA Affiliates; (l) the assertion of a claim (other than routine claims for benefits) against any Employee Plan or the assets thereof, or against any Loan Party or any of its ERISA Affiliates in connection with any Employee Plan or Multiemployer Plan; (m) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any such Pension Plan (or such other Employee Plan) to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; (n) the imposition on any Loan Party of any fine, excise tax or penalty with respect to any Employee Plan or Multiemployer Plan resulting from any noncompliance with any Requirements of Law; (o) the imposition of a Lien pursuant to Section 430(k) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan; or (p) the occurrence of any Foreign Plan Event.
“Erroneous Distribution” has the meaning specified therefor in Section 10.18.
“Event of Default” has the meaning specified therefor in Section 9.01.
“Excess Availability” means, as of any date of determination, the amount equal to the result of (a) Availability minus (b) the aggregate amount, if any, of (i) all trade payables of the Parent and its Subsidiaries outstanding for more than 60 days after the date such payable was due and (ii) all book overdrafts of the Parent and its Subsidiaries outstanding for more than 60 days after the date such overdraft occurred, in each case, as determined by the Administrative Agent in its reasonable business judgment.
“Excess Cash Flow” means, with respect to any Person for any period, (a) Consolidated EBITDA of such Person and its Subsidiaries for such period, less (b) the sum of, without duplication, (i) all cash principal payments (excluding any principal payments made pursuant to Section 2.05(b) or SectionSection 2.05(c)) on the Loans made during such period (but, in the case of the Revolving Loans, only to the extent that the Total Revolving Credit Commitment is permanently reduced by the amount of such payments), and all cash principal payments on Indebtedness (other than Indebtedness incurred under this Agreement) of such Person or any of its Subsidiaries during such period to the extent such other Indebtedness is permitted to be incurred, and such payments are permitted to be made, under this Agreement (but, in the case of revolving loans, only to the extent that the revolving credit commitment in respect thereof is permanently reduced by the amount of such payments), (ii) all Consolidated Net Interest Expense to the extent paid or payable in cash during such period, (iii) the cash portion of Capital Expenditures made by such Person and its Subsidiaries during such period to the extent permitted to be made under this Agreement (excluding Capital Expenditures to the extent financed through the incurrence of Indebtedness or through an Equity Issuance), (iv) all scheduled loan servicing fees and other similar fees in respect of Indebtedness of such Person or any of its Subsidiaries paid in cash during such period, to the extent such Indebtedness is permitted to be incurred, and such payments are permitted to be made, under this Agreement, (v) income taxes paid in cash by such Person and its Subsidiaries for such period, (vi) all cash expenses, cash charges, cash losses and other cash items that were added back in the determination of Consolidated EBITDA for such period and (vii) the excess, if any, of Working Capital at the end of such period over Working Capital at the beginning of such period (or minus the excess, if any, of Working Capital at the beginning of such period over Working Capital at the end of such period).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Account” means (a) any deposit account specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees and (b) any Petty Cash Accounts.
“Excluded Equity Issuance” means (a) in the event that the Ultimate Parent or any of its Subsidiaries forms any Subsidiary in accordance with this Agreement, the issuance by such Subsidiary of Equity Interests to the Ultimate Parent or such Subsidiary, as applicable, (b) the issuance of Equity Interests by the Ultimate Parent to any Person that is an equity holder of the Ultimate Parent prior to such issuance (an “Equity Holder”) so long as such Equity Holder did not acquire any Equity Interests of the Ultimate Parent so as to become an Equity Holder concurrently with, or in contemplation of, the issuance of such Equity Interests to such Equity Holder, (c) the issuance of Permitted Cure Equity, (d) the issuance of Equity Interests of the Ultimate Parent to directors, officers and employees of the Ultimate Parent and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors of the Parent, (e) the issuance of Equity Interests of the Ultimate Parent in order to finance the purchase consideration (or a portion thereof) in connection with a Permitted Acquisition, (f) the issuance of up to 30% in the aggregate of the Equity Interests in ClinActiv Technology Limited or ClinActiv(US) LLC to any Person on terms and conditions reasonably acceptable to the Collateral Agent and (g) the issuance of Equity Interests by a Subsidiary of the Ultimate Parent to its parent or member in connection with the contribution by such parent or member to such Subsidiary of the proceeds of an issuance described in clauses (a) – (e) above.
“Excluded Subsidiary” means (a) any Immaterial Subsidiary and (b) any Foreign Subsidiary with respect to which, in the reasonable judgment of the Collateral Agent, the cost of providing a Guaranty (including the incurrence of any material adverse tax consequences) shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom; provided that immediately upon the occurrence of any event or circumstance whereby any such Subsidiary described in clause (a) or clause (b) above no longer meets the criteria of an “Excluded Subsidiary” as set forth herein, such Subsidiary shall not be an Excluded Subsidiary and shall execute and deliver the agreements, instruments and other documents required by Section 7.01(b) in accordance with the terms thereof.
“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the guarantee of such Guarantor becomes effective with respect to such related Swap Obligation.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.09, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.09(d) and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Executive Order No. 13224” means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“Existing Credit Facility” means that certain Amended and Restated Credit Agreement, dated as of November 9, 2020 by and among the Ultimate Parent, the Parent, the Borrower, the other Subsidiaries party thereto as guarantors, the lenders who are party thereto and Wells Fargo Bank, National Association as administrative agent for such lenders.
“Existing Lenders” means the lenders party to the Existing Credit Facility.
“Extraordinary Receipts” means any cash received by the Ultimate Parent or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.05(c)(ii) or (iii)), including, without limitation, (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance (other than to the extent such insurance proceeds are (i) immediately payable to a Person that is not the Ultimate Parent or any of its Subsidiaries in accordance with applicable Requirements of Law or with Contractual Obligations entered into in the ordinary course of business or (ii) received by the Ultimate Parent or any of its Subsidiaries as reimbursement for any out-of-pocket costs incurred or made by such Person prior to the receipt thereof directly related to the event resulting from the payment of such proceeds), (d) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (e) condemnation awards (and payments in lieu thereof), (f) indemnity payments (other than to the extent such indemnity payments are (i) immediately payable to a Person that is not an Affiliate of the Ultimate Parent or any of its Subsidiaries, or (ii) received by the Ultimate Parent or any of its Subsidiaries as reimbursement for any costs previously incurred or any payment previously made by such Person) and (g) any purchase price adjustment received in connection with any purchase agreement.
“Facility” means the owned real property identified on Schedule 1.01(B) and any New Facility hereafter acquired by the Ultimate Parent or any of its Subsidiaries, including, without limitation, the land on which each such facility is located, all buildings and other improvements thereon, and all fixtures located thereat or used in connection therewith.
“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any fiscal, tax or regulatory legislation, rules or official practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of Sections 1471 through 1474 of the Internal Revenue Code and the Treasury Regulations thereunder.
“FCPA” has the meaning specified therefor in the definition of Anti-Corruption Laws.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Fee Letter” means that certain Fee Letter, dated as of the date hereof, by and between the Administrative Borrower and the Administrative Agent.
“Final Maturity Date” means March 16, 2026; provided that if such day is not a Business Day, then the Final Maturity Date will be the immediately preceding Business Day.
“Financial Statements” means (a) the audited consolidated balance sheet of the Parent and its Subsidiaries for the Fiscal Year ended December 31, 2019, and the related consolidated statement of operations, shareholders’ equity and cash flows for the Fiscal Year then ended, (b) the unaudited consolidated balance sheet of the Parent and its Subsidiaries for the 12 months ended December 31, 2020, and the related consolidated statement of operations, shareholder’s equity and cash flows for the 12 months then ended and (c) the unaudited consolidated balance sheet of the Parent and its Subsidiaries for the 1 month ended January 31, 2021, and the related consolidated statement of operations, shareholder’s equity and cash flows for the 1 month then ended.
“Fiscal Year” means the fiscal year of the Ultimate Parent and its Subsidiaries ending on December 31 of each year.
“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of (a) the result of (i) Consolidated EBITDA of such Person and its Subsidiaries for such period minus (ii) Capital Expenditures made by such Person and its Subsidiaries during such period, to (b) the sum of (i) all principal of Indebtedness of such Person and its Subsidiaries scheduled to be paid or prepaid during such period to the extent there is an equivalent permanent reduction in the commitments thereunder plus (ii) Consolidated Net Interest Expense of such Person and its Subsidiaries for such period plus (iii) income taxes paid or payable by such Person and its Subsidiaries during such period plus (iv) cash dividends or distributions paid, or the purchase, redemption or other acquisition or retirement for value (including in connection with any merger or consolidation), by such Person or any of its Subsidiaries, in respect of the Equity Interests of such Person or any of its Subsidiaries (other than dividends or distributions paid by a Loan Party to any other Loan Party) during such period.
“Foreign Lender” has the meaning specified therefor in Section 2.09(d)(ii)(B).
“Foreign Loan Party” means any Loan Party that is not a Domestic Loan Party.
“Foreign Plan” means any employee benefit plan, program, policy, arrangement or agreement maintained, sponsored or contributed to, or for which there is an obligation to contribute to, by any Loan Party or any of its ERISA Affiliates that is subject to any Requirements of Laws other than, or in addition to, the laws of the United States or any state thereof or the laws of the District of Columbia.
“Foreign Plan Event” means, with respect to any Foreign Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any Requirement of Law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make any required contribution or payment under any Requirement of Law within the time permitted by any Requirement of Law for such contributions or payments, (c) the receipt of a notice from a Governmental Authority relating to the intention to terminate any such Foreign Plan or to appoint a trustee or similar official to administer any such Foreign Plan, or alleging the insolvency of any such Foreign Plan, (d) the incurrence of any liability by any Loan Party or any Subsidiary under any law on account of the complete or partial termination of such Foreign Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction with respect to a Foreign Plan that is prohibited under any Requirement of Law and that could reasonably be expected to result in the incurrence of any liability by any Loan Party or any Subsidiary, or the imposition on any Loan Party or any Subsidiary of any fine, excise tax or penalty with respect to a Foreign Plan resulting from any noncompliance with any Requirement of Law.
“Foreign Sovereign Immunities Act” means the US Foreign Sovereign Immunities Act of 1976 (28 U.S.C. Sections 1602-1611), as amended.
“Foreign Subsidiary” means any Subsidiary of the Ultimate Parent that is not a Domestic Subsidiary.
“Funding Losses” has the meaning specified therefor in Section 2.08.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, provided that for the purpose of Section 7.03 and the definitions used therein, “GAAP” shall mean generally accepted accounting principles in effect on the date hereof and consistent with those used in the preparation of the Financial Statements, provided further that if there occurs after the date of this Agreement any change in GAAP that affects in any respect the calculation of any covenant contained in Section 7.03, the Collateral Agent and the Administrative Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenant with the intent of having the respective positions of the Lenders and the Borrowers after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the covenants in Section 7.03 shall be calculated as if no such change in GAAP has occurred.
“Governing Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization, articles of association and the operating agreement; (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture, declaration or other applicable agreement or documentation evidencing or otherwise relating to its formation or organization, governance and capitalization; and (d) with respect to any of the entities described above, any other agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization.
“Governmental Authority” means any nation or government, any foreign, federal, state, territory, provincial, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guaranteed Obligations” has the meaning specified therefor in Section 11.01.
“Guarantor” means (a) the Ultimate Parent, the Parent and each Subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages hereto, and (b) each other Person which guarantees, pursuant to Section 7.01(b) or otherwise, all or any part of the Obligations.
“Guaranty” means (a) the guaranty of each Guarantor party hereto contained in Article XI and (b) each other guaranty, in form and substance satisfactory to the Collateral Agent, made by any other Guarantor in favor of the Collateral Agent for the benefit of the Agents and the Lenders guaranteeing all or part of the Obligations.
“Hazardous Material” means any element, material, substance, waste, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic or hazardous substance, hazardous waste, universal waste, special waste, or solid waste or is otherwise characterized by words of similar import under any Environmental Law or that is regulated under, or for which liability or standards of care are imposed, pursuant to any Environmental Law, including, without limitation, petroleum, polychlorinated biphenyls; asbestos-containing materials, lead or lead-containing materials, urea formaldehyde-containing materials, radioactive materials, radon, per- and polyfluoroalkyl substances and mold.
“Health Care Claim” means any action, suit, complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication, from any Person or Governmental Authority relating to or arising out of any threatened, alleged or actual (a) violation of, non-compliance with, or liability under, any Health Care Law, or (b) the manufacture, use, handling, processing, distribution, labeling, generation, transportation, or storage of cosmetic products.
“Health Care Law” means any of the following: the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Anti-Kickback Act of 1986, 41 U.S.C. §§ 51-58; the Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a and 1320a-7b; the Federal Health Care Program Exclusion Laws, 42 U.S.C. § 1320a-7; 42 U.S.C. §§ 1320d through 1320d-8 and 42 C.F.R. §§ 160, 162 and 164, which are commonly referred to as “HIPAA;” any federal, state or local Law that regulates either the research, investigation, manufacturing, promotion or distribution of cosmetic products; any state or local Law regulating the interactions with health care professionals and reporting thereof; all applicable federal, state or local laws, statutes, rules, regulations and orders relating to the use, handling, storage, packaging, licensing, labeling, distribution, marketing, advertising or sale of cosmetic products, including the U.S. Federal Food, Drug and Cosmetic Act (“FDCA”), regulations of the FDA, guidance documents issued by the FDA, and all similar applicable laws, statues, rules, regulations and orders in each jurisdiction where cosmetic products are sold.
“Health Care Liability” means all liabilities (contingent or otherwise, known or unknown), monetary obligations, losses (including monies paid in settlement), damages, natural resource damages, costs and expenses (including all reasonable fees, costs, client charges and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest arising directly or indirectly as a result of, from, or based upon (a) any Health Care Claim, or (b) any actual, alleged or threatened violation of or non-compliance with any Health Care Law or Health Care Permit).
“Health Care Permit” means all necessary approvals, permits, licenses, registrations, listings or authorizations of any Governmental Authority, necessary for the research, development, manufacture, distribution, use, storage, import, export, transport, marketing, promotion and sale of any cosmetic product in a given country or regulatory jurisdiction.
“Hedging Agreement” means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement.
“Highest Lawful Rate” means, with respect to any Agent or any Lender, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations under laws applicable to such Agent or such Lender which are currently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.
“Holdout Lender” has the meaning specified therefor in Section 12.02(c).
“Immaterial Subsidiary” means any direct or indirect Subsidiary of the Ultimate Parent that (a) as of the date of the most recent financial statements required to be delivered pursuant to Section 7.01(a)(ii) or Section 7.01(a)(iii), does not have, individually, (i) assets in excess of 2.5% of the Loan Parties and their Subsidiaries’ consolidated total assets or (ii) revenues for the period of four consecutive fiscal quarters ending on such date in excess of 2.5% of the combined revenues of the Loan Parties and their Subsidiaries for such period, (b) as of the date of the most recent financial statements required to be delivered pursuant to Section 7.01(a)(ii) or Section 7.01(a)(iii), does not have, when taken together with all other Immaterial Subsidiaries, (i) assets in excess of 7.5% of the Loan Parties and their Subsidiaries’ consolidated total assets or (ii) revenues for the period of four consecutive fiscal quarters ending on such date in excess of 7.5% of the combined revenues of the Loan Parties and their Subsidiaries for such period, and (c) has been designated in writing by the Administrative Borrower to the Agents as an Immaterial Subsidiary. If at any time and from time to time after the Effective Date, Immaterial Subsidiaries comprise in the aggregate more than 7.5% of the Loan Parties and their Subsidiaries’ consolidated total assets or more than 7.5% of the combined revenues of the Loan Parties and their Subsidiaries, in each case, as of the date of the most recent financial statements required to be delivered pursuant to Section 7.01(a)(ii) or Section 7.01(a)(iii), then the Loan Parties shall, not later than 10 days after the date by which financial statements for such period are required to be delivered (or such longer period as the Administrative Agent may agree in its sole discretion), designate in writing to the Administrative Agent that one or more of such Subsidiaries is no longer an Immaterial Subsidiary for purposes of this Agreement to the extent required such that the foregoing condition ceases to be true. As of the Effective Date, the Immaterial Subsidiaries are listed on Schedule 1.01(C).
“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables or other accounts payable incurred in the ordinary course of such Person’s business and not outstanding for more than 90 days after the date such payable was created and any earn-out, purchase price adjustment or similar obligation until such obligation appears in the liabilities section of the balance sheet of such Person); (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (e) all Capitalized Lease Obligations of such Person; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (g) all obligations and liabilities, calculated on a basis satisfactory to the Collateral Agent and in accordance with accepted practice, of such Person under Hedging Agreements; (h) all monetary obligations under any receivables factoring, receivable sales or similar transactions and all monetary obligations under any synthetic lease, tax ownership/operating lease, off-balance sheet financing or similar financing; (i) all Contingent Obligations; (j) all Disqualified Equity Interests; and (k) all obligations referred to in clauses (a) through (j) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer.
“Indemnified Matters” has the meaning specified therefor in Section 12.15.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitees” has the meaning specified therefor in Section 12.15.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of any Debtor Relief Law.
“Intellectual Property” has the meaning specified therefor in the Security Agreement.
“Intellectual Property Contracts” means all agreements concerning Intellectual Property, including without limitation license agreements, technology consulting agreements, confidentiality agreements, co-existence agreements, consent agreements and non-assertion agreements.
“Intercompany Subordination Agreement” means an Intercompany Subordination Agreement made by the Parent and its Subsidiaries in favor of the Collateral Agent for the benefit of the Agents and the Lenders, in form and substance reasonably satisfactory to the Collateral Agent.
“Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Reference Rate Loan to a LIBOR Rate Loan) and ending one, two or three months thereafter; provided, however, that (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c) -(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is one, two or three months after the date on which the Interest Period began, as applicable, and (e) the Borrowers may not elect an Interest Period that will end after the Final Maturity Date.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.
“Inventory” means, with respect to any Person, all goods and merchandise of such Person leased or held for sale or lease by such Person, including, without limitation, all raw materials, work-in-process and finished goods, and all packaging, supplies and materials of every nature used or usable in connection with the shipping, storing, advertising or sale of such goods and merchandise, whether now owned or hereafter acquired, and all such other property the sale or other disposition of which would give rise to an Account or cash.
“Investment” means, with respect to any Person, (a) any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances or other extensions of credit (excluding Accounts arising in the ordinary course of business), capital contributions or acquisitions of Indebtedness (including, any bonds, notes, debentures or other debt securities), Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), (b) the purchase or ownership of any futures contract or liability for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or (c) any investment in any other items that are or would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP.
“Joinder Agreement” means a Joinder Agreement, substantially in the form of Exhibit A hereto, duly executed by a Subsidiary of a Loan Party made a party hereto pursuant to Section 7.01(b).
“Lease” means any lease, sublease or license of, or other agreement granting a possessory interest in, real property to which any Loan Party or any of its Subsidiaries is a party as lessor, lessee, sublessor, sublessee, licensor or licensee.
“Lender” has the meaning specified therefor in the preamble.
“Leverage Ratio” means, with respect to any Person and its Subsidiaries for any period, the ratio of (a) all Indebtedness described in clauses (a), (b), (c), (d), (e) and (f) in the definition thereof of such Person and its Subsidiaries as of the end of such period to (b) Consolidated EBITDA of such Person and its Subsidiaries for such period.
“LIBOR” means, with respect to any LIBOR Rate Loan for any Interest Period, the London interbank offered rate as calculated by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) and obtained through a nationally recognized service such as Bloomberg (or on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; in each case, the “Screen Rate”), or a comparable or successor rate that has been approved by the Administrative Agent, at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that, if the Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) with respect to Dollars, then the LIBOR Rate shall be the Interpolated Rate at such time. “Interpolated Rate” means, at any time, the rate per annum determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the Screen Rate for the longest period (for which that Screen Rate is available in Dollars) that is shorter than the Impacted Interest Period and (b) the Screen Rate for the shortest period (for which that Screen Rate is available for Dollars) that exceeds the Impacted Interest Period, in each case, at such time. Notwithstanding anything herein to the contrary, if “LIBOR” shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“LIBOR Deadline” has the meaning specified therefor in Section 2.07(a).
“LIBOR Notice” means a written notice substantially in the form of Exhibit D hereto.
“LIBOR Option” has the meaning specified therefor in Section 2.07(a).
“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the greater of (a) the rate per annum determined by the Administrative Agent (rounded upwards if necessary, to the next 1/100%) by dividing (i) LIBOR for such Interest Period by (ii) 100% minus the Reserve Percentage and (b) 1.00% per annum. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.
“LIBOR Rate Loan” means each portion of a Loan that bears interest at a rate determined by reference to the LIBOR Rate.
“Lien” means any mortgage, deed of trust, deed to secure debt, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any Capitalized Lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.
“Loan” means the Term Loan or any Revolving Loan made by an Agent or a Lender to the Borrowers pursuant to Article II.
“Loan Account” means an account maintained hereunder by the Administrative Agent on its books of account at the Payment Office, and with respect to the Borrowers, in which the Borrowers will be charged with all Loans made to, and all other Obligations incurred by, the Borrowers.
“Loan Document” means this Agreement, any Control Agreement, the Disbursement Letter, the Fee Letter, any Guaranty, the Intercompany Subordination Agreement, any Joinder Agreement, any Mortgage, any Security Agreement, any UCC Filing Authorization Letter, any landlord waiver, any collateral access agreement, any Perfection Certificate, any collateral assignment and any other agreement, instrument, certificate, report and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing any Loan or any other Obligation.
“Loan Party” means any Borrower and any Guarantor.
“Material Adverse Effect” means a material adverse effect on any of (a) the operations, assets, liabilities or financial condition of the Loan Parties taken as a whole, (b) the ability of the Loan Parties taken as a whole to perform any of their obligations under any Loan Document, (c) the legality, validity or enforceability of this Agreement or any other Loan Document, (d) the rights and remedies of any Agent or any Lender under any Loan Document, or (e) the validity, perfection or priority of a Lien in favor of the Collateral Agent for the benefit of the Agents and the Lenders on Collateral having a fair market value in excess of $5,000,000.
“Material Contract” means, with respect to any Person, (a) any Specified Material Contract, (b) each contract or agreement to which such Person or any of its Subsidiaries is a party involving aggregate consideration payable to or by such Person or such Subsidiary of $5,000,000 or more in any Fiscal Year (other than purchase orders in the ordinary course of the business of such Person or such Subsidiary and other than contracts that by their terms may be terminated by such Person or Subsidiary in the ordinary course of its business upon less than 90 days’ notice without penalty or premium) and (c) all other contracts or agreements as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Mortgage” means a mortgage (including, without limitation, a leasehold mortgage), deed of trust or deed to secure debt, in form and substance satisfactory to the Collateral Agent, made by a Loan Party in favor of the Collateral Agent for the benefit of the Agents and the Lenders, securing the Obligations and delivered to the Collateral Agent.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA Affiliates has contributed, or has been obligated to contribute, to at any time during the preceding six calendar years.
“Net Cash Proceeds” means, with respect to, any issuance or incurrence of any Indebtedness, any Equity Issuance, any Disposition or the receipt of any Extraordinary Receipts by any Person or any of its Subsidiaries, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (a) in the case of any Disposition or the receipt of any Extraordinary Receipts consisting of insurance proceeds or condemnation awards, the amount of any Indebtedness secured by any Permitted Lien on any asset (other than Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection therewith (other than Indebtedness under this Agreement), (b) reasonable expenses related thereto incurred by such Person or such Subsidiary in connection therewith, (c) transfer taxes paid to any taxing authorities by such Person or such Subsidiary in connection therewith, and (d) net income taxes to be paid or estimated to be payable in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements, and provided, that, if such estimated taxes exceed the amount of actual taxes required to be paid in cash, the amount of such excess shall constitute Net Cash Proceeds), in each case, to the extent, but only to the extent, that the amounts so deducted are (i) actually paid to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of such Person or any of its Subsidiaries and (ii) properly attributable to such transaction or to the asset that is the subject thereof.
“New Facility” has the meaning specified therefor in Section 7.01(m).
“New Lending Office” has the meaning specified therefor in Section 2.09(d).
“Non-U.S. Lender” has the meaning specified therefor in Section 2.09(d).
“Notice of Borrowing” has the meaning specified therefor in Section 2.02(a).
“Obligations” means all present and future indebtedness, obligations, and liabilities of each Loan Party to the Agents and the Lenders arising under or in connection with this Agreement or any other Loan Document, whether or not the right of payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 9.01. Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a) the obligation (irrespective of whether a claim therefor is allowed in an Insolvency Proceeding) to pay principal, interest, charges, expenses, fees, premiums (including the Applicable Premium), attorneys’ fees and disbursements, indemnities and other amounts payable by such Person under the Loan Documents, and (b) the obligation of such Person to reimburse any amount in respect of any of the foregoing that any Agent or any Lender (in its sole discretion) may elect to pay or advance on behalf of such Person. Notwithstanding any of the foregoing, Obligations shall not include any Excluded Swap Obligations.
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.
“Parent” has the meaning specified therefor in the preamble.
“Participant Register” has the meaning specified therefor in Section 12.07(i).
“Payment Office” means the Administrative Agent’s office located at 1251 Avenue of the Americas, Suite 4700, New York, New York 10020, or at such other office or offices of the Administrative Agent as may be designated in writing from time to time by the Administrative Agent to the Collateral Agent and the Administrative Borrower.
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“Pension Plan” means an Employee Plan that is subject to Section 412 of the Internal Revenue Code, Section 302 of ERISA or Title IV of ERISA and maintained, sponsored or contributed to, or for which there is an obligation to contribute to, by any Loan Party or any of its ERISA Affiliates at any time during the preceding six calendar years.
“Perfection Certificate “ means a certificate in form and substance satisfactory to the Collateral Agent providing information with respect to the property of each Loan Party.
“Permitted Acquisition” means any Acquisition by the Ultimate Parent or any Subsidiary of the Ultimate Parent that is a Loan Party to the extent that each of the following conditions shall have been satisfied:
(a)
no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition;
(b)
to the extent the Acquisition will be financed in whole or in part with the proceeds of any Loan, the conditions set forth in Section 5.02 shall have been satisfied;
(c)
the Borrowers shall have furnished to the Agents at least ten Business Days prior to the consummation of such Acquisition (i) an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such Acquisition) and, at the request of any Agent, such other information and documents that any Agent may request, including, without limitation, executed counterparts of the respective agreements, instruments or other documents pursuant to which such Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith, (ii) pro forma financial statements of the Ultimate Parent and its Subsidiaries after the consummation of such Acquisition, (iii) a certificate of the chief financial officer of the Ultimate Parent, demonstrating on a pro forma basis compliance, as of the end of the most recently ended fiscal quarter for which internally prepared financial statements were required to be delivered pursuant to the terms herein, with all covenants set forth in Section 7.03 after the consummation of such Acquisition, (iv) a certificate of the chief financial officer of the Ultimate Parent, demonstrating on a pro forma basis, as of the end of the most recently ended fiscal quarter for which internally prepared financial statements were required to be delivered pursuant to the terms herein, that the Leverage Ratio of the Ultimate Parent and its Subsidiaries for the 4 consecutive fiscal quarters of the Ultimate Parent and its Subsidiaries then ended does not exceed 4.00 to 1.00 after the consummation of such Acquisition and (v) copies of such other agreements, instruments or other documents as any Agent shall reasonably request;
(d)
the agreements, instruments and other documents referred to in paragraph (c) above shall provide that (i) neither the Loan Parties nor any of their Subsidiaries shall, in connection with such Acquisition, assume or remain liable in respect of any Indebtedness of the Seller or Sellers (except for Permitted Indebtedness), and (ii) all property to be so acquired in connection with such Acquisition shall be free and clear of any and all Liens, except for Permitted Liens (and if any such property is subject to any Lien not permitted by this clause (ii) then concurrently with such Acquisition such Lien shall be released);
(e)
such Acquisition shall be effected in such a manner so that the acquired assets or Equity Interests are owned either by a Loan Party or a wholly-owned Subsidiary of a Loan Party and, if effected by merger or consolidation involving a Loan Party, such Loan Party shall be the continuing or surviving Person;
(f)
the Borrowers shall have Excess Availability plus Qualified Cash in an amount equal to or greater than $20,000,000 immediately after giving effect to the consummation of the proposed Acquisition;
(g)
the assets being acquired or the Person whose Equity Interests are being acquired did not have negative Consolidated EBITDA during the 12-consecutive-month period most recently concluded prior to the date of the proposed Acquisition;
(h)
the assets being acquired (other than a de minimis amount of assets in relation to the Loan Parties and their Subsidiaries’ total assets), or the Person whose Equity Interests are being acquired, are useful in or engaged in, as applicable, the business of the Loan Parties and their Subsidiaries or a business reasonably related thereto;
(i)
the assets being acquired (other than a de minimis amount of assets in relation to the assets being acquired) are located within the United States or the Person whose Equity Interests are being acquired is organized in a jurisdiction located within the United States;
(j)
such Acquisition shall be consensual and shall have been approved by the board of directors of the Person whose Equity Interests or assets are proposed to be acquired and shall not have been preceded by an unsolicited tender offer for such Equity Interests by, or proxy contest initiated by, Ultimate Parent or any of its Subsidiaries or an Affiliate thereof;
(k)
any such Subsidiary (and its equityholders) shall execute and deliver the agreements, instruments and other documents required by Section 7.01(b) within 10 days of the date of the consummation of such Acquisition; and
(l)
the Purchase Price (i) payable in respect of any single Acquisition shall not exceed $10,000,000 and (ii) payable in respect of all Acquisitions (including the proposed Acquisition) shall not exceed $25,000,000 in the aggregate during the term of this Agreement.
“Permitted Cure Equity” means Qualified Equity Interests of the Parent.
“Permitted Disposition” means:
(a)
sale of Inventory in the ordinary course of business;
(b)
licensing, on a non-exclusive basis, Intellectual Property rights in the ordinary course of business;
(c)
leasing or subleasing assets in the ordinary course of business;
(d)
(i) the lapse of Registered Intellectual Property of the Parent and its Subsidiaries to the extent not economically desirable in the conduct of their business or (ii) the abandonment of Intellectual Property rights in the ordinary course of business so long as (in each, case under clauses (i) and (ii)), (A) with respect to copyrights, such copyrights are not material revenue generating copyrights, and (B) such lapse is not materially adverse to the interests of the Secured Parties;
(e)
any involuntary loss, damage or destruction of property;
(f)
any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property;
(g)
so long as no Event of Default has occurred and is continuing or would result therefrom, transfers of assets (i) from the Ultimate Parent or any of its Subsidiaries (other than the Borrowers) to a Domestic Loan Party (other than the Parent or the Ultimate Parent) and (ii) from any Subsidiary of the Ultimate Parent that is not a Loan Party to any other Subsidiary of the Ultimate Parent that is not a Loan Party;
(h)
Disposition of obsolete or worn-out equipment in the ordinary course of business; and
(i) Disposition of property or assets not otherwise permitted in clauses (a) through (h) above for cash in an aggregate amount not less than the fair market value of such property or assets;
provided that the Net Cash Proceeds of such Dispositions (including the proposed Disposition) (1) in the case of clauses (h) and (i) above, do not exceed $ 2,500,000 in the aggregate in any Fiscal Year and (2) in all cases, are paid to the Administrative Agent for the benefit of the Agents and the Lenders pursuant to the terms of Section 2.05(c)(ii) or applied as provided in Section 2.05(c)(vi).
“Permitted Holders” means the Dai Family, Mr. Qiangen Xiong and Yellow Sea Investment Holdings Limited.
“Permitted Indebtedness” means:
(a)
any Indebtedness owing to any Agent or any Lender under this Agreement and the other Loan Documents;
(b)
any other Indebtedness listed on Schedule 7.02(b), and any Permitted Refinancing Indebtedness in respect of such Indebtedness;
(c)
Permitted Purchase Money Indebtedness and any Permitted Refinancing Indebtedness in respect of such Indebtedness;
(d)
Permitted Intercompany Investments;
(e)
Indebtedness incurred in the ordinary course of business under performance, surety, statutory, and appeal bonds;
(f)
Indebtedness owed to any Person providing property, casualty, liability, or other insurance to the Loan Parties, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the period in which such Indebtedness is incurred and such Indebtedness is outstanding only during such period;
(g)
the incurrence by any Loan Party of Indebtedness under Hedging Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with such Loan Party’s operations and not for speculative purposes;
(h)
Indebtedness incurred in respect of credit cards, credit card processing services, debit cards, stored value cards, purchase cards (including so-called “procurement cards” or “P-cards”) or other similar cash management services, in each case, incurred in the ordinary course of business;
(i)
contingent liabilities in respect of any indemnification obligation, adjustment of purchase price, non-compete, or similar obligation of any Loan Party incurred in connection with the consummation of one or more Permitted Acquisitions;
(j)
Indebtedness of a Person whose assets or Equity Interests are acquired by the Parent or any of its Subsidiaries in a Permitted Acquisition in an aggregate amount not to exceed $2,500,000 at any one time outstanding; provided that such Indebtedness (i) is either Permitted Purchase Money Indebtedness or a Capitalized Lease with respect to equipment or mortgage financing with respect to a Facility, (ii) was in existence prior to the date of such Permitted Acquisition and (iii) was not incurred in connection with, or in contemplation of, such Permitted Acquisition;
(k)
unsecured Indebtedness owing to the Seller that is incurred by the applicable Loan Party in connection with the consummation of one or more Permitted Acquisitions so long as (i) the aggregate principal amount for all such Indebtedness does not exceed $2,500,000 at any one time outstanding, (ii) such Indebtedness is subordinated to the Obligations on terms and conditions reasonably acceptable to the Collateral Agent and (iii) such Indebtedness is otherwise on terms and conditions (including all economic terms and the absence of covenants) reasonably acceptable to the Collateral Agent;
(l)
unsecured Indebtedness of the applicable Loan Party that is incurred on the date of the consummation of a Permitted Acquisition solely for the purpose of consummating such Permitted Acquisition so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii) such unsecured Indebtedness is not incurred for working capital purposes, (iii) such unsecured Indebtedness does not mature prior to the date that is 12 months after the Final Maturity Date, (iv) such unsecured Indebtedness does not amortize until 12 months after the Final Maturity Date, (v) such unsecured Indebtedness does not provide for the payment of interest thereon in cash or Cash Equivalents prior to the date that is 12 months after the Final Maturity Date, and (vi) such Indebtedness is subordinated in right of payment to the Obligations on terms and conditions reasonably satisfactory to the Collateral Agent; and
(m)
Subordinated Indebtedness other than Subordinated Indebtedness described in clause (k) or (l) above in an aggregate amount not exceeding $1,000,000 at any time outstanding.
“Permitted Intercompany Investments” means Investments made by (a) a Loan Party to or in a Domestic Loan Party, (b) a Foreign Loan Party to or in a Foreign Loan Party, (c) a Subsidiary that is not a Loan Party to or in another Subsidiary that is not a Loan Party, (d) a Subsidiary that is not a Loan Party to or in a Loan Party, (e) a Domestic Loan Party to or in a Foreign Loan Party, so long as such Investments are in the form of cash and the aggregate amount of all such Investments made by Domestic Loan Parties to or in Foreign Loan Parties, when taken together with the aggregate amount of all Investments made by Loan Parties to or in Subsidiaries that are not Loan Parties pursuant to clause (f) below, does not exceed $2,500,000 at any time outstanding, and (f) a Loan Party to or in a Subsidiary that is not a Loan Party so long as (i) such Investments are in the form of cash and the aggregate amount of all such Investments made by Loan Parties to or in Subsidiaries that are not Loan Parties, when taken together with the aggregate amount of all Investments made by Domestic Loan Parties to or in Foreign Loan Parties pursuant to clause (e) above, does not exceed $2,500,000 at any time outstanding, (ii) no Default or Event of Default has occurred and is continuing either before or after giving effect to such Investment, and (iii) the Borrowers have Excess Availability plus Qualified Cash in an amount equal to or greater than $20,000,000 after giving effect to such Investment. Each party to any Investment described above made in the form of a loan or advance shall be a party to the Intercompany Subordination Agreement.
Notwithstanding the foregoing, payments for services or royalties made by one Loan Party or Subsidiary to another Loan Party or Subsidiary under any intercompany agreement shall not be subject to the Dollar limitations set forth in clauses (e) and (f) above so long as (A) such payments are made in the ordinary course of business and in a manner consistent with past practices, (B) such payments have transfer pricing payment terms that comply with all applicable transfer pricing rules and regulations, (C) such payments do not exceed the amounts necessary for the payee thereof to pay its projected operating expenses for the following one-month period and (D) the aggregate amount of all such payments that shall not be subject to the Dollar limitations set forth in clauses (e) and (f) above shall not exceed $900,000 in any one-month period.
“Permitted Investments” means:
(a)
Investments in cash and Cash Equivalents;
(b)
Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business;
(c)
advances made in connection with purchases of goods or services in the ordinary course of business;
(d)
Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries;
(e)
Investments existing on the date of this Agreement, as set forth on Schedule 7.02(e), but not any increase in the amount thereof as set forth in such Schedule or any other modification of the terms thereof;
(f)
Permitted Intercompany Investments;
(g)
Permitted Acquisitions; and
(h)
so long as no Default or Event of Default has occurred and is continuing or would result therefrom, any other Investments in the form of cash, in an aggregate amount not to exceed $2,500,000 at any time outstanding.
“Permitted Liens” means:
(a)
Liens securing the Obligations;
(b)
Liens for taxes, assessments and governmental charges the payment of which is not required under Section 7.01(c)(ii);
(c)
Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) that are not overdue by more than 30 days or are being contested in good faith and by appropriate proceedings promptly initiated and diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor;
(d)
Liens described on Schedule 7.02(a), provided that any such Lien shall only secure the Indebtedness that it secures on the Effective Date and any Permitted Refinancing Indebtedness in respect thereof;
(e)
purchase money Liens on equipment acquired or held by any Loan Party or any of its Subsidiaries in the ordinary course of its business to secure Permitted Purchase Money Indebtedness so long as such Lien only (i) attaches to such property and (ii) secures the Indebtedness that was incurred to acquire such property or any Permitted Refinancing Indebtedness in respect thereof;
(f)
deposits and pledges of cash securing (i) obligations incurred in respect of workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits, (ii) the performance of bids, tenders, leases, contracts (other than for the payment of money) and statutory obligations, or (iii) obligations on surety or appeal bonds, but only to the extent such deposits or pledges are made or otherwise arise in the ordinary course of business and secure obligations not past due;
(g)
with respect to any Facility, easements, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or its use by any Loan Party or any of its Subsidiaries in the normal conduct of such Person’s business;
(h)
Liens of landlords and mortgagees of landlords (i) arising by statute or under any Lease or related Contractual Obligation entered into in the ordinary course of business, (ii) on fixtures and movable tangible property located on the real property leased or subleased from such landlord or (iii) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP;
(i)
the title and interest of a lessor or sublessor in and to personal property leased or subleased (other than through a Capitalized Lease), in each case extending only to such personal property;
(j)
non-exclusive licenses of Intellectual Property rights in the ordinary course of business;
(k)
judgment liens (other than for the payment of taxes, assessments or other governmental charges) securing judgments and other proceedings not constituting an Event of Default under Section 9.01(j);
(l)
rights of set-off or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;
(m)
Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness;
(n)
Liens assumed by the Parent or any of its Subsidiaries in connection with a Permitted Acquisition that secure Indebtedness permitted by clause (j) of the definition of Permitted Indebtedness;
(o)
Liens solely on any cash earnest money deposits made by any Loan Party in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; and
(p)
other Liens which do not secure Indebtedness for borrowed money or letters of credit and as to which the aggregate amount of the obligations secured thereby does not exceed $2,500,000.
“Permitted Purchase Money Indebtedness” means, as of any date of determination, Indebtedness (other than the Obligations, but including Capitalized Lease Obligations) incurred to finance the acquisition of any fixed assets secured by a Lien permitted under clause (e) of the definition of “Permitted Liens”; provided that (a) such Indebtedness is incurred within 20 days after such acquisition, (b) such Indebtedness when incurred shall not exceed the purchase price of the asset financed and (c) the aggregate principal amount of all such Indebtedness shall not exceed $2,500,000 at any time outstanding.
“Permitted Refinancing Indebtedness” means the extension of maturity, refinancing or modification of the terms of Indebtedness so long as:
(a)
after giving effect to such extension, refinancing or modification, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, refinancing or modification (other than by the amount of premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of unfunded commitments with respect thereto);
(b)
such extension, refinancing or modification does not result in a shortening of the average weighted maturity (measured as of the extension, refinancing or modification) of the Indebtedness so extended, refinanced or modified;
(c)
such extension, refinancing or modification is pursuant to terms that are not materially less favorable to the Loan Parties and the Lenders, taken as a whole, than the terms of the Indebtedness (including, without limitation, terms relating to the collateral (if any) and subordination (if any)) being extended, refinanced or modified; and
(d)
the Indebtedness that is extended, refinanced or modified is not recourse to any Loan Party or any of its Subsidiaries that is liable on account of the obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed or extended.
“Permitted Restricted Payments” means any of the following Restricted Payments (in each case other than with respect to clause (c), made in the form of cash) by:
(a)
any Loan Party to the Parent or the Ultimate Parent in amounts necessary to pay taxes and other customary expenses as and when due and owing by the Parent or the Ultimate Parent in the ordinary course of its business as a holding company (including salaries and related reasonable and customary expenses incurred by employees of the Parent or the Ultimate Parent), so long as no Default or Event of Default shall have occurred and be continuing or would result from the making of such payment,
(b)
(i) any Subsidiary of any Loan Party (other than the Parent or the Ultimate Parent) to such Loan Party (other than the Parent or the Ultimate Parent) and (ii) any Subsidiary that is not a Loan Party to any other Subsidiary that is not a Loan Party,
(c)
the Ultimate Parent to pay dividends in the form of common Equity Interests,
(d)
the Loan Parties to Haitong International ZhongHau Finance Acquisition Fund I, L.P, the former holder of all of the Equity Interests in the Ultimate Parent, in an aggregate amount not to exceed $2,000,000 during the term of this Agreement, in respect of certain management fees owed by an Affiliate of the Loan Parties to such Person, so long as (i) no Default or Event of Default has occurred and is continuing or would result from the making of such payment, (ii) the Borrowers have Excess Availability plus Qualified Cash in an amount equal to or greater than $20,000,000 immediately after giving effect to such payment and (iii) the Agents have received a certificate of the chief financial officer of the Administrative Borrower certifying compliance by the Loan Parties with the conditions set forth in this clause (d), and
(e)
the Parent or the Ultimate Parent in an aggregate amount not to exceed (i) if the Leverage Ratio of the Ultimate Parent and its Subsidiaries as of the last day of the last fiscal quarter of the Ultimate Parent and its Subsidiaries for which financial statements of the Ultimate Parent and its Subsidiaries have been delivered under Section 7.01(a) does not exceed 3.25 to 1.00 after giving pro forma effect to such payment (as if made on the first day of such period), $5,000,000 in any Fiscal Year, and (ii) if the Leverage Ratio of the Ultimate Parent and its Subsidiaries as of the last day of the last fiscal quarter of the Ultimate Parent and its Subsidiaries for which financial statements of the Ultimate Parent and its Subsidiaries have been delivered under Section 7.01(a) does not exceed 2.50 to 1.00 after giving pro forma effect to such payment (as if made on the first day of such period), $10,000,000 in any Fiscal Year (for the avoidance of doubt, when taken together with the aggregate amount of any Restricted Payments made pursuant to clause (i) above in such Fiscal Year), in the case of each of clauses (i) and (ii) above, so long as (A) no Default or Event of Default has occurred and is continuing or would result from the making of such payment, (B) the total then outstanding Revolving Loan Obligations are equal to or less than $5,000,000 both before and after giving effect to such payment, (C) the Loan Parties are in compliance with the financial covenants set forth in Section 7.03 as of the last day of the last fiscal quarter of the Ultimate Parent and its Subsidiaries for which financial statements of the Ultimate Parent and its Subsidiaries have been delivered under Section 7.01(a) after giving pro forma effect to such payment (as if made on the first day of such period) and (D) the Agents have received a certificate of the vice president of finance of the Administrative Borrower certifying compliance by the Loan Parties with the conditions set forth in this clause (e) and attaching reasonably detailed calculations of all financial ratios set forth above.
“Permitted Specified Liens” means Permitted Liens described in clauses (a), (b) and (c) of the definition of Permitted Liens, and, solely in the case of Section 7.01(b)(i), including clauses (g), (h) and (i) of the definition of Permitted Liens.
“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“Petty Cash Accounts” means Cash Management Accounts with deposits at any time in an aggregate amount not in excess of $50,000 for any one account and $250,000 in the aggregate for all such accounts.
“Post-Default Rate” means a rate of interest per annum equal to the rate of interest otherwise in effect from time to time pursuant to the terms of this Agreement plus 2.00%, or, if a rate of interest is not otherwise in effect, interest at the highest rate specified herein for any Loan then outstanding prior to an Event of Default plus 2.00%.
“Pro Rata Share” means, with respect to:
(a)
a Lender’s obligation to make Revolving Loans and the right to receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (A) such Lender’s Revolving Credit Commitment, by (B) the Total Revolving Credit Commitment, provided that, if the Total Revolving Credit Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender’s Revolving Loans (including Collateral Agent Advances) and the denominator shall be the aggregate unpaid principal amount of all Revolving Loans (including Collateral Agent Advances),
(b)
a Lender’s obligation to make the Term Loan and the right to receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender’s Term Loan Commitment, by (ii) the Total Term Loan Commitment, provided that if the Total Term Loan Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender’s portion of the Term Loan and the denominator shall be the aggregate unpaid principal amount of the Term Loan, and
(c)
all other matters (including, without limitation, the indemnification obligations arising under Section 10.05), the percentage obtained by dividing (i) the sum of such Lender’s Revolving Credit Commitment and the unpaid principal amount of such Lender’s portion of the Term Loan, by (ii) the sum of the Total Revolving Credit Commitment and the aggregate unpaid principal amount of the Term Loan, provided that, if such Lender’s Revolving Credit Commitment shall have been reduced to zero, such Lender’s Revolving Credit Commitment shall be deemed to be the aggregate unpaid principal amount of such Lender’s Revolving Loans (including Collateral Agent Advances) and if the Total Revolving Credit Commitment shall have been reduced to zero, the Total Revolving Credit Commitment shall be deemed to be the aggregate unpaid principal amount of all Revolving Loans (including Collateral Agent Advances).
“Process Agent” has the meaning specified therefor in Section 12.10(c).
“Projections” means financial projections of the Parent and its Subsidiaries delivered pursuant to Section 6.01(g)(ii), as updated from time to time pursuant to Section 7.01(a)(vii).
“Purchase Price” means, with respect to any Acquisition, an amount equal to the sum of (a) the aggregate consideration, whether cash, property or securities (including, without limitation, the fair market value of any Equity Interests of any Loan Party or any of its Subsidiaries issued in connection with such Acquisition), paid or delivered by a Loan Party or any of its Subsidiaries (whether as initial consideration or through the payment or disposition of deferred consideration, including, without limitation, in the form of seller financing, royalty payments, payments allocated towards non-compete covenants, payments to principals for consulting services or other similar payments) in connection with such Acquisition, plus (b) the aggregate amount of liabilities of the acquired business (net of current assets of the acquired business) that would be reflected on a balance sheet (if such were to be prepared) of the Parent and its Subsidiaries after giving effect to such Acquisition, plus (c) the aggregate amount of all transaction fees, costs and expenses incurred by the Parent or any of its Subsidiaries in connection with such Acquisition.
“Qualified Cash” means, as of any date of determination, the aggregate amount of unrestricted cash on-hand of the Loan Parties maintained in deposit accounts in the name of a Loan Party in the United States as of such date, which deposit accounts are subject to Control Agreements.
“Qualified Equity Interests” means, with respect to any Person, all Equity Interests of such Person that are not Disqualified Equity Interests.
“Real Property Deliverables” means each of the following agreements, instruments and other documents in respect of each Facility, each in form and substance reasonably satisfactory to the Collateral Agent:
(a)
a Mortgage duly executed by the applicable Loan Party,
(b)
evidence of the recording of each Mortgage in such office or offices as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the Lien purported to be created thereby or to otherwise protect the rights of the Collateral Agent and the Lenders thereunder;
(c)
a Title Insurance Policy with respect to each Mortgage;
(d)
a current ALTA survey and a surveyor’s certificate, certified to the Collateral Agent and to the issuer of the Title Insurance Policy with respect thereto by a professional surveyor licensed in the state in which such Facility is located and reasonably satisfactory to the Collateral Agent;
(e)
a zoning report issued by a provider reasonably satisfactory to the Collateral Agent or a copy of each letter issued by the applicable Governmental Authority, evidencing each Facility’s compliance with all applicable Requirements of Law, together with a copy of all certificates of occupancy issued with respect to each Facility;
(f)
an opinion of counsel, satisfactory to the Collateral Agent, in the state where such Facility is located with respect to the enforceability of the Mortgage to be recorded and such other matters as the Collateral Agent may reasonably request;
(g)
a Phase I Environmental Site Assessment prepared in accordance with the United States Environmental Protection Agency Standards and Practices for “All Appropriate Inquiries” under Section 101(3)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act as referenced in 40 CFR Part 312 and ASTM E-1527-13 “Standard Practice for Environmental Assessments” (“Phase I ESA” (and if reasonably requested by the Collateral Agent based upon the results of such Phase I ESA, a Phase II Environmental Site Assessment), by a nationally-recognized environmental consulting firm, reasonably satisfactory to the Collateral Agent; and
(h)
such other agreements, instruments, appraisals and other documents (including guarantees and opinions of counsel) as the Collateral Agent may reasonably require.
“Recipient” means any Agent or any Lender, as applicable.
“Reference Rate” means, for any period, the greatest of (a) 2.00% per annum, (b) the Federal Funds Rate plus 0.50% per annum, (c) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily basis) plus 1.00% per annum, and (d) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective.
“Reference Rate Loan” means each portion of a Loan that bears interest at a rate determined by reference to the Reference Rate.
“Refusal Option” shall have the meaning assigned to such term in Section 2.05(g).
“Register” has the meaning specified therefor in Section 12.07(f).
“Registered Intellectual Property” means Intellectual Property that is issued, registered, renewed or the subject of a pending application.
“Registered Loans” has the meaning specified therefor in Section 12.07(f).
“Regulation T”, “Regulation U” and “Regulation X” mean, respectively, Regulations T, U and X of the Board or any successor, as the same may be amended or supplemented from time to time.
“Related Fund” means, with respect to any Person, an Affiliate of such Person, or a fund or account managed by such Person or an Affiliate of such Person.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the direct and indirect equityholders, partners, directors, officers, employees, agents, consultants, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through or in any environmental media, including the indoor or outdoor air, soil, surface or ground water, sediments or property.
“Remedial Action” means any action (a) to correct, mitigate, or address any actual, alleged or threatened violation of or non-compliance with any Environmental Law or Environmental Permit, or (b) to clean up, remove, remediate, mitigate, abate, contain, treat, monitor, assess, evaluate, investigate, prevent, minimize or in any other way address any environmental condition or the actual, alleged or threatened presence, Release or threatened Release of any Hazardous Materials (including the performance of pre-remedial studies and investigations and post-remedial operation and maintenance activities).
“Replacement Lender” has the meaning specified therefor in Section 12.02(c).
“Replacement Rate” has the meaning specified therefor in Section 2.07(g).
“Reportable Event” means an event described in Section 4043 of ERISA (other than an event for which the 30-day notice period is waived by regulation).
“Required Lenders” means Lenders whose Pro Rata Shares (calculated in accordance with clause (c) of the definition thereof) aggregate at least 50.1%.
“Required Prepayment Date” shall have the meaning assigned to such term in Section 2.05(g).
“Requirements of Law” means, with respect to any Person, collectively, the common law and any and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities), and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Reserve Percentage” means, on any day, for any Lender, the maximum percentage prescribed by the Board (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.
“Restricted Payment” means (a) the declaration or payment of any dividend or other distribution, direct or indirect, on account of any Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, together with any payment or distribution pursuant to a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law, (b) the making of any repurchase, redemption, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of any Loan Party or any direct or indirect parent of any Loan Party, now or hereafter outstanding, (c) the making of any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Equity Interests of any Loan Party, now or hereafter outstanding, (d) the return of any Equity Interests to any shareholders or other equity holders of any Loan Party or any of its Subsidiaries, or make any other distribution of property, assets, shares of Equity Interests, warrants, rights, options, obligations or securities thereto as such or (e) the payment of any management, consulting, monitoring or advisory fees or any other fees or expenses (including the reimbursement thereof by any Loan Party or any of its Subsidiaries) pursuant to any management, consulting, monitoring, advisory or other services agreement to any of the shareholders or other equityholders of any Loan Party or any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates of any Loan Party.
“Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans to the Borrowers in the amount set forth opposite such Lender’s name in Schedule 1.01(A) hereto or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amount may be terminated or reduced from time to time in accordance with the terms of this Agreement.
“Revolving Loan” means a loan made by a Lender to the Borrowers pursuant to Section 2.01(a)(i).
“Revolving Loan Lender” means a Lender with a Revolving Credit Commitment or a Revolving Loan.
“Revolving Loan Obligations “ means any Obligations with respect to the Revolving Loans (including without limitation, the principal thereof, the interest thereon, and the fees and expenses specifically related thereto).
“Sale and Leaseback Transaction” means, with respect to the Parent or any of its Subsidiaries, any arrangement, directly or indirectly, with any Person whereby the Parent or any of its Subsidiaries shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.
“Sanctioned Country” means, at any time, a country or territory that is the subject or target of any Sanctions that broadly prohibit dealings with that country or territory (which, as of the Effective Date, include Crimea, Cuba, Iran, North Korea, Sudan and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in OFAC’s Specially Designated Nationals and Blocked Persons List, OFAC’s Sectoral Sanctions Identification List, and any other Sanctions -related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom, Germany, Canada, Australia or other relevant sanctions authority, (b) a Person that resides in, is organized in or located in, or has a place of business in, a country or territory named on any list referred to in clause (a) of this definition or a country or territory that is designated as a “Non-Cooperative Jurisdiction” by the Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from or through any such jurisdiction (each of the foregoing in this clause (b), a “Sanction Target”), or a Person that owns 50% or more of the Equity Interests of, or is otherwise controlled by, or is acting on behalf of, one or more Sanction Targets, (c) any Person with whom or with which a U.S. Person is prohibited from dealing under any of the Sanctions or (d) any Person owned or controlled by any Person or Persons described in clause (a) or (b).
“Sanctions” means Requirements of Law concerning or relating to economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by OFAC, the U.S. Department of State, the European Union or Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.
“Secured Party” means any Agent and any Lender.
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.
“Securitization” has the meaning specified therefor in Section 12.07(l).
“Security Agreement” means (a) a Pledge and Security Agreement, in form and substance satisfactory to the Collateral Agent, made by a Loan Party in favor of the Collateral Agent for the benefit of the Secured Parties securing the Obligations and (b) any Cayman Islands Security Document.
“Seller” means any Person that sells Equity Interests or other property or assets to a Loan Party or a Subsidiary of a Loan Party in a Permitted Acquisition.
“Settlement Period” has the meaning specified therefor in Section 2.02(d)(i).
“Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property (on a going concern basis) of such Person is not less than the total amount of the liabilities of such Person, (b) the present fair salable value of the assets (on a going concern basis) of such Person is not less than the amount that will be required to pay the probable liability of such Person on its existing debts as they become absolute and matured, (c) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in the ordinary course of business, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital.
“Specified Material Contract” means, at any time, (a) the Distribution Services Agreement, dated as of June 27, 2018 by and between Administrative Borrower and Box Out, as amended, (b) the Services Agreement, dated as of February 22, 2018, by and between Administrative Borrower and Eversana Life Science Services, LLC, as amended, (c) the Distribution and Supply Agreement, dated as of November 15, 2019, by and between Administrative Borrower and Lexbrands LLC, (d) the Distribution and Supply Agreement, dated as of April 24, 2019, by and between Administrative Borrower and Rohto Pharmaceutical Co., Ltd, as amended, (e) the Know-How and Trademark License Agreement, dated as of September 13, 2002, by and between Borrower and Rohto Pharmaceutical Co., Ltd, as amended, (f) the License and Supply Agreement, dated as of December 4, 2008, by and between Borrower and Rohto Pharmaceutical Co., Ltd, as amended and (g) any other contract or agreement under which the Loan Parties have purchased or sold products representing 15% or more of the gross purchases or gross sales (as the case may be) of the Loan Parties for the immediately preceding 12 consecutive month period.
“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc. and any successor thereto.
“Subordinated Indebtedness” means Indebtedness of any Loan Party the terms of which (including, without limitation, payment terms, interest rates, covenants, remedies, defaults and other material terms) are satisfactory to the Collateral Agent and which has been expressly subordinated in right of payment to all Indebtedness of such Loan Party under the Loan Documents (a) by the execution and delivery of a subordination agreement, in form and substance satisfactory to the Collateral Agent, or (b) otherwise on terms and conditions satisfactory to the Collateral Agent.
“Subsidiary” means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (a) the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP or (b) of which more than 50% of (i) the outstanding Equity Interests having (in the absence of contingencies) ordinary voting power to elect a majority of the Board of Directors of such Person, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company, or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person. References to a Subsidiary shall mean a Subsidiary of the Ultimate Parent unless the context expressly provides otherwise.
“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” means the first date on which all of the Obligations are paid in full in cash and the Commitments of the Lenders are terminated.
“Term Loan” means, collectively, the loans made by the Term Loan Lenders to the Borrowers on the Effective Date pursuant to Section 2.01(a)(ii).
“Term Loan Commitment” means, with respect to each Lender, the commitment of such Lender to make the Term Loan to the Borrowers in the amount set forth in Schedule 1.01(A) hereto or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
“Term Loan Lender” means a Lender with a Term Loan Commitment or a Term Loan.
“Term Loan Obligations “ means any Obligations with respect to the Term Loan (including, without limitation, the principal thereof, the interest thereon, and the fees and expenses specifically related thereto).
“Title Insurance Policy” means a mortgagee’s loan policy, in form and substance satisfactory to the Collateral Agent, together with all endorsements made from time to time thereto, issued to the Collateral Agent by or on behalf of a title insurance company selected by or otherwise reasonably satisfactory to the Collateral Agent, insuring the Lien created by a Mortgage in an amount and on terms and with such endorsements reasonably satisfactory to the Collateral Agent, delivered to the Collateral Agent.
“Total Commitment” means the sum of the Total Revolving Credit Commitment and the Total Term Loan Commitment.
“Total Revolving Credit Commitment” means the sum of the amounts of the Lenders’ Revolving Credit Commitments.
“Total Term Loan Commitment” means the sum of the amounts of the Lenders’ Term Loan Commitments.
“UCC Filing Authorization Letter” means a letter duly executed by each Loan Party authorizing the Collateral Agent to file appropriate financing statements on Form UCC-1 without the signature of such Loan Party in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Agreement and each Mortgage.
“Ultimate Parent” has the meaning specified therefor in the preamble.
“Uniform Commercial Code” or “UCC” has the meaning specified therefor in Section 5.01(d).
“Unused Line Fee” has the meaning specified therefor in Section 2.06(b).
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT) Act of 2001 (Title III of Pub. L. 107-56, Oct. 26, 2001)) as amended by the USA Patriot Improvement and Reauthorization Act of 2005 (Pub. L. 109-177, March 9, 2006) and as the same may have been or may be further renewed, extended, amended, or replaced.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.
“Waivable Mandatory Prepayment” shall have the meaning assigned to such term in Section 2.05(g).
“WARN” has the meaning specified therefor in Section 6.01(p).
“Withholding Agent” means any Loan Party and the Administrative Agent.
“Working Capital” means, at any date of determination thereof, (a) the sum, for any Person and its Subsidiaries, of (i) the unpaid face amount of all Accounts of such Person and its Subsidiaries as at such date of determination, plus (ii) the aggregate amount of prepaid expenses and other current assets of such Person and its Subsidiaries as at such date of determination (other than cash, Cash Equivalents and any Indebtedness owing to such Person or any of its Subsidiaries by Affiliates of such Person), minus (b) the sum, for such Person and its Subsidiaries, of (i) the unpaid amount of all accounts payable of such Person and its Subsidiaries as at such date of determination, plus (ii) the aggregate amount of all accrued expenses of such Person and its Subsidiaries as at such date of determination (other than the current portion of long-term debt and all accrued interest and taxes).
Section 1.02 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
Section 1.03 Certain Matters of Construction. References in this Agreement to “determination” by any Agent include good faith estimates by such Agent (in the case of quantitative determinations) and good faith beliefs by such Agent (in the case of qualitative determinations). A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any other Loan Document as having been created in favor of any Agent, any agreement entered into by any Agent pursuant to this Agreement or any other Loan Document, any payment made by or to or funds received by any Agent pursuant to or as contemplated by this Agreement or any other Loan Document, or any act taken or omitted to be taken by any Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of the Agents and the Lenders. Wherever the phrase “to the knowledge of any Loan Party” or words of similar import relating to the knowledge or the awareness of any Loan Party are used in this Agreement or any other Loan Document, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Loan Party or (ii) the knowledge that a senior officer would have obtained if such officer had engaged in good faith and diligent performance of such officer’s duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Loan Party and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.
Section 1.04 Accounting and Other Terms.
(a) Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP. For purposes of determining compliance with any incurrence or expenditure tests set forth in Section 7.01, 7.02 and 7.03, any amounts so incurred or expended (to the extent incurred or expended in a currency other than Dollars) shall be converted into Dollars on the basis of the exchange rates (as shown on the Bloomberg currency page for such currency or, if the same does not provide such exchange rate, by reference to such other publicly available service for displaying exchange rates as may be reasonably selected by the Agents or, in the event no such service is selected, on such other basis as is reasonably satisfactory to the Agents) as in effect on the date of such incurrence or expenditure under any provision of any such Section that has an aggregate Dollar limitation provided for therein (and to the extent the respective incurrence or expenditure test regulates the aggregate amount outstanding at any time and it is expressed in terms of Dollars, all outstanding amounts originally incurred or spent in currencies other than Dollars shall be converted into Dollars on the basis of the exchange rates (as shown on the Bloomberg currency page for such currency or, if the same does not provide such exchange rate, by reference to such other publicly available service for displaying exchange rates as may be reasonably selected by the Agents or, in the event no such service is selected, on such other basis as is reasonably satisfactory to the Agents) as in effect on the date of any new incurrence or expenditures made under any provision of any such Section that regulates the Dollar amount outstanding at any time). Notwithstanding the foregoing, (i) with respect to the accounting for leases as either operating leases or capital leases and the impact of such accounting in accordance with FASB ASC 842 on the definitions and covenants herein, GAAP as in effect on December 31, 2018 shall be applied, (ii) for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Ultimate Parent and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded and (iii) with respect to revenue recognition and the impact of such accounting in accordance with FASB ASC 606 on the definitions and covenants herein, GAAP as in effect on December 31, 2017 shall be applied.
(b) All terms used in this Agreement which are defined in Article 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the “Uniform Commercial Code” or the “UCC”) and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute, except as any Agent may otherwise determine.
Section 1.05 Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern Daylight Saving Time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; provided, however, that with respect to a computation of fees or interest payable to any Secured Party, such period shall in any event consist of at least one full day.
Section 1.06 Obligation to Make Payments in Dollars. All payments to be made by any Loan Party of principal, interest, fees and other Obligations under any Loan Document shall be made in Dollars in same day funds, and no obligation of any Loan Party to make any such payment shall be discharged or satisfied by any payment other than payments made in Dollars in same day funds.
Section 1.07 Pro Forma Calculations. Notwithstanding any other provision set forth herein to the contrary, the parties hereto acknowledge and agree that, for purposes of all calculations made in determining compliance for any applicable period with the financial covenants set forth in Section 7.03 (including, without limitation, for purposes of determining pro forma compliance with such financial covenants pursuant to the requirements of any other section hereof or, if used without reference to a financial covenant), (a) with respect to any Permitted Acquisition consummated during the applicable period, (i) income statement items, cash flow statement items and other balance sheet items (whether positive or negative) attributable to the Person acquired in such transaction shall be included in such calculations (including, without limitation, the calculation of Consolidated EBITDA, in a manner consistent with the definition thereof) and such transaction shall be deemed to have occurred as of the first day of such applicable period and (ii) Indebtedness of a Person which is retired in connection with a Permitted Acquisition or other such acquisition shall be excluded from such calculations and deemed to have been retired as of the first day of such applicable period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the interest rates applicable thereto at the date incurred, assumed or repaid), (b) with respect to any Permitted Disposition consummated during the applicable period, (i) income statement items, cash flow statement items and other balance sheet items (whether positive or negative) attributable to the property or assets disposed of shall be excluded in such calculations and such transaction shall be deemed to have occurred as of the first day of such applicable period and (ii) Indebtedness that is repaid with the proceeds of such Disposition shall be excluded from such calculations and deemed to have been repaid as of the first day of such applicable period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the interest rates applicable thereto at the date incurred, assumed or repaid) and (c) with respect to each of the calculations referred to in the foregoing clauses (a) and (b), pro forma adjustments may be included to the extent that such adjustments (i) have been realized or (ii) have been certified by (A) the chief financial officer of the Parent as having been determined in good faith to be reasonably anticipated to be realized within 9 months following such Permitted Acquisition or Permitted Disposition, to the extent approved by the Administrative Agent in writing (such approval not to be unreasonably withheld or delayed) or (B) a nationally recognized third party accounting firm; provided that (1) the aggregate amount of pro forma adjustments to Consolidated EBITDA made in connection with any Permitted Acquisitions and Permitted Dispositions for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed the 5.0% of Consolidated EBITDA (without giving effect to such adjustment) and (2) the aggregate amount added back to Consolidated EBITDA pursuant clause (ix) and clause (x) of the definition of Consolidated EBITDA and the aggregate amount of pro forma adjustments to Consolidated EBITDA made pursuant to this Section 1.07(c) for any 4 consecutive Fiscal Quarters of the Parent and its Subsidiaries shall not exceed (I) for the period ending March 31, 2021, 20.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (II) for the period ending June 30, 2021, 15.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (III) for the period ending September 30, 2021, 12.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments), (IV) for the period ending December 31, 2021, 10.0% of Consolidated EBITDA (without giving effect to such addbacks and adjustments) and (V) for any period ending thereafter, 7.5% of Consolidated EBITDA (without giving effect to such addbacks and adjustments).
ARTICLE II
THE LOANS
Section 2.01 Commitments.
(a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth:
(i) each Revolving Loan Lender severally agrees to make Revolving Loans to the Borrowers at any time and from time to time during the term of this Agreement, in an aggregate principal amount of Revolving Loans at any time outstanding not to exceed the amount of such Lender’s Revolving Credit Commitment; and
(ii) each Term Loan Lender severally agrees to make the Term Loan to the Borrowers on the Effective Date, in an aggregate principal amount not to exceed the amount of such Lender’s Term Loan Commitment.
(b) Notwithstanding the foregoing:
(i) The aggregate principal amount of Revolving Loans outstanding at any time to the Borrowers shall not exceed the Total Revolving Credit Commitment. The Revolving Credit Commitment of each Lender shall automatically and permanently be reduced to zero on the Final Maturity Date. Within the foregoing limits, the Borrowers may borrow, repay and reborrow, the Revolving Loans on or after the Effective Date and prior to the Final Maturity Date, subject to the terms, provisions and limitations set forth herein. Notwithstanding the foregoing, no more than $20,000,000 of the Revolving Loans shall be advanced on the Effective Date.
(ii) The aggregate principal amount of the Term Loan made on the Effective Date shall not exceed the Total Term Loan Commitment. Any principal amount of the Term Loan which is repaid or prepaid may not be reborrowed.
Section 2.02 Making the Loans.
(a) The Administrative Borrower shall give the Administrative Agent prior written notice, in substantially the form of Exhibit C hereto (a “Notice of Borrowing”), not later than 12:00 noon (New York City time) on the date which is five Business Days prior to the date of the proposed Loan (and, in the case of any borrowings of Revolving Loans in excess of $20,000,000, not later than 12:00 noon (New York City time) on the date which is ten Business Days prior to the date of the proposed Loan) (or, in each case, such shorter period as the Administrative Agent is willing to accommodate from time to time, but in no event later than 12:00 noon (New York City time) on the borrowing date of the proposed Loan). Such Notice of Borrowing shall be irrevocable and shall specify (i) the principal amount of the proposed Loan, (ii) in the case of Loans requested on the Effective Date, whether such Loan is requested to be a Revolving Loan or the Term Loan, (iii) whether the Loan is requested to be a Reference Rate Loan or a LIBOR Rate Loan and, in the case of a LIBOR Rate Loan, the initial Interest Period with respect thereto, (iv) the use of the proceeds of such proposed Loan, (v) applicable wire instructions for the proceeds of such proposed Loan and (vi) the proposed borrowing date, which must be a Business Day, and, with respect to the Term Loan, must be the Effective Date. The Administrative Agent and the Lenders may act without liability upon the basis of written or telecopied notice believed by the Administrative Agent in good faith to be from the Administrative Borrower (or from any Authorized Officer thereof designated in writing purportedly from the Administrative Borrower to the Administrative Agent). The Administrative Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer’s authority to request a Loan on behalf of the Borrowers until the Administrative Agent receives written notice to the contrary. The Administrative Agent and the Lenders shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing.
(b) Each Notice of Borrowing pursuant to this Section 2.02 shall be irrevocable and the Borrowers shall be bound to make a borrowing in accordance therewith. Each Revolving Loan shall be made in a minimum amount of $500,000 and shall be in an integral multiple of $100,000.
(c) (i) Except as otherwise provided in this Section 2.02(c), all Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of the Total Revolving Credit Commitment or the Total Term Loan Commitment, as the case may be, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender’s obligations to make a Loan requested hereunder, nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender’s obligation to make a Loan requested hereunder, and each Lender shall be obligated to make the Loans required to be made by it by the terms of this Agreement regardless of the failure by any other Lender.
(ii) Notwithstanding any other provision of this Agreement, and in order to reduce the number of fund transfers among the Borrowers, the Agents and the Lenders, the Borrowers, the Agents and the Lenders agree that the Administrative Agent may (but shall not be obligated to), and the Borrowers and the Lenders hereby irrevocably authorize the Administrative Agent to, fund, on behalf of the Revolving Loan Lenders, Revolving Loans pursuant to Section 2.01, subject to the procedures for settlement set forth in Section 2.02(d); provided, however, that (A) the Administrative Agent shall in no event fund any such Revolving Loans if the Administrative Agent shall have received written notice from the Collateral Agent or the Required Lenders on the Business Day prior to the date of the proposed Revolving Loan that one or more of the conditions precedent contained in Section 5.02 will not be satisfied at the time of the proposed Revolving Loan, and (B) the Administrative Agent shall not otherwise be required to determine that, or take notice whether, the conditions precedent in Section 5.02 have been satisfied. If the Administrative Borrower gives a Notice of Borrowing requesting a Revolving Loan and the Administrative Agent elects not to fund such Revolving Loan on behalf of the Revolving Loan Lenders, then promptly after receipt of the Notice of Borrowing requesting such Revolving Loan, the Administrative Agent shall notify each Revolving Loan Lender of the specifics of the requested Revolving Loan and that it will not fund the requested Revolving Loan on behalf of the Revolving Loan Lenders. If the Administrative Agent notifies the Revolving Loan Lenders that it will not fund a requested Revolving Loan on behalf of the Revolving Loan Lenders, each Revolving Loan Lender shall make its Pro Rata Share of the Revolving Loan available to the Administrative Agent, in immediately available funds, in the Administrative Agent’s Account no later than 2:00 p.m. (New York City time) (provided that the Administrative Agent requests payment from such Revolving Loan Lender not later than 12:00 p.m. (New York City time)) on the date of the proposed Revolving Loan. The Administrative Agent will make the proceeds of all such requested Revolving Loans available to the Borrowers on the day of the proposed Revolving Loan by causing an amount, in immediately available funds, equal to the proceeds of all such Revolving Loans received by the Administrative Agent in the Administrative Agent’s Account or the amount funded by the Administrative Agent on behalf of the Revolving Loan Lenders to be deposited in an account designated by the Administrative Borrower.
(iii) If the Administrative Agent has notified the Revolving Loan Lenders that the Administrative Agent, on behalf of the Revolving Loan Lenders, will not fund a particular Revolving Loan pursuant to Section 2.02(c)(ii), the Administrative Agent may assume that each such Revolving Loan Lender has made such amount available to the Administrative Agent on such day and the Administrative Agent, in its sole discretion, may, but shall not be obligated to, cause a corresponding amount to be made available to the Borrowers on such day. If the Administrative Agent makes such corresponding amount available to the Borrowers and such corresponding amount is not in fact made available to the Administrative Agent by any such Revolving Loan Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Revolving Loan Lender together with interest thereon, for each day from the date such payment was due until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for three Business Days and thereafter at the Reference Rate. During the period in which such Revolving Loan Lender has not paid such corresponding amount to the Administrative Agent, notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the amount so advanced by the Administrative Agent to the Borrowers shall, for all purposes hereof, be a Revolving Loan made by the Administrative Agent for its own account. Upon any such failure by a Revolving Loan Lender to pay the Administrative Agent, the Administrative Agent shall promptly thereafter notify the Administrative Borrower of such failure and the Borrowers shall immediately pay such corresponding amount to the Administrative Agent for its own account.
(iv) Nothing in this Section 2.02(c) shall be deemed to relieve any Revolving Loan Lender from its obligations to fulfill its Revolving Credit Commitment hereunder or to prejudice any rights that the Administrative Agent or the Borrowers may have against any Revolving Loan Lender as a result of any default by such Revolving Loan Lender hereunder.
(d) (i) With respect to all periods for which the Administrative Agent has funded Revolving Loans pursuant to Section 2.02(c), on Friday of each week, or if the applicable Friday is not a Business Day, then on the following Business Day, or such shorter period as the Administrative Agent may from time to time select (any such week or shorter period being herein called a “Settlement Period”), the Administrative Agent shall notify each Revolving Loan Lender of the unpaid principal amount of the Revolving Loans outstanding as of the last day of each such Settlement Period. In the event that such amount is greater than the unpaid principal amount of the Revolving Loans outstanding on the last day of the Settlement Period immediately preceding such Settlement Period (or, if there has been no preceding Settlement Period, the amount of the Revolving Loans made on the date of such Revolving Loan Lender’s initial funding), each Revolving Loan Lender shall promptly (and in any event not later than 2:00 p.m. (New York City time) if the Administrative Agent requests payment from such Lender not later than 12:00 noon (New York City time) on such day) make available to the Administrative Agent its Pro Rata Share of the difference in immediately available funds. In the event that such amount is less than such unpaid principal amount, the Administrative Agent shall promptly pay over to each Revolving Loan Lender its Pro Rata Share of the difference in immediately available funds. In addition, if the Administrative Agent shall so request at any time when a Default or an Event of Default shall have occurred and be continuing, or any other event shall have occurred as a result of which the Administrative Agent shall determine that it is desirable to present claims against the Borrowers for repayment, each Revolving Loan Lender shall promptly remit to the Administrative Agent or, as the case may be, the Administrative Agent shall promptly remit to each Revolving Loan Lender, sufficient funds to adjust the interests of the Revolving Loan Lenders in the then outstanding Revolving Loans to such an extent that, after giving effect to such adjustment, each such Revolving Loan Lender’s interest in the then outstanding Revolving Loans will be equal to its Pro Rata Share thereof. The obligations of the Administrative Agent and each Revolving Loan Lender under this Section 2.02(d) shall be absolute and unconditional. Each Revolving Loan Lender shall only be entitled to receive interest on its Pro Rata Share of the Revolving Loans which have been funded by such Revolving Loan Lender.
(ii) In the event that any Revolving Loan Lender fails to make any payment required to be made by it pursuant to Section 2.02(d)(i), the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Revolving Loan Lender together with interest thereon, for each day from the date such payment was due until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for three Business Days and thereafter at the Reference Rate. During the period in which such Revolving Loan Lender has not paid such corresponding amount to the Administrative Agent, notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the amount so advanced by the Administrative Agent to the Borrowers shall, for all purposes hereof, be a Revolving Loan made by the Administrative Agent for its own account. Upon any such failure by a Revolving Loan Lender to pay the Administrative Agent, the Administrative Agent shall promptly thereafter notify the Administrative Borrower of such failure and the Borrowers shall immediately pay such corresponding amount to the Administrative Agent for its own account. Nothing in this Section 2.02(d)(ii) shall be deemed to relieve any Revolving Loan Lender from its obligation to fulfill its Revolving Credit Commitment hereunder or to prejudice any rights that the Administrative Agent or the Borrowers may have against any Revolving Loan Lender as a result of any default by such Revolving Loan Lender hereunder.
Section 2.03 Repayment of Loans; Evidence of Debt.
(a) The outstanding principal of all Revolving Loans shall be due and payable on the Final Maturity Date or, if earlier, on the date on which they are declared due and payable pursuant to the terms of this Agreement.
(b) The outstanding principal amount of the Term Loan shall be repayable on the following dates and in the following amounts set forth opposite such dates:
Date | Amount |
June 30, 2021 | $275,000 |
September 30, 2021 | $275,000 |
December 31, 2021 | $275,000 |
March 31, 2022 | $687,500 |
June 30, 2022 | $687,500 |
September 30, 2022 | $687,500 |
December 31, 2022 | $687,500 |
March 31, 2023 and on the last day of each Fiscal Quarter ending thereafter | $1,375,000 |
; provided, however, that (i) if any such date is not a Business Day then the installment due on such date shall instead be paid on the immediately preceding Business Day and (ii) the last such installment shall be in the amount necessary to repay in full the unpaid principal amount of the Term Loan. The outstanding unpaid principal amount of the Term Loan, and all accrued and unpaid interest thereon, shall be due and payable on the earliest of (A) the termination of the Total Revolving Credit Commitment, (B) the Final Maturity Date and (C) the date on which the Term Loan is declared due and payable pursuant to the terms of this Agreement.
(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(e) The entries made in the accounts maintained pursuant to Section 2.03(c) or 2.03(d) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that (i) the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement and (ii) in the event of any conflict between the entries made in the accounts maintained pursuant to Section 2.03(c) and the accounts maintained pursuant to Section 2.03(d), the accounts maintained pursuant to Section 2.03(d) shall govern and control.
(f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrowers shall execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in substantially the form of Exhibit F hereto. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 12.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).
Section 2.04 Interest.
(a) Revolving Loans. Subject to the terms of this Agreement, at the option of the Administrative Borrower, each Revolving Loan shall be either a Reference Rate Loan or a LIBOR Rate Loan. Each Revolving Loan that is a Reference Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of such Loan until repaid, at a rate per annum equal to the Reference Rate plus the Applicable Margin. Each Revolving Loan that is a LIBOR Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of such Loan until repaid, at a rate per annum equal to the LIBOR Rate for the Interest Period in effect for such Loan plus the Applicable Margin.
(b) Term Loan. Subject to the terms of this Agreement, at the option of the Administrative Borrower, the Term Loan or any portion thereof shall be either a Reference Rate Loan or a LIBOR Rate Loan. Each portion of the Term Loan that is a Reference Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of the Term Loan until repaid, at a rate per annum equal to the Reference Rate plus the Applicable Margin, and each portion of the Term Loan that is a LIBOR Rate Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of the Term Loan until repaid, at a rate per annum equal to the LIBOR Rate for the Interest Period in effect for the Term Loan (or such portion thereof) plus the Applicable Margin.
(c) Default Interest. To the extent permitted by law and notwithstanding anything to the contrary in this Section, upon the occurrence and during the continuance of an Event of Default, at the election of the Collateral Agent or Required Lenders (and automatically upon the occurrence and during the continuance of any Event of Default pursuant to Section 9.01(a), Section 9.01(f) or Section 9.01(g)), the principal of, and all accrued and unpaid interest on, all Loans, fees, indemnities, or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate.
(d) Interest Payment . Interest on each Loan shall be payable monthly, in arrears, on the last Business Day of each month, commencing on the last Business Day of the month in which such Loan is made, and at maturity (whether upon demand, by acceleration or otherwise). Interest at the Post-Default Rate shall be payable on demand. Each Borrower hereby authorizes the Administrative Agent to, and the Administrative Agent may, from time to time, charge the Loan Account pursuant to Section 4.01 with the amount of any interest payment due hereunder.
(e) General. All interest shall be computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed.
Section 2.05 Reduction of Commitment; Prepayment of Loans.
(a) Reduction of Commitments.
(i) Revolving Credit Commitments. The Total Revolving Credit Commitment shall terminate on the Final Maturity Date. The Borrowers may reduce the Total Revolving Credit Commitment to an amount (which may be zero) not less than the sum of (A) the aggregate unpaid principal amount of all Revolving Loans then outstanding, and (B) the aggregate principal amount of all Revolving Loans not yet made as to which a Notice of Borrowing has been given by the Administrative Borrower under Section 2.02. Each such reduction shall be (1) in an amount which is an integral multiple of $1,000,000 (or by the full amount of the Total Revolving Credit Commitment in effect immediately prior to such reduction if such amount at that time is less than $1,000,000), (2) made by providing not less than five Business Days’ prior written notice to the Administrative Agent, (3) irrevocable and (4) accompanied by the payment of the Applicable Premium, if any, payable in connection with such reduction of the Total Revolving Credit Commitment. Once reduced, the Total Revolving Credit Commitment may not be increased. Each such reduction of the Total Revolving Credit Commitment shall reduce the Revolving Credit Commitment of each Lender proportionately in accordance with its Pro Rata Share thereof.
(ii) Term Loan. The Total Term Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the Effective Date.
(b) Optional Prepayment.
(i) Revolving Loans. The Borrowers may, at any time and from time to time, upon at least 3 Business Days’ prior written notice to the Administrative Agent, prepay the principal of any Revolving Loan, in whole or in part. Each prepayment made pursuant to this Section 2.05(b)(i) in connection with a reduction of the Total Revolving Credit Commitment pursuant to Section 2.05(a)(i) above shall be accompanied by the payment of the Applicable Premium, if any, payable in connection with such reduction of the Total Revolving Credit Commitment.
(ii) Term Loan. The Borrowers may, at any time and from time to time, upon at least 5 Business Days’ prior written notice to the Administrative Agent, prepay the principal of the Term Loan, in whole or in part. Each prepayment made pursuant to this Section 2.05(b)(ii) shall be accompanied by the payment of (A) accrued interest to the date of such payment on the amount prepaid and (B) the Applicable Premium, if any, payable in connection with such prepayment of the Term Loan. Each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity.
(iii) Termination of Agreement. The Borrowers may, upon at least 10 days prior written notice to the Administrative Agent, terminate this Agreement by paying to the Administrative Agent, in cash, the Obligations, in full, plus the Applicable Premium, if any, payable in connection with such termination of this Agreement. If the Administrative Borrower has sent a notice of termination pursuant to this Section 2.05(b)(iii), then the Lenders’ obligations to extend credit hereunder shall terminate and the Borrowers shall be obligated to repay the Obligations, in full, plus the Applicable Premium, if any, payable in connection with such termination of this Agreement on the date set forth as the date of termination of this Agreement in such notice.
(c) Mandatory Prepayment.
(i) Contemporaneously with the delivery to the Agents and the Lenders of audited annual financial statements pursuant to Section 7.01(a)(iii), commencing with the delivery to the Agents and the Lenders of the financial statements for the Fiscal Year ended December 31, 2021 or, if such financial statements are not delivered to the Agents and the Lenders on the date such statements are required to be delivered pursuant to Section 7.01(a)(iii), on the date such statements are required to be delivered to the Agents and the Lenders pursuant to Section 7.01(a)(iii), the Borrowers shall, if the Leverage Ratio of the Ultimate Parent and its Subsidiaries as of the end of such Fiscal Year is (A) greater than 3.50 to 1.00, prepay the outstanding principal amount of the Loans in accordance with Section 2.05(d) in an amount equal to the result of (to the extent positive) (1) 50% of the Excess Cash Flow of the Ultimate Parent and its Subsidiaries for such Fiscal Year minus (2) the aggregate principal amount of all payments made by the Borrowers pursuant to Section 2.05(b) for such Fiscal Year (in the case of payments made by the Borrowers pursuant to Section 2.05(b)(i), only to the extent that the Total Revolving Credit Commitment is permanently reduced by the amount of such payments), or (B) equal to or less than 3.50 to 1.00, prepay the outstanding principal amount of the Loans in accordance with Section 2.05(d) in an amount equal to the result of (to the extent positive) (1) 25% of the Excess Cash Flow of the Ultimate Parent and its Subsidiaries for such Fiscal Year minus (2) the aggregate principal amount of all payments made by the Borrowers pursuant to Section 2.05(b) for such Fiscal Year (in the case of payments made by the Borrowers pursuant to Section 2.05(b)(i), only to the extent that the Total Revolving Credit Commitment is permanently reduced by the amount of such payments).
(ii) Immediately upon any Disposition (excluding Dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e), (f) or (g) of the definition of Permitted Disposition) by any Loan Party or its Subsidiaries, the Borrowers shall prepay the outstanding principal amount of the Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition to the extent that the aggregate amount of Net Cash Proceeds received by all Loan Parties and their Subsidiaries (and not paid to the Administrative Agent as a prepayment of the Loans) shall exceed for all such Dispositions $1,000,000 in any Fiscal Year. Nothing contained in this Section 2.05(c)(ii) shall permit any Loan Party or any of its Subsidiaries to make a Disposition of any property other than in accordance with Section 7.02(c)(ii)
(iii) Upon the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), or upon an Equity Issuance (other than any Excluded Equity Issuances), the Borrowers shall prepay the outstanding amount of the Loans in accordance with Section 2.05(d) in an amount equal to (A) with respect to any Indebtedness (other than Permitted Indebtedness), 100% of the Net Cash Proceeds received by such Person in connection therewith and (B) with respect to an Equity Issuance (other than any Excluded Equity Issuances), 50% of the Net Cash Proceeds received by such Person in connection therewith. The provisions of this Section 2.05(c)(iii) shall not be deemed to be implied consent to any such issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement.
(iv) Upon the receipt by any Loan Party or any of its Subsidiaries of any Extraordinary Receipts, the Borrowers shall prepay the outstanding principal of the Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith to the extent that the aggregate amount of Net Cash Proceeds received by all Loan Parties and their Subsidiaries (and not paid to the Administrative Agent as a prepayment of the Loans) shall exceed for all such Extraordinary Receipts $1,000,000 in any Fiscal Year.
(v) Immediately upon receipt by the Borrowers of the proceeds of any Permitted Cure Equity pursuant to Section 9.02, the Borrowers shall prepay the outstanding principal of the Loans in accordance with Section 2.05(d) in an amount equal to 100% of such proceeds.
(vi) Notwithstanding the foregoing, with respect to Net Cash Proceeds received by any Loan Party or any of its Subsidiaries in connection with a Disposition or the receipt of Extraordinary Receipts consisting of insurance proceeds or condemnation awards that are required to be used to prepay the Obligations pursuant to Section 2.05(c)(ii) or 2.05(c)(iv), as the case may be, up to $5,000,000 in the aggregate in any Fiscal Year of the Net Cash Proceeds from all such Dispositions and Extraordinary Receipts shall not be required to be so used to prepay the Obligations to the extent that such Net Cash Proceeds are used to replace, repair or restore properties or assets (other than current assets) used in such Person’s business; provided that, (A) no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (B) the Administrative Borrower delivers a certificate to the Administrative Agent within five days after such Disposition or loss, destruction or taking, as the case may be, stating that such Net Cash Proceeds shall be used to replace, repair or restore properties or assets used in such Person’s business within a period specified in such certificate not to exceed 180 days after the date of receipt of such Net Cash Proceeds (which certificate shall set forth estimates of the Net Cash Proceeds to be so expended), (C) such Net Cash Proceeds are deposited in an account subject to a Control Agreement, and (D) upon the earlier of (1) the expiration of the period specified in the relevant certificate furnished to the Administrative Agent pursuant to clause (B) above or (2) the occurrence of a Default or an Event of Default, such Net Cash Proceeds, if not theretofore so used, shall be used to prepay the Obligations in accordance with Section 2.05(c)(ii) or 2.05(c)(iv) as applicable.
(d) Application of Payments. Each prepayment pursuant to subsections (c)(i), (c)(ii), (c)(iii), (c)(iv) and (c)(v) above shall be applied, first, to the Term Loan, until paid in full, and second, to the Revolving Loans (with a corresponding permanent reduction in the Revolving Credit Commitments), until paid in full. Each such prepayment of the Term Loan shall be applied against the remaining installments of principal of the Term Loan in the inverse order of maturity. Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, if the Administrative Agent has elected, or has been directed by the Collateral Agent or the Required Lenders, to apply payments in respect of any Obligations in accordance with Section 4.03(b), prepayments required under Section 2.05(c) shall be applied in the manner set forth in Section 4.03(b).
(e) Interest and Fees. Any prepayment made pursuant to this Section 2.05 (other than any prepayment made pursuant to Section 2.05(b)(i)) shall be accompanied by (i) accrued interest on the principal amount being prepaid to the date of prepayment, (ii) any Funding Losses payable pursuant to Section 2.08, (iii) the Applicable Premium, if any, payable in connection with such prepayment of the Loans to the extent required under Section 2.06(c) and (iv) if such prepayment would reduce the amount of the outstanding Loans to zero at a time when the Total Revolving Credit Commitment has been terminated, such prepayment shall be accompanied by the payment of all fees accrued to such date pursuant to Section 2.06.
(f) Cumulative Prepayments. Except as otherwise expressly provided in this Section 2.05, payments with respect to any subsection of this Section 2.05 are in addition to payments made or required to be made under any other subsection of this Section 2.05.
(g) Waivable Mandatory Prepayments. Anything contained herein to the contrary notwithstanding, in the event that the Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Loans pursuant to Section 2.05(c), not less than 3 Business Days prior to the date on which the Borrowers are required to make such Waivable Mandatory Prepayment (the “Required Prepayment Date”), the Administrative Borrower shall notify the Administrative Agent in writing of the amount of such prepayment, and the Administrative Agent will promptly thereafter notify each Lender holding an outstanding Loan of the amount of such Lender’s Pro Rata Share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount (the “Refusal Option”). Each such Lender may exercise the Refusal Option by giving written notice to the Administrative Borrower and the Administrative Agent of its election to do so on or before 12:00 noon (New York City time) one Business Day prior to the Required Prepayment Date (it being understood that any Lender that does not notify the Administrative Borrower and the Administrative Agent of its election to exercise the Refusal Option on or before 12:00 noon (New York City time) one Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise the Refusal Option). On the Required Prepayment Date, the Borrowers shall pay to the Administrative Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (i) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise the Refusal Option, to prepay the Loans of such Lenders ratably in accordance with their Pro Rata Shares, and (ii) to the extent of any excess, to those Lenders that have elected not to exercise the Refusal Option, on a pro rata basis (based upon the portion of the Loans held by each such Lender that elected not to exercise the Refusal Option, as compared to the amount of Loans held by all such Lenders that did not elect to exercise the Refusal Option) to prepay the Loans of such Lenders, or, to the extent any such Lender refuses the excess amount specified in this clause (ii) (or to the extent the Loans of all such Lenders have been repaid in full), to the Borrowers for working capital and general corporate purposes.
Section 2.06 Fees.
(a) Fee Letter. As and when due and payable under the terms of the Fee Letter, the Borrowers shall pay the fees set forth in the Fee Letter.
(b) Unused Line Fee. From and after the Effective Date and until the Termination Date, the Borrowers shall pay to the Administrative Agent for the account of the Revolving Loan Lenders, in accordance with their Pro Rata Shares, monthly in arrears on the last Business Day of each month commencing March 31, 2021, an unused line fee (the “Unused Line Fee”), which shall accrue at the rate per annum of 0.50% on the excess, if any, of the Total Revolving Credit Commitment over the sum of the average principal amount of all Revolving Loans outstanding from time to time during the preceding month.
(c) Applicable Premium.
(i) Upon the occurrence of an Applicable Premium Trigger Event, the Borrower shall pay to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, the Applicable Premium.
(ii) Any Applicable Premium payable in accordance with this Section 2.06(c) shall be presumed to be equal to the liquidated damages sustained by the Lenders as the result of the occurrence of the Applicable Premium Trigger Event and the Loan Parties agree that it is reasonable under the circumstances currently existing. THE LOAN PARTIES EXPRESSLY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING APPLICABLE PREMIUM IN CONNECTION WITH ANY ACCELERATION.
(iii) The Loan Parties expressly agree that: (A) the Applicable Premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the Applicable Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Lenders and the Loan Parties giving specific consideration in this transaction for such agreement to pay the Applicable Premium; (D) the Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph; (E) their agreement to pay the Applicable Premium is a material inducement to Lenders to provide the Commitments and make the Loans; and (F) the Applicable Premium represents a good faith, reasonable estimate and calculation of the lost profits or damages of the Agents and the Lenders and that it would be impractical and extremely difficult to ascertain the actual amount of damages to the Agents and the Lenders or profits lost by the Agents and the Lenders as a result of such Applicable Premium Trigger Event.
(iv) Nothing contained in this Section 2.06(c) shall permit any prepayment of the Loans or reduction of the Commitments not otherwise permitted by the terms of this Agreement or any other Loan Document.
(d) Audit and Collateral Monitoring Fees. The Borrowers acknowledge that pursuant to Section 7.01(f), representatives of the Agents may visit any or all of the Loan Parties and/or conduct inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations of any or all of the Loan Parties at any time and from time to time (in each case, so long as no Event of Default shall have occurred and be continuing, upon 3 days prior written notice and during normal business hours) . The Borrowers agree to pay (i) $1,500 per day per examiner plus the examiner’s out-of-pocket costs and reasonable expenses incurred in connection with all such visits, inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations and (ii) the reasonable costs of all visits, inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations conducted by a third party on behalf of the Agents; provided that so long as no Event of Default shall have occurred and be continuing, the Borrowers shall not be obligated to reimburse the Agents for more than (A) one audit during any calendar year, (B) one physical count during any calendar year, (C) one valuation during any calendar year, (D) one appraisal during any calendar year, (E) one environmental site assessment during any calendar year or (F) one examination during any calendar year.
Section 2.07 LIBOR Option.
(a) The Borrowers may, at any time and from time to time, so long as no Default or Event of Default has occurred and is continuing, elect to have interest on all or a portion of the Loans be charged at a rate of interest based upon the LIBOR Rate (the “LIBOR Option”) by notifying the Administrative Agent prior to 11:00 a.m. (New York City time) at least three Business Days prior to (i) the proposed borrowing date of a Loan (as provided in Section 2.02), (ii) in the case of the conversion of a Reference Rate Loan to a LIBOR Rate Loan, the commencement of the proposed Interest Period or (iii) in the case of the continuation of a LIBOR Rate Loan as a LIBOR Rate Loan, the last day of the then current Interest Period (the “LIBOR Deadline”). Notice of the Borrowers’ election of the LIBOR Option for a permitted portion of the Loans and an Interest Period pursuant to this Section 2.07(a) shall be made by delivery to the Administrative Agent of (A) a Notice of Borrowing (in the case of the initial making of a Loan) in accordance with Section 2.02 or (B) a LIBOR Notice prior to the LIBOR Deadline. Promptly upon its receipt of each such LIBOR Notice, the Administrative Agent shall provide a copy thereof to each of the Lenders. Each LIBOR Notice shall be irrevocable and binding on the Borrowers.
(b) Interest on LIBOR Rate Loans shall be payable in accordance with Section 2.04(d). On the last day of each applicable Interest Period, unless the Borrowers properly have exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loans automatically shall convert to the rate of interest then applicable to Reference Rate Loans of the same type hereunder. At any time that a Default or an Event of Default has occurred and is continuing, the Borrowers no longer shall have the option to request that any portion of the Loans bear interest at the LIBOR Rate and the Administrative Agent shall have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate of interest then applicable to Reference Rate Loans of the same type hereunder on the last day of the then current Interest Period.
(c) Notwithstanding anything to the contrary contained in this Agreement, the Borrowers (i) shall have not more than 6 LIBOR Rate Loans in effect at any given time, and (ii) only may exercise the LIBOR Option for LIBOR Rate Loans of at least $500,000 and integral multiples of $100,000 in excess thereof.
(d) The Borrowers may prepay LIBOR Rate Loans at any time; provided, however, that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any mandatory prepayment pursuant to Section 2.05(c) or any application of payments or proceeds of Collateral in accordance with Section 4.03 or 4.04 or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, the Borrowers shall indemnify, defend and hold the Agents and the Lenders and their participants harmless against any and all Funding Losses in accordance with Section 2.08.
(e) Anything to the contrary contained herein notwithstanding, neither any Agent nor any Lender, nor any of their participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Article II shall apply as if each Lender or its participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.
(f) Unless and until a Replacement Rate is implemented in accordance with clause (g) below, if prior to the commencement of any Interest Period for any LIBOR Rate Loan,
(i) the Administrative Agent shall have determined that either Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, or adequate and reasonable means do not exist for ascertaining LIBOR for such Interest Period, including, without limitation, because the Administrative Agent determines that either inadequate or insufficient quotations of the London interbank offered rate exist or the use of “LIBOR” has been discontinued (any determination of Administrative Agent to be conclusive and binding absent manifest error), or
(ii) the Administrative Agent shall have received notice from the Required Lenders that LIBOR does not adequately and fairly reflect the cost to such Lenders of making, funding or maintaining their LIBOR Rate Loans for such Interest Period,
then the Administrative Agent shall give written notice to the Administrative Borrower and to the Lenders as soon as practicable thereafter. Until the Administrative Agent shall notify the Administrative Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) the obligations of the Lenders to make LIBOR Rate Loans, or to continue or convert outstanding Loans as or into LIBOR Rate Loans, shall be suspended and (B) all such affected Loans shall be converted into Reference Rate Loans on the last day of the then current Interest Period applicable thereto.
(g) Notwithstanding anything to the contrary contained herein, if at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances described in Section 2.07(f)(i) or (f)(ii) have arisen and such circumstances are unlikely to be temporary, (ii) syndicated loans currently being executed, or that include language similar to that contained in Section 2.07(f), are being executed or amended (as applicable), to incorporate or adopt a new benchmark interest rate to replace LIBOR or (iii) the supervisor for the administrator of LIBOR or a Governmental Authority has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for loans, then the Administrative Agent, in consultation with the Administrative Borrower, shall endeavor to establish an alternate index rate (the “Replacement Rate”) that gives due consideration to the then prevailing market convention for determining a rate of interest for leveraged syndicated loans in the United States at such time, in which case the Replacement Rate shall, subject to the following provisions of this Section 2.07(g), replace such applicable interest rate for all purposes under the Loan Documents unless and until (A) an event described in Section 2.07(f)(i), (f)(ii), (g)(i), (g)(ii) or (g)(iii) occurs with respect to the Replacement Rate or (B) the Required Lenders through the Administrative Agent notify the Administrative Borrower that the Replacement Rate does not adequately and fairly reflect the cost to the Lenders of making, funding or maintaining the Loans bearing interest at the Replacement Rate. In connection with the establishment and application of the Replacement Rate, this Agreement and the other Loan Documents shall be amended solely with the consent of the Administrative Agent and the Administrative Borrower as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of this Section 2.07(g). Notwithstanding anything to the contrary in Section 12.02, such amendment shall become effective without any further action or consent of any Lender so long as the Administrative Agent shall not have received, within five Business Days after the date notice such amendment is provided to the Lenders, a written notice from Required Lenders stating that they object to such amendment (which amendment shall not be effective prior to the end of such five Business Day notice period). To the extent the Replacement Rate is adopted as contemplated hereby, the Replacement Rate shall be applied in a manner consistent with prevailing market convention; provided that, to the extent no prevailing market convention exists or such prevailing market convention is not administratively feasible for the Administrative Agent, such Replacement Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent in consultation with the Administrative Borrower. If the Administrative Agent makes a determination described in clause (i), (ii) or (iii) above, until a Replacement Rate has been determined and an amendment with respect thereto has become effective in accordance with the terms and conditions of this paragraph, (x) any notice from a Borrower that requests the conversion of any Reference Rate Loan to, or continuation of any LIBOR Rate Loan as, a LIBOR Rate Loan shall be ineffective, and (y) if any notice of borrowing requests a LIBOR Rate Loan, such Loan shall be made as a Reference Rate Loan. Notwithstanding anything contained herein to the contrary, if such Replacement Rate as determined in this paragraph is determined to be less than 1.00% per annum, such rate shall be deemed to be 1.00% per annum for the purposes of this Agreement.
Section 2.08 Funding Losses. In connection with each LIBOR Rate Loan, the Borrowers shall indemnify, defend, and hold the Agents and the Lenders harmless against any loss, cost, or expense incurred by any Agent or any Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of a Default or an Event of Default or any mandatory prepayment required pursuant to Section 2.05(c)), (b) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto (including as a result of a Default or an Event of Default) or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any Notice of Borrowing or LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses, collectively, “Funding Losses”). Funding Losses shall, with respect to any Agent or any Lender, be deemed to equal the amount reasonably determined by such Agent or such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period therefor), minus (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Agent or such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of an Agent or a Lender delivered to the Administrative Borrower setting forth any amount or amounts that such Agent or such Lender is entitled to receive pursuant to this Section 2.08 shall be conclusive absent manifest error.
Section 2.09 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any and all Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of the applicable Withholding Agent) requires the deduction or withholding of any Taxes from or in respect of any such payment, (i) the applicable Withholding Agent shall make such deduction or withholding, (ii) the applicable Withholding Agent shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law and (iii) if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased by the amount (an “Additional Amount”) necessary such that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 2.09) the applicable Recipient receives the amount equal to the sum it would have received had no such deduction or withholding been made.
(b) In addition, each Loan Party shall pay to the relevant Governmental Authority in accordance with applicable law any Other Taxes, or at the option of the Administrative Agent timely reimburse it for the payment of any Other Taxes by any Secured Party. Each Loan Party shall deliver to each Secured Party official receipts in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such Taxes or Other Taxes.
(c) The Loan Parties hereby jointly and severally indemnify and agree to hold each Secured Party harmless from and against Indemnified Taxes and Other Taxes (including, without limitation, Indemnified Taxes and Other Taxes imposed on any amounts payable under this Section 2.09) paid or payable by such Secured Party or required to be withheld or deducted from a payment to such Secured Party and any expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be paid within ten days from the date on which any such Person makes demand therefor. A certificate as to the amount of such payment or liability delivered to the Borrower by a Secured Party (with a copy to the Administrative Agent) or by the Administrative Agent on its own behalf or on behalf of another Secured Party shall be conclusive absent manifest error.
(d) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.09(d)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing,
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Lender that is not a U.S. Person (a “Foreign Lender”) shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed copies of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit 2.09(d)-1 hereto to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 2.09(d)-2 or Exhibit 2.09(d)-3, IRS Form W-9, or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 2.09(d)-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Administrative Agent in writing of its legal inability to do so.
(e) Each Lender shall severally indemnify the Administrative Agent, within ten days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.07(i) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).
(f) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.09 (including by the payment of additional amounts pursuant to this Section 2.09), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.09 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(g) The obligations of the Loan Parties under this Section 2.09 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
Section 2.10 Increased Costs and Reduced Return.
(a) If any Secured Party shall have determined that any Change in Law shall (i) subject such Secured Party, or any Person controlling such Secured Party to any tax, duty or other charge with respect to this Agreement or any Loan made by such Agent or such Lender, or change the basis of taxation of payments to such Secured Party or any Person controlling such Secured Party of any amounts payable hereunder (except for taxes on the overall net income of such Secured Party or any Person controlling such Secured Party), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan or against assets of or held by, or deposits with or for the account of, or credit extended by, such Secured Party or any Person controlling such Secured Party or (iii) impose on such Secured Party or any Person controlling such Secured Party any other condition regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to such Secured Party of making any Loan, or agreeing to make any Loan, or to reduce any amount received or receivable by such Secured Party hereunder, then, upon demand by such Secured Party, the Borrowers shall pay to such Secured Party such additional amounts as will compensate such Secured Party for such increased costs or reductions in amount.
(b) If any Secured Party shall have determined that any Change in Law either (i) affects or would affect the amount of capital required or expected to be maintained by such Secured Party or any Person controlling such Secured Party, and such Secured Party determines that the amount of such capital is increased as a direct or indirect consequence of any Loans made or maintained, such Secured Party’s or such other controlling Person’s other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on such Secured Party’s or such other controlling Person’s capital to a level below that which such Secured Party or such controlling Person could have achieved but for such circumstances as a consequence of any Loans made or maintained, or any agreement to make Loans, or such Secured Party’s or such other controlling Person’s other obligations hereunder (in each case, taking into consideration, such Secured Party’s or such other controlling Person’s policies with respect to capital adequacy), then, upon demand by such Secured Party, the Borrowers shall pay to such Secured Party from time to time such additional amounts as will compensate such Secured Party for such cost of maintaining such increased capital or such reduction in the rate of return on such Secured Party’s or such other controlling Person’s capital.
(c) All amounts payable under this Section 2.10 shall bear interest from the date that is 10 days after the date of demand by any Secured Party until payment in full to such Secured Party at the Reference Rate. A certificate of such Secured Party claiming compensation under this Section 2.10, specifying the event herein above described and the nature of such event shall be submitted by such Secured Party to the Administrative Borrower, setting forth the additional amount due and an explanation of the calculation thereof, and such Secured Party’s reasons for invoking the provisions of this Section 2.10, and shall be final and conclusive absent manifest error.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 2.10 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 2.10 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Administrative Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) The obligations of the Loan Parties under this Section 2.10 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
Section 2.11 Changes in Law; Impracticability or Illegality.
(a) The LIBOR Rate may be adjusted by the Administrative Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give the Administrative Borrower and the Administrative Agent notice of such a determination and adjustment and the Administrative Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, the Administrative Borrower may, by notice to such affected Lender (i) require such Lender to furnish to the Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment or (ii) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any amounts due under Section 2.09).
(b) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to the Administrative Borrower and the Administrative Agent, and the Administrative Agent promptly shall transmit the notice to each other Lender and (i) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Reference Rate Loans of the same type hereunder and (ii) the Borrowers shall not be entitled to elect the LIBOR Option (including in any borrowing, conversion or continuation then being requested) until such Lender determines that it would no longer be unlawful or impractical to do so.
(c) The obligations of the Loan Parties under this Section 2.11 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
Section 2.12 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requires the Borrowers to pay any Additional Amounts under Section 2.09 or requests compensation under Section 2.10, then such Lender shall (at the request of the Administrative Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to such Section in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requires the Borrowers to pay any Additional Amounts under Section 2.09 or requests compensation under Section 2.10 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with clause (a) above, or if any Lender is a Defaulting Lender, then the Administrative Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 12.07), all of its interests, rights and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(i) the Borrowers shall have paid to the Agents any assignment fees specified in Section 12.07;
(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Sections 2.08 and 2.09) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);
(iii) in the case of any such assignment resulting from payments required to be made pursuant to Section 2.09 or a claim for compensation under Section 2.10, such assignment will result in a reduction in such compensation or payments thereafter; and
(iv) such assignment does not conflict with applicable law. Prior to the effective date of such assignment, the assigning Lender shall execute and deliver an Assignment and Acceptance, subject only to the conditions set forth above. If the assigning Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such assignment, the assigning Lender shall be deemed to have executed and delivered such Assignment and Acceptance. Any such assignment shall be made in accordance with the terms of Section 12.07.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Administrative Borrower to require such assignment and delegation cease to apply.
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
APPLICATION OF PAYMENTS; DEFAULTING LENDERS;
JOINT AND SEVERAL LIABILITY OF BORROWERS
Section 4.01 Payments; Computations and Statements. The Borrowers will make each payment under this Agreement not later than 12:00 noon (New York City time) on the day when due, in lawful money of the United States of America and in immediately available funds, to the Administrative Agent’s Account. All payments received by the Administrative Agent after 12:00 noon (New York City time) on any Business Day may, in the Administrative Agent’s discretion, be credited to the Loan Account on the next succeeding Business Day. All payments shall be made by the Borrowers without set-off, counterclaim, recoupment, deduction or other defense to the Agents and the Lenders. Except as provided in Section 2.02, after receipt, the Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal ratably to the Lenders in accordance with their Pro Rata Shares and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement, provided that the Administrative Agent will cause to be distributed all interest and fees received from or for the account of the Borrowers not less than once each month and in any event promptly after receipt thereof. The Lenders and the Borrowers hereby authorize the Administrative Agent to, and the Administrative Agent may, from time to time, charge the Loan Account of the Borrowers with any amount due and payable by the Borrowers under any Loan Document. Each of the Lenders and the Borrowers agrees that the Administrative Agent shall have the right to make such charges whether or not any Default or Event of Default shall have occurred and be continuing or whether any of the conditions precedent in Section 5.02 have been satisfied. Any amount charged to the Loan Account of the Borrowers shall be deemed a Revolving Loan hereunder made by the Revolving Loan Lenders to the Borrowers, funded by the Administrative Agent on behalf of the Revolving Loan Lenders and subject to Section 2.02. The Lenders and the Borrowers confirm that any charges which the Administrative Agent may so make to the Loan Account of the Borrowers as herein provided will be made as an accommodation to the Borrowers and solely at the Administrative Agent’s discretion, provided that the Administrative Agent shall from time to time upon the request of the Collateral Agent, charge the Loan Account of the Borrowers with any amount due and payable under any Loan Document. Whenever any payment to be made under any such Loan Document shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. All computations of fees shall be made by the Administrative Agent on the basis of a year of 360 days for the actual number of days. Each determination by the Administrative Agent of an interest rate or fees hereunder shall be conclusive and binding for all purposes in the absence of manifest error.
Section 4.02 Sharing of Payments. Except as provided in Section 2.02, if any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that (a) if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid by the purchasing Lender in respect of the total amount so recovered, and (b) the provisions of this Section shall not be construed to apply to (i) any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment of an amendment, consent or waiver fee to consenting Lenders pursuant to an effective amendment, consent or waiver with respect to this Agreement), or (ii) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans, other than to any Loan Party or any Subsidiary thereof (as to which the provisions of this Section shall apply). The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all of its rights (including the Lender’s right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.
Section 4.03 Apportionment of Payments. Subject to Section 2.02:
(a) All payments of principal and interest in respect of outstanding Loans, all payments of fees (other than the fees set forth in Section 2.06) and all other payments in respect of any other Obligations, shall be allocated by the Administrative Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares or otherwise as provided herein or, in respect of payments not made on account of Loans, as designated by the Person making payment when the payment is made.
(b) After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon the direction of the Collateral Agent or the Required Lenders shall, apply all payments in respect of any Obligations, including without limitation, all proceeds of the Collateral, subject to the provisions of this Agreement, (i) first, ratably to pay the Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Agents until paid in full; (ii) second, to pay interest then due and payable in respect of the Collateral Agent Advances until paid in full; (iii) third, to pay principal of the Collateral Agent Advances until paid in full; (iv) fourth, ratably to pay the Obligations in respect of any fees (other than any Applicable Premium), expense reimbursements, indemnities and other amounts then due and payable to the Lenders until paid in full; (v) fifth, ratably to pay interest then due and payable in respect of the Loans until paid in full; (vi) sixth, ratably to pay principal of the Loans until paid in full; (vii) seventh, ratably to pay the Obligations in respect of any Applicable Premium then due and payable to the Lenders until paid in full; and (viii) eighth, to the ratable payment of all other Obligations then due and payable.
(c) For purposes of Section 4.03(b) (other than clause (viii) thereof), “paid in full” means payment in cash of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding; provided, however, that for the purposes of clause (viii), “paid in full” means payment in cash of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest on interest and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.
(d) In the event of a direct conflict between the priority provisions of this Section 4.03 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of Section 4.03 shall control and govern.
Section 4.04 Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(a) Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 12.02.
(b) The Administrative Agent shall not be obligated to transfer to such Defaulting Lender any payments made by any Borrower to the Administrative Agent for such Defaulting Lender’s benefit, and, in the absence of such transfer to such Defaulting Lender, the Administrative Agent shall transfer any such payments to each other non-Defaulting Lender ratably in accordance with their Pro Rata Shares (without giving effect to the Pro Rata Shares of such Defaulting Lender) (but only to the extent that such Defaulting Lender’s Loans were funded by the other Lenders) or, if so directed by the Administrative Borrower and if no Default or Event of Default has occurred and is continuing (and to the extent such Defaulting Lender’s Loans were not funded by the other Lenders), retain the same to be re-advanced to the Borrowers as if such Defaulting Lender had made such Loans to the Borrowers. Subject to the foregoing, the Administrative Agent may hold and, in its discretion, re-lend to the Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by the Administrative Agent for the account of such Defaulting Lender.
(c) Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle the Borrowers to replace the Defaulting Lender with one or more substitute Lenders, and the Defaulting Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Defaulting Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. Prior to the effective date of such replacement, the Defaulting Lender shall execute and deliver an Assignment and Acceptance, subject only to the Defaulting Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever. If the Defaulting Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Defaulting Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Defaulting Lender shall be made in accordance with the terms of Section 12.07.
(d) The operation of this Section shall not be construed to increase or otherwise affect the Commitments of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to the Administrative Agent or to the Lenders other than such Defaulting Lender.
(e) This Section shall remain effective with respect to such Lender until either (i) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable or (ii) the non-Defaulting Lenders, the Agents, and the Borrowers shall have waived such Defaulting Lender’s default in writing, and the Defaulting Lender makes its Pro Rata Share of the applicable defaulted Loans and pays to the Agents all amounts owing by such Defaulting Lender in respect thereof; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while such Lender was a Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
Section 4.05 Administrative Borrower; Joint and Several Liability of the Borrowers.
(a) Each Borrower hereby irrevocably appoints Obagi Cosmeceuticals, LLC as the borrowing agent and attorney-in-fact for the Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until the Agents shall have received prior written notice signed by all of the Borrowers that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide to the Agents and receive from the Agents all notices with respect to Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of the Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to the Borrowers in order to utilize the collective borrowing powers of the Borrowers in the most efficient and economical manner and at their request, and that neither the Agents nor the Lenders shall incur liability to the Borrowers as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.
(b) Each Borrower hereby accepts joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Agents and the Lenders under this Agreement and the other Loan Documents, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations. Each of the Borrowers, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety, but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 4.05), it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such Obligation. Subject to the terms and conditions hereof, the Obligations of each of the Borrowers under the provisions of this Section 4.05 constitute the absolute and unconditional, full recourse Obligations of each of the Borrowers, enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement, the other Loan Documents or any other circumstances whatsoever.
(c) The provisions of this Section 4.05 are made for the benefit of the Agents, the Lenders and their successors and assigns, and may be enforced by them from time to time against any or all of the Borrowers as often as occasion therefor may arise and without requirement on the part of the Agents, the Lenders or such successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Borrowers or to exhaust any remedies available to it or them against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 4.05 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied.
(d) Each of the Borrowers hereby agrees that it will not enforce any of its rights of contribution or subrogation against the other Borrowers with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to the Agents or the Lenders with respect to any of the Obligations or any Collateral, until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to the Agents or the Lenders hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations.
ARTICLE V
CONDITIONS TO LOANS
Section 5.01 Conditions Precedent to Effectiveness. This Agreement shall become effective as of the Business Day (the “Effective Date”) when each of the following conditions precedent shall have been satisfied in a manner satisfactory to the Agents:
(a) Payment of Fees, Etc. The Borrowers shall have paid on or before the Effective Date all fees, costs, expenses and taxes then payable pursuant to Sections 2.06 and 12.04.
(b) Representations and Warranties; No Event of Default. The following statements shall be true and correct: (i) the representations and warranties contained in Article VI and in each other Loan Document, certificate or other writing delivered to any Secured Party pursuant hereto or thereto on or prior to the Effective Date are true and correct on and as of the Effective Date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date) and (ii) no Default or Event of Default shall have occurred and be continuing on the Effective Date or would result from this Agreement or the other Loan Documents becoming effective in accordance with its or their respective terms.
(c) Legality. The making of the initial Loans shall not contravene any law, rule or regulation applicable to any Secured Party.
(d) Delivery of Documents. The Collateral Agent shall have received on or before the Effective Date the following, each in form and substance satisfactory to the Collateral Agent and, unless indicated otherwise, dated the Effective Date and, if applicable, duly executed by the Persons party thereto:
(i) a Security Agreement, together with the original stock certificates (if any) representing all of the Equity Interests and all promissory notes required to be pledged thereunder, accompanied by undated stock powers executed in blank and other proper instruments of transfer;
(ii) a UCC Filing Authorization Letter, together with evidence satisfactory to the Collateral Agent of the filing of appropriate financing statements on Form UCC 1 in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Agreement and each Mortgage;
(iii) the results of searches for any effective UCC financing statements, tax Liens or judgment Liens filed against any Loan Party or its property, which results shall not show any such Liens (other than Permitted Liens acceptable to the Collateral Agent);
(iv) a Perfection Certificate;
(v) the Fee Letter;
(vi) the Disbursement Letter;
(vii) the Intercompany Subordination Agreement;
(viii) with respect to each Facility, each of the Real Property Deliverables;
(ix) a certificate of an Authorized Officer of each Loan Party, certifying (A) as to copies of the Governing Documents of such Loan Party, together with all amendments thereto (including, without limitation, a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified as of a recent date not more than 30 days prior to the Effective Date by an appropriate official of the jurisdiction of organization of such Loan Party which shall set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organizational number is issued in such jurisdiction), (B) as to a copy of the resolutions or written consents of such Loan Party authorizing (1) the borrowings hereunder and the transactions contemplated by the Loan Documents to which such Loan Party is or will be a party, and (2) the execution, delivery and performance by such Loan Party of each Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith, (C) the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document (in the case of a Borrower, including, without limitation, Notices of Borrowing, LIBOR Notices and all other notices under this Agreement and the other Loan Documents) to which such Loan Party is or will be a party and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers and (D) as to the matters set forth in Section 5.01(b);
(x) a certificate of the president of the Parent (A) demonstrating in reasonable detail that the Consolidated EBITDA of the Parent and its Subsidiaries as of the twelve-month period ending December 31, 2020 is at least $5,000,000, (B) demonstrating in reasonable detail that the aggregate principal amount of Indebtedness for borrowed money of the Ultimate Parent and its Subsidiaries outstanding as of the Effective Date does not exceed $130,000,000, (C) certifying that all tax returns required to be filed by the Loan Parties have been filed and all taxes upon the Loan Parties or their properties, assets, and income (including real property taxes and payroll taxes) have been paid, (D) attaching a copy of the Financial Statements and the Projections described in Section 6.01(g)(ii) and certifying as to the compliance with the representations and warranties set forth in Sections 6.01(g)(i) and 6.01(ff)(ii) and (E) certifying that after giving effect to all Loans to be made on the Effective Date, Excess Availability plus Qualified Cash is not less than $25,000,000;
(xi) a certificate of the president of each Loan Party, certifying as to the solvency of such Loan Party (after giving effect to the Loans made on the Effective Date);
(xii) a certificate of an Authorized Officer of the Administrative Borrower certifying that (A) the attached copies of the Specified Material Contracts and the other Material Contracts as in effect on the Effective Date are true, complete and correct copies thereof and (B) such agreements remain in full force and effect and that none of the Loan Parties has breached or defaulted in any of its obligations under such agreements);
(xiii) a certificate of the appropriate official(s) of the jurisdiction of organization and, except to the extent such failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, each jurisdiction of foreign qualification of each Loan Party certifying as of a recent date not more than 30 days prior to the Effective Date as to the subsistence in good standing of, and the payment of taxes by, such Loan Party in such jurisdictions, together with written confirmation (where available) on the Effective Date from such official(s) as to such matters;
(xiv) opinions of (A) Morgan Lewis & Bockius LLP, Delaware counsel to the Loan Parties and (B) Conyers, Cayman Islands counsel to the Loan Parties, each as to such matters as the Collateral Agent may reasonably request;
(xv) evidence of the insurance coverage required by Section 7.01 and the terms of each Security Agreement and each Mortgage and such other insurance coverage with respect to the business and operations of the Loan Parties as the Collateral Agent may reasonably request, in each case, where requested by the Collateral Agent, as to the named insureds or loss payees thereunder as the Collateral Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days’ prior written notice to the Collateral Agent and each such named insured or loss payee, together with evidence of the payment of all premiums due in respect thereof for such period as the Collateral Agent may request;
(xvi) a collateral assignment of business interruption insurance;
(xvii) [reserved];
(xviii) evidence of the payment in full of all Indebtedness under the Existing Credit Facility, together with (A) a termination and release agreement with respect to the Existing Credit Facility and all related documents, duly executed by the Loan Parties and the Existing Lenders, (B) a satisfaction of mortgage for each mortgage filed by the Existing Lender on each Facility, (C) a termination of security interest in Intellectual Property for each assignment for security recorded by the Existing Lenders at the United States Patent and Trademark Office or the United States Copyright Office and covering any intellectual property of the Loan Parties, and (D) UCC 3 termination statements for all UCC-1 financing statements filed by the Existing Lenders and covering any portion of the Collateral;
(xix) all Control Agreements that, in the reasonable judgment of the Agents, are required for the Loan Parties to comply with the Loan Documents as of the Effective Date, each duly executed by, in addition to the applicable Loan Party, the applicable financial institution;
(xx) evidence satisfactory to the Agents that a Process Agent has been properly appointed by each Foreign Loan Party in accordance with Section 12.10(b); and
(xxi) such other agreements, instruments, approvals, opinions and other documents, each satisfactory to the Agents in form and substance, as any Agent may reasonably request.
(e) Material Adverse Effect. The Collateral Agent shall have determined, in its sole judgment, that no event or development shall have occurred since December 31, 2019 which could reasonably be expected to have a Material Adverse Effect.
(f) Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Loans, or the conduct of the Loan Parties’ business, or the consummation of any of the underlying transactions, shall have been obtained and shall be in full force and effect.
(g) Proceedings; Receipt of Documents. All proceedings in connection with the making of the initial Loans and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Collateral Agent and its counsel, and the Collateral Agent and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Collateral Agent or such counsel may reasonably request.
(h) Management Reference Checks. The Collateral Agent shall have received satisfactory reference checks for, and shall have had an opportunity to meet (in-person or telephonically) with, key management of each Loan Party.
(i) Due Diligence. The Agents shall have completed their business, legal, insurance, and collateral due diligence with respect to each Loan Party and the results thereof shall be acceptable to the Agents, in their sole and absolute discretion.
(j) Security Interests. The Loan Documents shall create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable first priority security interest in the Collateral secured thereby (subject only to Permitted Liens).
(k) Litigation. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or threatened in any court or before any arbitrator or Governmental Authority which relates to the Loans or which, in the opinion of the Collateral Agent, is reasonably likely to be adversely determined, and that, if adversely determined, would reasonably be expected to have a Material Adverse Effect.
(l) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing pursuant to Section 2.02.
Section 5.02 Conditions Precedent to All Loans. The obligation of any Agent or any Lender to make any Loan after the Effective Date is subject to the fulfillment, in a manner satisfactory to the Administrative Agent, of each of the following conditions precedent:
(a) Payment of Fees, Etc. The Borrowers shall have paid all fees, costs, expenses and taxes then payable by the Borrowers pursuant to this Agreement and the other Loan Documents, including, without limitation, Sections 2.06 and 12.04.
(b) Representations and Warranties; No Event of Default. The following statements shall be true and correct, and the submission by the Administrative Borrower to the Administrative Agent of a Notice of Borrowing with respect to each such Loan, and the Borrowers’ acceptance of the proceeds of such Loan, shall each be deemed to be a representation and warranty by each Loan Party on the date of such Loan that: (i) the representations and warranties contained in Article VI and in each other Loan Document, certificate or other writing delivered to any Secured Party pursuant hereto or thereto on or prior to the date of such Loan are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date), (ii) at the time of and after giving effect to the making of such Loan and the application of the proceeds thereof , no Default or Event of Default has occurred and is continuing or would result from the making of the Loan to be made, on such date and (iii) the conditions set forth in this Section 5.02 have been satisfied as of the date of such request.
(c) Legality. The making of such Loan shall not contravene any law, rule or regulation applicable to any Secured Party.
(d) Notices. The Administrative Agent shall have received a Notice of Borrowing pursuant to Section 2.02.
(e) Excess Cash. After giving effect to the borrowing of any Revolving Loan after the Effective Date (and the use of proceeds thereof), the maximum amount of cash and Cash Equivalents in all of the checking, savings and other accounts of the Loan Parties and their Subsidiaries shall not exceed $15,000,000 in the aggregate; provided that the maximum amount of cash and Cash Equivalents in all of the checking, savings and other accounts of the Foreign Loan Parties and the Subsidiaries of the Ultimate Parent that are not Loan Parties shall not exceed $3,000,000 in the aggregate.
Section 5.03 Conditions Subsequent to Effectiveness. As an accommodation to the Loan Parties, the Agents and the Lenders have agreed to execute this Agreement and to make the Loans on the Effective Date notwithstanding the failure by the Loan Parties to satisfy the conditions set forth below on or before the Effective Date. In consideration of such accommodation, the Loan Parties agree that, in addition to all other terms, conditions and provisions set forth in this Agreement and the other Loan Documents, including, without limitation, those conditions set forth in Section 5.01, the Loan Parties shall satisfy each of the conditions subsequent set forth below on or before the date applicable thereto (it being understood that (i) the failure by the Loan Parties to perform or cause to be performed any such condition subsequent on or before the date applicable thereto shall constitute an Event of Default and (ii) to the extent that the existence of any such condition subsequent would otherwise cause any representation, warranty or covenant in this Agreement or any other Loan Document to be breached, the Required Lenders hereby waive such breach for the period from the Effective Date until the date on which such condition subsequent is required to be fulfilled pursuant to this Section 5.03):
(a) Within 15 days of the Effective Date, the Loan Parties shall deliver to the Collateral Agent:
(i) a landlord waiver, in form and substance satisfactory to the Collateral Agent, executed by each landlord with respect to each location of the Loan Parties described in Section 7.01(l); and
(ii) a collateral access agreement, in form and substance satisfactory to the Collateral Agent, executed by each Person who possesses Collateral at a location described in Section 7.01(l).
(b) Within 30 days of the Effective Date, the Loan Parties shall deliver to the Collateral Agent endorsements as to the named insureds or loss payees with respect to insurance coverage required by Section 7.01, in each case, as the Collateral Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days’ prior written notice to the Collateral Agent and each such named insured or loss payee.
(c) Within 180 days of the Effective Date, the Loan Parties shall cause Obagi Hong Kong Limited, Obagi (Shanghai) Cosmeceuticals Co., Ltd. and Obagi (Xi’an) Pharmaceutical Technology Co., Ltd. to be joined to this Agreement as Guarantors and to provide all agreements, instruments and other documents reasonably requested by the Collateral Agent (including, without limitation, all agreements, instruments and other documents described in Section 7.01(b)) in order to effect the intent that such Subsidiaries shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiaries shall become Collateral for the Obligations.
(d) Within 5 Business Days of the Effective Date, the Loan Parties shall deliver to the Collateral Agent, a Control Agreement, in form and substance satisfactory to the Collateral Agent, with respect to the Cash Management Accounts held at Wells Fargo Bank, National Association, for the accounts with account numbers ending in 5942 and 8959, executed by the Administrative Borrower, Obagi Holdings Company Limited, Wells Fargo Bank, National Association and TCW, as secured party thereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties. Each Loan Party hereby represents and warrants to the Secured Parties as follows:
(a) Organization, Good Standing, Etc. Each Loan Party (i) is a corporation, limited liability company or limited partnership duly organized or incorporated, validly existing and in good standing under the laws of the state or jurisdiction of its organization or incorporation, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder, and to execute and deliver each Loan Document to which it is a party, and to consummate the transactions contemplated thereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except (solely for the purposes of this subclause (iii)) where the failure to be so qualified and in good standing could not reasonably be expected to have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and performance by each Loan Party of each Loan Document to which it is or will be a party, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene (A) any of its Governing Documents, (B) any applicable material Requirement of Law or (C) any material Contractual Obligation binding on or otherwise affecting it or any of its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties, except, in the case of clause (iv), to the extent where such contravention, default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect.
(c) Governmental Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Loan Party of any Loan Document to which it is or will be a party other than filings and recordings with respect to Collateral to be made, or otherwise delivered to the Collateral Agent for filing or recordation, on the Effective Date.
(d) Enforceability of Loan Documents. This Agreement is, and each other Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.
(e) Capitalization. On the Effective Date, after giving effect to the transactions contemplated hereby to occur on the Effective Date, the authorized Equity Interests of the Ultimate Parent and each of its Subsidiaries and the issued and outstanding Equity Interests of the Ultimate Parent and each of its Subsidiaries are as set forth on Schedule 6.01(e) hereto. All of the issued and outstanding shares of Equity Interests of each of the Subsidiaries of the Ultimate Parent have been validly issued and are fully paid and nonassessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. All Equity Interests of such Subsidiaries of the Ultimate Parent are owned by the Ultimate Parent free and clear of all Liens (other than Permitted Specified Liens). Except as described on Schedule 6.01(e) hereto, as of the Effective Date, there are no outstanding debt or equity securities of the Ultimate Parent or any of its Subsidiaries and no outstanding obligations of the Ultimate Parent or any of its Subsidiaries convertible into or exchangeable for, or warrants, options or other rights for the purchase or acquisition from the Ultimate Parent or any of its Subsidiaries, or other obligations of the Ultimate Parent or any of its Subsidiaries to issue, directly or indirectly, any shares of Equity Interests of the Ultimate Parent or any of its Subsidiaries.
(f) Litigation. Except as set forth in Schedule 6.01(f) hereto, there is no pending or, to the best knowledge of any Loan Party, threatened action, suit or proceeding affecting any Loan Party or any of its properties before any court or other Governmental Authority or any arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby.
(g) Financial Statements.
(i) The Financial Statements, copies of which have been delivered to each Agent and each Lender, fairly present the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. All material indebtedness and other liabilities (including, without limitation, Indebtedness, liabilities for taxes, long-term leases and other unusual forward or long-term commitments), direct or contingent, of the Parent and its Subsidiaries are set forth in the Financial Statements. Since December 31, 2019, no event or development has occurred that has had or could reasonably be expected to have a Material Adverse Effect.
(ii) The Parent has heretofore furnished to each Agent and each Lender (A) projected quarterly balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries for the period from January 1, 2021 through December 31, 2025, and (B) projected annual balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries for the Fiscal Years ending in December 31, 2021 through December 31, 2025, which projected financial statements shall be updated from time to time pursuant to Section 7.01(a)(vii).
(h) Compliance with Law, Etc. No Loan Party or any of its Subsidiaries is in violation of (i) any of its Governing Documents, (ii) any Requirement of Law, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect, or (iii) any material term of any Contractual Obligation (including, without limitation, any Material Contract) binding on or otherwise affecting it or any of its properties, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.
(i) ERISA. Except as set forth on Schedule 6.01(i) hereto, (i) each Loan Party and each Employee Plan (and each related trust, insurance contract or fund, if any) is in compliance with all Requirements of Law in all material respects, (ii) no ERISA Event has occurred nor is reasonably expected to occur, (iii) the most recent annual report (Form 5500 Series) with respect to each Employee Plan, including, for purposes of any Pension Plan, any required Schedule B (Actuarial Information) thereto, copies of which have been filed with the Internal Revenue Service and delivered to the Agents, is complete and correct and, for purposes of any Pension Plan, fairly presents the funding status of such Pension Plan, and since the date of such report, there has been no material adverse change in such funding status, (iv) copies of each agreement entered into with the PBGC, the U.S. Department of Labor or the Internal Revenue Service with respect to any Employee Plan have been delivered to the Agents, and (v) each Employee Plan that is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Internal Revenue Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Internal Revenue Code, and has received a favorable determination, advisory or opinion letter from the Internal Revenue Service regarding its qualification thereunder, and no event has occurred that would reasonably be expected to result in the disqualification of any such Employee Benefit Plan or related trust. No Loan Party or any of its ERISA Affiliates has incurred any liability to the PBGC which remains outstanding other than the payment of premiums, and there are no premium payments which have become due which are unpaid. There are no pending or threatened claims, actions, proceedings or lawsuits (other than claims for benefits in the normal course) asserted or instituted against (A) any Employee Plan or its assets, (B) any fiduciary with respect to any Employee Plan, or (C) any Loan Party or any of its ERISA Affiliates with respect to any Employee Plan. Except as required by Section 4980B of the Internal Revenue Code or similar state law, no Loan Party or any of its ERISA Affiliates maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides health benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Loan Party or any of its ERISA Affiliates or otherwise has any obligation to provide any such benefits for any current employee after such employee’s termination of employment. Each arrangement pursuant to which a Loan Party has an obligation to pay or accrue nonqualified deferred compensation (within the meaning of Section 409A of the Internal Revenue Code) has been administered in accordance with plan documents that satisfy the requirements of Section 409A of the Internal Revenue Code.
(j) Taxes, Etc. (i) All federal and all other material Tax returns and other reports required by applicable Requirements of Law to be filed by any Loan Party have been timely filed and (ii) all Taxes imposed upon any Loan Party or any property of any Loan Party which have become due and payable on or prior to the date hereof have been paid, except Taxes contested in good faith by proper proceedings which stay the imposition of any Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof on the Financial Statements in accordance with GAAP.
(k) Regulations T, U and X. No Loan Party is or will be engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U and X.
(l) Nature of Business.
(i) No Loan Party is engaged in any business other than as set forth on Schedule 6.01(l) hereto.
(ii) Neither the Ultimate Parent nor the Parent (A) has any material liabilities (other than (1) in the case of the Parent, the liabilities described on Schedule 7.02(j), and (2) in each case, the liabilities arising under the Loan Documents), (B) owns any material assets (other than (1) in the case of the Parent, the assets described on Schedule 7.02(j), and (2) in each case, the Equity Interests of its Subsidiaries) or (C) engages in any operations or business (other than (1) in the case of the Parent, the business described on Schedule 7.02(j), and (2) in each case, the ownership of its Subsidiaries).
(m) Adverse Agreements, Etc. No Loan Party or any of its Subsidiaries is a party to any Contractual Obligation or subject to any restriction or limitation in any Governing Document or any judgment, order, regulation, ruling or other requirement of a court or other Governmental Authority, which (either individually or in the aggregate) has, or in the future could reasonably be expected (either individually or in the aggregate) to have, a Material Adverse Effect.
(n) Permits, Etc. Each Loan Party has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations, including Environmental Permits and Health Care Permits, required for such Person lawfully to own, lease, manage or operate, or to acquire, each business and Facility currently owned, leased, managed or operated, or to be acquired, by such Person, except to the extent the failure to have or be in compliance therewith could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, including any such Environmental Permit or Health Care Permit, and there is no claim that any of the foregoing is not in full force and effect.
(o) Properties. Each Loan Party has good and marketable title to, valid leasehold interests in, or valid licenses to use, all property and assets material to its business, free and clear of all Liens, except Permitted Liens. All such properties and assets are in good working order and condition, ordinary wear and tear excepted.
(p) Employee and Labor Matters. Except as set forth on Schedule 6.01(p), (i) each Loan Party and its Subsidiaries is in compliance with all Requirements of Law in all material respects pertaining to employment and employment practices, terms and conditions of employment, wages and hours, and occupational safety and health, (ii) no Loan Party or any Subsidiary is party to any collective bargaining agreement, nor has any labor union been recognized as the representative of the employees of any Loan Party of Subsidiary, (iii) there is no unfair labor practice complaint pending or, to the best knowledge of any Loan Party, threatened against any Loan Party or any Subsidiary before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Loan Party or any Subsidiary which arises out of or under any collective bargaining agreement, (iv) there has been no strike, work stoppage, slowdown, lockout, or other labor dispute pending or threatened against any Loan Party or any Subsidiary, and (v) to the best knowledge of each Loan Party, no labor organization or group of employees has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or authority. No Loan Party or Subsidiary has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act (“WARN”) or any similar Requirement of Law, which remains unpaid or unsatisfied. All material payments due from any Loan Party or Subsidiary on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of such Loan Party or Subsidiary.
(q) Environmental Matters. Except as set forth on Schedule 6.01(q) hereto, (i) no Loan Party or any of its Subsidiaries is in violation of any Environmental Law, except to the extent any failure to be in compliance therewith could not reasonably be expected to result in a material Environmental Claim or Environmental Liability; (ii) each Loan Party and each of its Subsidiaries has, and is in compliance with, all Environmental Permits for its respective operations and businesses, except to the extent any failure to have or be in compliance therewith could not reasonably be expected to result in a material Environmental Claim or Environmental Liability; (iii) there has been no Release or threatened Release of Hazardous Materials on, in, at under or from any properties currently or formerly owned, leased or operated by any Loan Party, its Subsidiaries or a respective predecessor in interest or at any disposal or treatment facility which received Hazardous Materials generated by any Loan Party, its Subsidiaries or any respective predecessor in interest, which in any case of the foregoing could reasonably be expected to result in a material Environmental Claim or Environmental Liability; (iv) there are no pending or threatened Environmental Claims against, or Environmental Liability of, any Loan Party, its Subsidiaries or any respective predecessor in interest that could reasonably be expected to result in a material Environmental Claim or Environmental Liability; (v) neither any Loan Party nor any of its Subsidiaries is performing or responsible for any Remedial Action that could reasonably be expected to result in a material Environmental Claim or Environmental Liability; and (vi) the Loan Parties have made available to the Collateral Agent and Lenders true and complete copies of all material environmental reports, audits and investigations in the possession or control of any Loan Party or any of its Subsidiaries with respect to the operations and business of the Loan Parties and its Subsidiaries.
(r) Insurance. Each Loan Party maintains all insurance required by Section 7.01(h). Schedule 6.01(r) sets forth a list of all such insurance maintained by or for the benefit of each Loan Party on the Effective Date.
(s) Use of Proceeds. The proceeds of the Loans shall be used to (a) refinance the Existing Credit Facility and other existing indebtedness of the Borrowers in the principal amount of up to $110,630,000.00, (b) pay fees and expenses in connection with the transactions contemplated hereby and (c) fund working capital of the Borrowers.
(t) Solvency. After giving effect to the transactions contemplated by this Agreement and before and after giving effect to each Loan, each Loan Party is, and the Loan Parties on a consolidated basis are, Solvent. No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay or defraud either present or future creditors of such Loan Party.
(u) Intellectual Property. Except as set forth on Schedule 6.01(u) hereto, each Loan Party owns or licenses or otherwise has the right to use all Intellectual Property rights that are necessary for the operation of its business, without infringement upon or conflict with the rights of any other Person with respect thereto, except for such infringements and conflicts which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Set forth on Schedule 6.01(u) hereto is a complete and accurate list as of the Effective Date of (i) each item of Registered Intellectual Property owned by each Loan Party, (ii) each material work of authorship owned by each Loan party and which is not Registered Intellectual Property and (iii) each material Intellectual Property Contract to which each Loan Party is bound. No trademark or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon or conflicts with any rights owned by any other Person, and no claim or litigation regarding any of the foregoing is pending or threatened, except for such infringements and conflicts which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To the knowledge of each Loan Party, no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code pertaining to Intellectual Property is pending or proposed, which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(v) Material Contracts. Set forth on Schedule 6.01(v) hereto is a complete and accurate list as of the Effective Date of all Material Contracts of each Loan Party, showing the parties and subject matter thereof and amendments and modifications thereto. As of the Effective Date, each such Material Contract (i) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the best knowledge of such Loan Party, all other parties thereto in accordance with its terms, (ii) has not been otherwise amended or modified, and (iii) is not in default due to the action of any Loan Party or, to the best knowledge of any Loan Party, any other party thereto.
(w) Investment Company Act. None of the Loan Parties is (i) an “investment company”, “affiliated person”, “promoter” of, or “principal underwriter” of or for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended, or (ii) subject to regulation under any Requirement of Law that limits in any respect its ability to incur Indebtedness or which may otherwise render all or a portion of the Obligations unenforceable.
(x) Customers and Suppliers. There exists no actual or threatened termination, cancellation or limitation of, or modification to or change in, the business relationship between (i) any Loan Party, on the one hand, and any customer or any group thereof, on the other hand, or (ii) any Loan Party, on the one hand, and any supplier or any group thereof, on the other hand, and there exists no present state of facts or circumstances that could give rise to or result in any such termination, cancellation, limitation, modification or change, in each case, which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(y) Sanctions; Anti-Corruption and Anti-Money Laundering Laws. None of any Loan Party, any Subsidiary thereof, any of their respective directors, officers, or employees, shareholders or owners, nor, to the knowledge of any Loan Party, any of their respective agents or Affiliates, (i) is a Sanctioned Person or currently the subject or target of any Sanctions, (ii) has assets located in a Sanctioned Country, (iii) conducts any business with or for the benefit of any Sanctioned Person, (iv) directly or indirectly derives revenues from investments in, or transactions with, Sanctioned Persons, (v) is a “Foreign Shell Bank” within the meaning of the USA Patriot Act, i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision, or (vi) is a Person that resides in or is organized under the laws of a jurisdiction designated by the United States Secretary of the Treasury under Section 311 or 312 of the USA Patriot Act as warranting special measures due to money laundering concerns. Each Loan Party and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance by each Loan Party and its Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all Anti-Corruption Laws and Anti-Money Laundering Law. Each Loan Party and each Subsidiary is in compliance with all Sanctions, Anti-Money Laundering Laws and Anti-Corruption Laws in all material respects. Each Loan Party and, to the knowledge of any Loan Party, each Affiliate, officer, employee or director acting on behalf of any Loan Party is (and is taking no action that would result in any such Person not being) in compliance with (A) all applicable OFAC rules and regulations, (B) all applicable United States of America, United Kingdom, United Nations, European Union, German, Canadian, Australian and all other internationally respected national autonomous sanctions, embargos and trade restrictions and (C) all applicable provisions of the USA PATRIOT Act.
(z) Anti-Bribery and Corruption.
(i) Neither any Loan Party nor, to the best knowledge of any Loan Party, any director, officer, employee or any other Person acting on behalf of any Loan Party, has offered, promised, paid, given or authorized the payment or giving of any money or other thing of value, directly or indirectly, to or for the benefit of any Person, including, without limitation, any employee, official or other Person acting on behalf of any Governmental Authority, or otherwise engaged in any activity that may violate any Anti-Corruption Law.
(ii) Neither any Loan Party nor, to the best knowledge of any Loan Party, any director, officer, employee or any other Person acting on behalf of any Loan Party, has engaged in any activity that would breach any Anti-Corruption Laws.
(iii) To the best of each Loan Party’s knowledge and belief, there is no pending or, to the best knowledge of any Loan Party, threatened action, suit, proceeding or investigation before any court or other Governmental Authority against any Loan Party or any of its directors, officers, employees or other Person acting on its behalf that relates to a potential violation of any Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions.
(iv) The Loan Parties will not directly or indirectly use, lend or contribute the proceeds of the Advances for any purpose that would breach the Anti-Bribery and Corruption Laws.
(aa) Proper Legal Form. The Loan Documents are in proper legal form under the laws of the jurisdiction of organization of each Foreign Loan Party to be valid, legal, effective, enforceable or admissible into evidence in the courts of the jurisdiction of organization of such Foreign Loan Party except for any other procedural steps that have been taken or that can be taken at any time without significant expense or delay and without prejudice to any rights or remedies the Secured Parties may have under the Loan Documents.
(bb) No Recordation. It is not necessary that any Loan Document or any other document be filed, registered or recorded with, or executed or notarized before, any court, public office or other authority in the jurisdiction of organization of any Foreign Loan Party or that any registration charge or stamp or similar tax be paid on or in respect of any Loan Document or any other document in order to ensure the legality, validity, effectiveness, enforceability, priority or admissibility in evidence of such Loan Document, in each case, other than any Mortgage.
(cc) Proceedings to Enforce Agreement. In any proceeding in the jurisdiction of organization of any Foreign Loan Party to enforce any Loan Document governed by New York law, the choice of New York law as the governing law of such Loan Document will be recognized and applied, the irrevocable submission of it to the jurisdiction of the courts of the State of New York or of the United States of America for the Southern District of New York will be valid, legal, binding and enforceable, and any judgment obtained in such a court will be recognized and enforceable in the jurisdiction of organization of such Foreign Loan Party without reconsideration as to the merits of such judgment.
(dd) Pari Passu. The obligations of each Foreign Loan Party under this Agreement and the other Loan Documents to which it is a party rank and will rank at least pari passu in priority of payment and in all other respects with all its other present and future unsecured and unsubordinated Indebtedness of such Foreign Loan Party.
(ee) Exchange Controls. Each Foreign Loan Party has the ability to lawfully pay solely and exclusively in Dollars the total amount which is, or may become, payable by it to the Agents and the Lenders under the Loan Documents and it has complied with its reporting obligations to the jurisdiction of organization of such Foreign Loan Party pursuant to the jurisdiction of organization of such Foreign Loan Party.
(ff) Full Disclosure.
(i) Each Loan Party has disclosed to the Agents all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Agents (other than forward-looking information and projections and information of a general economic nature and general information about the Loan Parties’ industry) in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which it was made, not misleading.
(ii) Projections have been prepared on a reasonable basis and in good faith based on assumptions, estimates, methods and tests that are believed by the Loan Parties to be reasonable at the time such Projections were prepared and information believed by the Loan Parties to have been accurate based upon the information available to the Loan Parties at the time such Projections were furnished to the Lenders, and neither the Ultimate Parent nor the Parent is aware of any facts or information that would lead it to believe that such Projections are incorrect or misleading in any material respect; it being understood that (A) Projections are by their nature subject to significant uncertainties and contingencies, many of which are beyond the Loan Parties’ control, (B) actual results may differ materially from the Projections and such variations may be material and (C) the Projections are not a guarantee of performance.
(gg) Health Care. Except as set forth on Schedule 6.01(gg) hereto, (i) no Loan Party or any of its Subsidiaries is in violation of any Health Care Law, except to the extent any failure to be in compliance therewith could not reasonably be expected to result in a material Health Care Claim or Health Care Liability; (ii) each Loan Party and each of its Subsidiaries has, and is in compliance with, all Health Care Permits for its respective operations and businesses, except to the extent any failure to have or be in compliance therewith could not reasonably be expected to result in a material Health Care Claim or Health Care Liability; (iii) there are no pending or threatened Health Care Claims against, or Health Care Liability of, any Loan Party, its Subsidiaries or any respective predecessor in interest that could reasonably be expected to result in a material Health Care Claim or Health Care Liability; and (iv) the Loan Parties have made available to the Agents and the Lenders true and complete copies of all material health care reports, audits and investigations in the possession or control of any Loan Party or any of its Subsidiaries with respect to the operations and business of the Loan Parties and their Subsidiaries.
ARTICLE VII
COVENANTS OF THE LOAN PARTIES AND OTHER COLLATERAL MATTERS
Section 7.01 Affirmative Covenants. So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid (other than Contingent Indemnity Obligations) or any Lender shall have any Commitment hereunder, each Loan Party will, unless the Required Lenders shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to each Agent and each Lender:
(i) as soon as available, and in any event within 30 days after the end of each fiscal month of the Ultimate Parent and its Subsidiaries commencing with the first fiscal month of the Ultimate Parent and its Subsidiaries ending after the Effective Date, internally prepared consolidated and consolidating balance sheets, statements of operations and retained earnings and statements of cash flows as at the end of such fiscal month, and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such fiscal month, setting forth in each case in comparative form the figures for the corresponding date or period set forth in the financial statements for the immediately preceding Fiscal Year, all in reasonable detail and certified by an Authorized Officer of the Ultimate Parent as fairly presenting, in all material respects, the financial position of the Ultimate Parent and its Subsidiaries as of the end of such fiscal month and the results of operations, retained earnings and cash flows of the Ultimate Parent and its Subsidiaries for such fiscal month and for such year to date period, in accordance with GAAP applied in a manner consistent with that of the most recent audited financial statements furnished to the Agents and the Lenders, subject to the absence of footnotes and normal year-end adjustments;
(ii) as soon as available and in any event within 45 days after the end of each fiscal quarter of the Ultimate Parent and its Subsidiaries commencing with the first fiscal quarter of the Ultimate Parent and its Subsidiaries ending after the Effective Date, consolidated and consolidating balance sheets, statements of operations and retained earnings and statements of cash flows of the Ultimate Parent and its Subsidiaries as at the end of such quarter, and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the figures for the corresponding date or period set forth in (A) the financial statements for the immediately preceding Fiscal Year and (B) the Projections, all in reasonable detail and certified by an Authorized Officer of the Ultimate Parent as fairly presenting, in all material respects, the financial position of the Ultimate Parent and its Subsidiaries as of the end of such quarter and the results of operations and cash flows of the Ultimate Parent and its Subsidiaries for such quarter and for such year-to-date period, in accordance with GAAP applied in a manner consistent with that of the most recent audited financial statements of the Ultimate Parent and its Subsidiaries furnished to the Agents and the Lenders, subject to the absence of footnotes and normal year-end adjustments;
(iii) as soon as available, and in any event within 120 days after the end of each Fiscal Year of the Ultimate Parent and its Subsidiaries, consolidated and consolidating balance sheets, statements of operations and retained earnings and statements of cash flows of the Ultimate Parent and its Subsidiaries as at the end of such Fiscal Year, setting forth in each case in comparative form the figures for the corresponding date or period set forth in (A) the financial statements for the immediately preceding Fiscal Year and (B) the Projections, all in reasonable detail and prepared in accordance with GAAP, and accompanied by a report and an opinion, prepared in accordance with generally accepted auditing standards, of independent certified public accountants of recognized standing selected by the Ultimate Parent and satisfactory to the Agents (which report and opinion shall not include (1) any qualification, exception or explanatory paragraph expressing substantial doubt about the ability of the Ultimate Parent or any of its Subsidiaries to continue as a going concern or any qualification or exception as to the scope of such audit or (2) any qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 7.03);
(iv) simultaneously with the delivery of the financial statements of the Ultimate Parent and its Subsidiaries required by clauses (i), (ii) and (iii) of this Section 7.01(a), a Compliance Certificate:
(A) stating that such Authorized Officer has reviewed the provisions of this Agreement and the other Loan Documents and has made or caused to be made under his or her supervision a review of the condition and operations of the Ultimate Parent and its Subsidiaries during the period covered by such financial statements with a view to determining whether the Ultimate Parent and its Subsidiaries were in compliance with all of the provisions of this Agreement and such Loan Documents at the times such compliance is required hereby and thereby, and that such review has not disclosed, and such Authorized Officer has no knowledge of, the occurrence and continuance during such period of an Event of Default or Default or, if an Event of Default or Default had occurred and continued or is continuing, describing the nature and period of existence thereof and the action which the Ultimate Parent and its Subsidiaries propose to take or have taken with respect thereto,
(B) in the case of the delivery of the financial statements of the Ultimate Parent and its Subsidiaries required by clauses (ii) and (iii) of this Section 7.01(a), (1) attaching a schedule showing the calculation of the financial covenants specified in Section 7.03 and the calculation of the Leverage Ratio for the applicable period for purposes of determining the Applicable Margin in accordance with the terms of the definition thereof and (2) including a discussion and analysis of the financial condition and results of operations of the Ultimate Parent and its Subsidiaries for the portion of the Fiscal Year then elapsed and discussing the reasons for any significant variations from the Projections for such period and the figures for the corresponding period in the previous Fiscal Year, and
(C) in the case of the delivery of the financial statements of the Ultimate Parent and its Subsidiaries required by clause (iii) of this Section 7.01(a), attaching (1) a summary of all material insurance coverage maintained as of the date thereof by any Loan Party or any of its Subsidiaries and evidence that such insurance coverage meets the requirements set forth in Section 7.01, each Security Agreement and each Mortgage, together with such other related documents and information as the Administrative Agent may reasonably require, (2) the calculation of the Excess Cash Flow in accordance with the terms of Section 2.05(c)(i) and (3) confirmation that there have been no changes to the information contained in each of the Perfection Certificates delivered on the Effective Date or the date of the most recently updated Perfection Certificate delivered pursuant to this clause (iv) and/or attaching an updated Perfection Certificate identifying any such changes to the information contained therein;
(v) as soon as available and in any event within 10 days after the end of each fiscal month of the Ultimate Parent and its Subsidiaries commencing with the first fiscal month of the Ultimate Parent and its Subsidiaries ending after the Effective Date, reports in form and detail satisfactory to the Agents and certified by an Authorized Officer of the Administrative Borrower as being accurate and complete (A) listing all Accounts of the Loan Parties as of such day, which shall include the amount and age of each such Account, showing separately those which are more than 30, 60, 90 and 120 days old and a description of all Liens, set-offs, defenses and counterclaims with respect thereto, together with a reconciliation of such schedule with the schedule delivered to the Agents pursuant to this clause (v)(A) for the immediately preceding fiscal month and such other information as any Agent may request, (B) listing all accounts payable of the Loan Parties as of each such day which shall include the amount and age of each such account payable and such other information as any Agent may request, and (C) listing all Inventory of the Loan Parties as of each such day, and containing a breakdown of such Inventory by type and amount, the cost value thereof (by location) and such other information as any Agent may request, all in detail and in form satisfactory to the Agents;
(vi) [reserved];
(vii) as soon as available and in any event not later than 45 days after the end of each Fiscal Year, a certificate of an Authorized Officer of the Ultimate Parent (A) attaching Projections for the Ultimate Parent and its Subsidiaries, supplementing and superseding the Projections previously required to be delivered pursuant to this Agreement, prepared on a monthly basis and otherwise in form and substance satisfactory to the Agents, for the immediately succeeding Fiscal Year for the Ultimate Parent and its Subsidiaries, and (B) certifying that the representations and warranties set forth in Section 6.01(ff)(ii) are true and correct with respect to the Projections;
(viii) promptly after submission to any Governmental Authority, all documents and information furnished to such Governmental Authority in connection with any investigation of any Loan Party other than routine inquiries by such Governmental Authority;
(ix) as soon as possible, and in any event within three Business Days after the occurrence of an Event of Default or Default or the occurrence of any event or development that could reasonably be expected to have a Material Adverse Effect, the written statement of an Authorized Officer of the Administrative Borrower setting forth the details of such Event of Default or Default or other event or development having a Material Adverse Effect and the action which the affected Loan Party proposes to take with respect thereto;
(x) as soon as possible and in any event: (A) at least ten days prior to any event or development that could reasonably be expected to result in or constitute an ERISA Event, and, to the extent not reasonably expected, within five days after the occurrence of any ERISA Event, notice of such ERISA Event (in reasonable detail), (B) within three days after receipt thereof by any Loan Party or any of its ERISA Affiliates from the PBGC, copies of each notice received by any Loan Party or any of its ERISA Affiliates of the PBGC’s intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (C) within ten days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Pension Plan, (D) within three days after receipt thereof by any Loan Party or any of its ERISA Affiliates from a sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice received by any Loan Party or any of its ERISA Affiliates concerning the imposition or amount of withdrawal liability under Section 4202 of ERISA, and (E) within ten days after any Loan Party sends notice of a plant closing or mass layoff (as defined in WARN) to employees, copies of each such notice sent by such Loan Party;
(xi) promptly after the commencement thereof but in any event not later than five days after service of process with respect thereto on, or the obtaining of knowledge thereof by, any Loan Party, notice of each action, suit or proceeding before any court or other Governmental Authority or other regulatory body or any arbitrator which could reasonably be expected to have a Material Adverse Effect;
(xii) as soon as possible and in any event within five days after execution, receipt or delivery thereof, copies of any material notices that any Loan Party executes or receives in connection with any Material Contract;
(xiii) [reserved];
(xiv) [reserved];
(xv) promptly after (A) the sending or filing thereof, copies of all statements, reports and other information any Loan Party sends to any holders of its Indebtedness or its securities or files with the SEC or any national (domestic or foreign) securities exchange, and (B) the receipt thereof, a copy of any material notice received from any holder of its Indebtedness;
(xvi) promptly upon receipt thereof, copies of all financial reports (including, without limitation, management letters), if any, submitted to any Loan Party by its auditors in connection with any annual or interim audit of the books thereof;
(xvii) promptly upon request, any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming the Borrowers’ compliance with Section 7.02(r);
(xviii) [reserved];
(xix) simultaneously with the delivery of the financial statements of the Ultimate Parent and its Subsidiaries required by clauses (i), (ii) and (iii) of this Section 7.01(a), if, as a result of any change in accounting principles and policies from those used in the preparation of the Financial Statements that is permitted by Section 7.02(q), the consolidated financial statements of the Ultimate Parent and its Subsidiaries delivered pursuant to clauses (i), (ii) and (iii) of this Section 7.01(a) will differ from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form and substance satisfactory to the Agents; and
(xx) promptly upon request, such other information concerning the condition or operations, financial or otherwise, of any Loan Party as any Agent may from time to time may reasonably request.
(b) Additional Borrowers, Guarantors and Collateral Security. Cause:
(i) each Subsidiary of any Loan Party not in existence on the Effective Date (other than an Excluded Subsidiary), and each Subsidiary of any Loan Party which is an Excluded Subsidiary on the Effective Date or upon formation or acquisition but later ceases to be an Excluded Subsidiary, to execute and deliver to the Collateral Agent promptly and in any event within (A) with respect to any Domestic Subsidiary, 10 days, and (B) with respect to any Foreign Subsidiary, 20 days, after the formation, acquisition or change in status thereof, (1) a Joinder Agreement, pursuant to which such Subsidiary shall be made a party to this Agreement as a Borrower or a Guarantor, (2) a supplement to the Security Agreement, together with (x) certificates evidencing all of the Equity Interests of any Person owned by such Subsidiary required to be pledged under the terms of the Security Agreement, (y) undated stock powers for such Equity Interests executed in blank with signature guaranteed, and (z) such opinions of counsel as the Collateral Agent may reasonably request, (3) to the extent required under the terms of this Agreement, one or more Mortgages creating on the real property of such Subsidiary a perfected, first priority Lien (in terms of priority, subject only to Permitted Specified Liens) on such real property and such other Real Property Deliverables as may be required by the Collateral Agent with respect to each such real property, (4) with respect to any Foreign Subsidiary, such other foreign law security agreements, approvals, documents, filings, or registrations reasonably requested by the Collateral Agent in order to create, perfect, or establish the priority of or perfection of any lien pursuant to the applicable laws of the jurisdiction of organization of such Foreign Subsidiary, and (5) such other agreements, instruments, approvals or other documents reasonably requested by the Collateral Agent in order to create, perfect, establish the first priority of or otherwise protect any Lien purported to be covered by any such Security Agreement or Mortgage or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary shall become Collateral for the Obligations; and
(ii) each owner of the Equity Interests of any such Subsidiary to execute and deliver promptly and in any event within (A) with respect to any Domestic Subsidiary, 10 days, and (B) with respect to any Foreign Subsidiary, 20 days, after the formation, acquisition or change in status of such Subsidiary a Pledge Amendment (as defined in the Security Agreement), together with (1) certificates evidencing all of the Equity Interests of such Subsidiary required to be pledged under the terms of the Security Agreement, (2) undated stock powers or other appropriate instruments of assignment for such Equity Interests executed in blank with signature guaranteed, (3) such opinions of counsel as the Collateral Agent may reasonably request, (4) with respect to any Foreign Subsidiary, such other foreign law security agreements, approvals, documents, filings, or registrations reasonably requested by the Collateral Agent in order to create, perfect, or establish the priority of or perfection of any lien pursuant to the applicable laws of the jurisdiction of organization of such Foreign Subsidiary, and (5) such other agreements, instruments, approvals or other documents requested by the Collateral Agent.
Notwithstanding the foregoing, no Excluded Subsidiary shall be required to become a Guarantor hereunder (and, as such, shall not be required to deliver the documents required by clause (i) above); provided, however, that if the Equity Interests of an Excluded Subsidiary are owned by a Loan Party, such Loan Party shall deliver all such documents, instruments, agreements (including, without limitation, with respect to any Foreign Subsidiary, at the reasonable request of the Collateral Agent, a pledge agreement governed by the laws of the jurisdiction of the organization of such Foreign Subsidiary) and certificates described in clause (ii) above to the Collateral Agent, and take all commercially reasonable actions reasonably requested by the Collateral Agent or otherwise necessary to grant and to perfect a first-priority Lien (subject to Permitted Specified Liens) in favor of the Collateral Agent, for the benefit of the Agents and the Lenders, in all of the Equity Interests of such Excluded Subsidiary owned by such Loan Party.
(c) Compliance with Laws; Payment of Taxes.
(i) Comply, and cause each of its Subsidiaries to comply, with all Requirements of Law, judgments and awards (including any settlement of any claim that, if breached, could give rise to any of the foregoing), except to the extent the failure to so comply could not reasonably be expected to have a Material Adverse Effect.
(ii) Pay, and cause each of its Subsidiaries to pay, in full before delinquency or before the expiration of any extension period, all federal and other material Taxes imposed upon any Loan Party or any of its Subsidiaries or any property of any Loan Party or any of its Subsidiaries, except Taxes contested in good faith by proper proceedings which stay the imposition of any Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP.
(d) Preservation of Existence, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except to the extent that the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.
(e) Keeping of Records and Books of Account. Keep, and cause each of its Subsidiaries to keep, adequate records and books of account, with complete entries made to permit the preparation of financial statements in accordance with GAAP.
(f) Inspection Rights. Permit, and cause each of its Subsidiaries to permit, the agents and representatives of any Agent, at any time and from time to time, at the expense of the Borrowers, to examine and make copies of and abstracts from its records and books of account, to visit and inspect its properties, to verify materials, leases, notes, accounts receivable, deposit accounts and its other assets, to conduct audits, physical counts, valuations, appraisals or examinations and to discuss its affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives (in each case, so long as no Event of Default shall have occurred and be continuing, upon 3 days prior written notice and during normal business hours). In furtherance of the foregoing, each Loan Party hereby authorizes its independent accountants, and the independent accountants of each of its Subsidiaries, to discuss the affairs, finances and accounts of such Person (independently or together with representatives of such Person) with the agents and representatives of any Agent in accordance with this Section 7.01(f).
(g) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder, except to the extent the failure to so maintain and preserve or so comply could not reasonably be expected to have a Material Adverse Effect.
(h) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, flood, rent, worker’s compensation and business interruption insurance) with respect to the Collateral and its other properties (including all real property leased or owned by it) and business, in such amounts and covering such risks as is (i) carried generally in accordance with sound business practice by companies in similar businesses similarly situated, (ii) required by any Requirement of Law, (iii) required by any Material Contract and (iv) in any event in amount, adequacy and scope reasonably satisfactory to the Collateral Agent. All policies covering the Collateral are to be made payable to the Collateral Agent for the benefit of the Agents and the Lenders, as their interests may appear, in case of loss, under a standard non contributory “lender” or “secured party” clause and are to contain such other provisions as the Collateral Agent may require to fully protect the Lenders’ interest in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to the Collateral Agent and the policies are to be premium prepaid, with the loss payable and additional insured endorsement in favor of the Collateral Agent for the benefit of the Agents and the Lenders, as their respective interests may appear, and such other Persons as the Collateral Agent may designate from time to time, and shall provide for not less than 30 days’ (ten days’ in the case of non-payment) prior written notice to the Collateral Agent of the exercise of any right of cancellation. If any Loan Party or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such insurance, but at the Borrowers’ expense and without any responsibility on the Collateral Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the sole right, in the name of the Lenders, any Loan Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.
(i) Obtaining of Permits, Etc. Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations that are necessary or useful in the proper conduct of its business, in each case, except to the extent the failure to obtain, maintain, preserve or take such action could not reasonably be expected to have a Material Adverse Effect.
(j) Environmental.
(i) Keep the Collateral free of any Environmental Lien;
(ii) Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all Environmental Permits that are necessary or useful in the proper conduct of its business, and comply, and cause each of its Subsidiaries to comply, with all Environmental Laws and Environmental Permits, except to the extent the failure to so obtain, maintain, preserve or comply could not reasonably be expected to result in a material Environmental Claim or Environmental Liability;
(iii) Take all commercially reasonable steps to prevent any Release or threatened Release of Hazardous Materials in violation of any Environmental Law or Environmental Permit at, in, on, under or from any property owned, leased or operated by any Loan Party or its Subsidiaries that could reasonably be expected to result in a material Environmental Claim or Environmental Liability;
(iv) Provide the Collateral Agent with written notice within ten (10) days of any of the following: (A) discovery of any Release of a Hazardous Material or environmental condition at, in, on, under or from any property currently or formerly owned, leased or operated by any Loan Party, Subsidiary or predecessor in interest or any violation of Environmental Law or Environmental Permit that in any case could reasonably be expected to result in any material Environmental Claim or Environmental Liability; (B) notice that an Environmental Lien has been filed against any Collateral; or (C) a material Environmental Claim or Environmental Liability; and provide such reports, documents and information as the Collateral Agent may reasonably request from time to time with respect to any of the foregoing.
(k) Fiscal Year. Cause the Fiscal Year of the Ultimate Parent and its Subsidiaries to end on December 31 of each calendar year unless the Agents consent to a change in such Fiscal Year (and appropriate related changes to this Agreement).
(l) Landlord Waivers; Collateral Access Agreements. Obtain a written subordination or waiver or collateral access agreement, as the case may be, in form and substance satisfactory to the Collateral Agent, with respect to (i) each headquarters location of each Loan Party, (ii) each location where books and records of any Loan Party are stored or maintained and (iii) each other location where any Collateral with a book value in excess of $2,500,000 (when aggregated with all other Collateral at the same location) is stored or maintained, in each case, if such location is not owned by a Loan Party (including, without limitation, any premises of a bailee, warehouseman or similar party); provided that such subordination or waiver or collateral access agreement shall not be required with respect to any such location if the Collateral Agent is reasonably satisfied that such subordination or waiver or collateral access agreement will not be obtained after the Loan Parties have used commercially reasonable efforts to obtain the same.
(m) After-Acquired Real Property. Upon the acquisition by it or any of its Subsidiaries after the date hereof of any interest in any real property (wherever located) (each such interest being a “New Facility”) with a Current Value (as defined below) in excess of $2,500,000, immediately so notify the Collateral Agent, setting forth with specificity a description of the interest acquired, the location of the real property, any structures or improvements thereon and either an appraisal or such Loan Party’s good faith estimate of the current value of such real property (for purposes of this Section, the “Current Value”). The Collateral Agent shall notify such Loan Party whether it intends to require a Mortgage (and any other Real Property Deliverables)) with respect to such New Facility. Upon receipt of such notice requesting a Mortgage (and any other Real Property Deliverables), the Person that has acquired such New Facility shall promptly furnish the same to the Collateral Agent. The Borrowers shall pay all fees and expenses, including, without limitation, reasonable attorneys’ fees and expenses, and all title insurance charges and premiums, in connection with each Loan Party’s obligations under this Section 7.01(m).
(n) Anti-Corruption Laws; Anti-Money Laundering Laws; Sanctions.
(i) Maintain, and cause each of its Subsidiaries to maintain, policies and procedures designed to promote compliance by each Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws and Anti-Money Laundering Laws.
(ii) Comply, and cause each of its Subsidiaries to comply, with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.
(iii) Neither Loan Party nor, to the best knowledge of any Loan Party, any director, officer, employee or any Person acting on behalf of any Loan Party will engage in any activity that would breach any Anti-Corruption Law.
(iv) Promptly notify the Administrative Agent of any action, suit or investigations by any court or Governmental Authority in relation to an alleged breach of the Anti-Corruption Law.
(v) Not directly or indirectly use, lend or contribute the proceeds of any Loan for any purpose that would breach any Anti-Corruption Law.
(vi) Each Loan Party and Affiliate, officer, employee or director, acting on behalf of the Loan Party is (and will take no action which would result in any such Person not being) in compliance with (A) all applicable OFAC rules and regulations, (B) all applicable United States of America, United Kingdom, United Nations, European Union, German, Canadian, Australian and all other reasonable internationally respected national autonomous sanctions, embargos and trade restrictions and (C) all applicable provisions of the USA PATRIOT Act. In addition, none of the activities or business of any Loan Party includes any kind of activities or business of or with any Person or in any country or territory that is subject to any Sanctions.
(vii) In order to comply with the “know your customer/borrower” requirements of the Anti-Money Laundering Laws, promptly provide to the Administrative Agent upon its reasonable request from time to time (A) information relating to individuals and entities affiliated with any Loan Party that maintain a business relationship with the Administrative Agent and (B) such identifying information and documentation as may be available for such Loan Party in order to enable the Administrative Agent or any Lender to comply with Anti-Money Laundering Laws.
(o) Lender Meetings. Upon the request of any Agent or the Required Lenders (which request, so long as no Event of Default shall have occurred and be continuing, shall not be made more than (i) once during each fiscal month of the Parent and its Subsidiaries during the period from the Effective Date through September 31, 2021 and (2) once during each fiscal quarter of the Parent and its Subsidiaries thereafter), participate in a meeting with the Agents and the Lenders at the Borrowers’ corporate offices (or at such other location (or by such other telephonic means) as may be agreed to by the Administrative Borrower and such Agent or the Required Lenders) at such time as may be agreed to by the Administrative Borrower and such Agent or the Required Lenders.
(p) [Reserved].
(q) Health Care.
(i) Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all Health Care Permits that are necessary or useful in the proper conduct of its business, and comply, and cause each of its Subsidiaries to comply, with all Health Care Laws and Health Care Permits, except to the extent the failure to so obtain, maintain, preserve or comply could not reasonably be expected to result in a material Health Care Claim or Health Care Liability; and
(ii) Provide the Agents with written notice within 10 days of a material Health Care Claim or Health Care Liability; and provide such reports, documents and information as any Agent may reasonably request from time to time with respect to any of the foregoing.
(r) [Reserved].
(s) Further Assurances. Take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments or other documents as any Agent may require from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected first priority Liens any of the Collateral or any other property of any Loan Party and its Subsidiaries (subject only to Permitted Specified Liens), (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer and confirm unto each Secured Party the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Loan Party (i) authorizes each Agent to execute any such agreements, instruments or other documents in such Loan Party’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes each Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Loan Party, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Loan Party prior to the date hereof.
Section 7.02 Negative Covenants. So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid (other than Contingent Indemnity Obligations) or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with respect to any of its properties, whether now owned or hereafter acquired; file or suffer to exist under the Uniform Commercial Code or any Requirement of Law of any jurisdiction, a financing statement (or the equivalent thereof) that names it or any of its Subsidiaries as debtor; sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement (or the equivalent thereof) other than, as to all of the above, Permitted Liens.
(b) Indebtedness. Create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted Indebtedness.
(c) Fundamental Changes; Dispositions.
(i) Wind up, liquidate or dissolve, or merge, consolidate or amalgamate with any Person, including by means of a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law, or permit any of its Subsidiaries to do (or agree to do) any of the foregoing; provided, however, that (A) any wholly-owned Subsidiary of any Loan Party (other than the Ultimate Parent, the Parent or a Borrower) may be merged into such Loan Party or another wholly-owned Subsidiary of such Loan Party, or may consolidate or amalgamate with another wholly-owned Subsidiary of such Loan Party, and (B) any Subsidiary (other than the Parent) may be merged into a Borrower if such Borrower is the surviving entity of such merger, in each case so long as (1) no other provision of this Agreement would be violated thereby, (2) such Loan Party gives the Agents at least 30 days’ prior written notice of such merger, consolidation or amalgamation accompanied by true, correct and complete copies of all material agreements, documents and instruments relating to such merger, consolidation or amalgamation, including, without limitation, the certificate or certificates of merger or amalgamation to be filed with each appropriate Secretary of State (with a copy as filed promptly after such filing), (3) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, (4) the Lenders’ rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such merger, consolidation or amalgamation, and (5) the surviving Subsidiary, if any, if not already a Loan Party, is joined as a Loan Party hereunder pursuant to a Joinder Agreement and is a party to a Security Agreement and the Equity Interests of such Subsidiary is the subject of a Security Agreement, in each case, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation; and
(ii) Make any Disposition, whether in one transaction or a series of related transactions, of all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing), or permit any of its Subsidiaries to do any of the foregoing; provided, however, that any Loan Party and its Subsidiaries may make Permitted Dispositions.
(d) Change in Nature of Business.
(i) Make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in Section 6.01(l).
(ii) Permit the Ultimate Parent or the Parent to (A) have any material liabilities (other than (1) in the case of the Parent, the liabilities described on Schedule 7.02(j), and (2) in each case, the liabilities arising under the Loan Documents), (B) own any material assets (other than (1) in the case of the Parent, the assets described on Schedule 7.02(j), and (2) in each case, the Equity Interests of its Subsidiaries) or (C) engage in any operations or business (other than (1) in the case of the Parent, the business described on Schedule 7.02(j), and (2) in each case, the ownership of its Subsidiaries).
(e) Loans, Advances, Investments, Etc. Make or commit or agree to make, or permit any of its Subsidiaries make or commit or agree to make, any Investment in any other Person except for Permitted Investments.
(f) Sale and Leaseback Transactions. Enter into, or permit any of its Subsidiaries to enter into, any Sale and Leaseback Transaction.
(g) [Reserved].
(h) Restricted Payments. Make or permit any of its Subsidiaries to make any Restricted Payment other than Permitted Restricted Payments.
(i) Federal Reserve Regulations. Permit any Loan or the proceeds of any Loan under this Agreement to be used for any purpose that would cause such Loan to be a margin loan under the provisions of Regulation T, U or X of the Board.
(j) Transactions with Affiliates. Enter into, renew, extend or be a party to, or permit any of its Subsidiaries to enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except: (i) transactions consummated in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof, and that are fully disclosed to the Agents prior to the consummation thereof, if they involve one or more payments by the Ultimate Parent or any of its Subsidiaries in excess of $1,000,000 for any single transaction or series of related transactions, (ii) transactions with another Loan Party, (iii) transactions permitted by Sections 7.02(e) and 7.02(h), (iv) sales of Qualified Equity Interests of the Ultimate Parent to Affiliates of the Ultimate Parent not otherwise prohibited by the Loan Documents and the granting of registration and other customary rights in connection therewith, (v) reasonable and customary director and officer compensation (including bonuses and stock option programs), benefits and indemnification arrangements, in each case, approved by the Board of Directors (or a committee thereof) of such Loan Party or such Subsidiary and (vi) transactions occurring prior to the Effective Date and listed on Schedule 7.02(j) and any renewal, extension or modification thereof, in each case, on terms that are not materially less favorable to the Loan Parties and the Lenders, taken as a whole, than the terms of such transactions listed on Schedule 7.02(j) on the Effective Date.
Notwithstanding the foregoing, all payments for services or royalties made by one Loan Party or Subsidiary to another Loan Party or Subsidiary under any intercompany agreement shall (A) be made in the ordinary course of business and in a manner consistent with past practices, (B) have transfer pricing payment terms that comply with all applicable transfer pricing rules and regulations, (C) not exceed the amounts necessary for the payee thereof to pay its projected operating expenses for the following one-month period and (D) not exceed for all Loan Parties and Subsidiaries $900,000 in any one-month period.
(k) Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries. Create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends or to make any other distribution on any shares of Equity Interests of such Subsidiary owned by any Loan Party or any of its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries, (iii) to make loans or advances to any Loan Party or any of its Subsidiaries or (iv) to transfer any of its property or assets to any Loan Party or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing; provided, however, that nothing in any of clauses (i) through (iv) of this Section 7.02(k) shall prohibit or restrict compliance with:
(A) this Agreement and the other Loan Documents;
(B) any agreement in effect on the date of this Agreement and described on Schedule 7.02(k) hereto, or any extension, replacement or continuation of any such agreement; provided that, any such encumbrance or restriction contained in such extended, replaced or continued agreement is no less favorable to the Agents and the Lenders than the encumbrance or restriction under or pursuant to the agreement so extended, replaced or continued;
(C) any applicable law, rule or regulation (including, without limitation, applicable currency control laws and applicable state corporate statutes restricting the payment of dividends in certain circumstances);
(D) in the case of clause (iv), (1) customary restrictions on the subletting, assignment or transfer of any specified property or asset set forth in a lease, license, asset, sale agreement or similar contract for the conveyance of such property or asset and (2) instrument or other document evidencing a Permitted Lien (or the Indebtedness secured thereby) from restricting on customary terms the transfer of any property or assets subject thereto;
(E) customary restrictions on dispositions of real property interests in reciprocal easement agreements;
(F) customary restrictions in agreements for the sale of assets on the transfer or encumbrance of such assets during an interim period prior to the closing of the sale of such assets; or
(G) customary restrictions in contracts that prohibit the assignment of such contract.
(l) Limitations on Negative Pledges. Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement, instrument, deed, lease or other arrangement that prohibits, restricts or imposes any condition upon the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, or that requires the grant of any security for an obligation if security is granted for another obligation, except the following: (i) this Agreement and the other Loan Documents, (ii) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by Section 7.02(b) if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (iii) any customary restrictions and conditions contained in agreements relating to the sale or other disposition of assets or of a Subsidiary pending such sale or other disposition, provided that such restrictions and conditions apply only to the assets or Subsidiary to be sold or disposed of and such sale or disposition is permitted hereunder, and (iv) customary provisions in leases restricting the assignment or sublet thereof.
(m) Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc.
(i) Amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any of its or its Subsidiaries’ Subordinated Indebtedness or of any instrument or agreement (including, without limitation, any purchase agreement, indenture, loan agreement or security agreement) relating to any such Indebtedness if such amendment, modification or change would shorten the final maturity or average life to maturity of, or require any payment to be made earlier than the date originally scheduled on, such Indebtedness, would increase the interest rate applicable to such Indebtedness, would add any covenant or event of default, would change the subordination provisions of such Indebtedness, or would otherwise be adverse to the Lenders or the issuer of such Indebtedness in any respect;
(ii) except for the Obligations, (A) make any voluntary or optional payment (including, without limitation, any payment of interest in cash that, at the option of the issuer, may be paid in cash or in kind), prepayment, redemption, defeasance, sinking fund payment or other acquisition for value of any of its or its Subsidiaries’ Indebtedness (including, without limitation, by way of depositing money or securities with the trustee therefor before the date required for the purpose of paying any portion of such Indebtedness when due), (B) refund, refinance, replace or exchange any other Indebtedness for any such Indebtedness (other than with respect to Permitted Refinancing Indebtedness), (C) make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any Subordinated Indebtedness in violation of the subordination provisions thereof or any subordination agreement with respect thereto, or (D) make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any Indebtedness as a result of any asset sale, change of control, issuance and sale of debt or equity securities or similar event, or give any notice with respect to any of the foregoing;
(iii) amend, modify or otherwise change any of its Governing Documents (including, without limitation, by the filing or modification of any certificate of designation, or any agreement or arrangement entered into by it) with respect to any of its Equity Interests (including any shareholders agreement), or enter into any new agreement with respect to any of its Equity Interests, except any such amendments, modifications or changes or any such new agreements or arrangements pursuant to this clause (iii) that either individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, provided that no such amendment, modification or change or new agreement or arrangement shall provide for any plan of division pursuant to Section 18-217 of the Delaware Limited Liability Company Act (or any similar statute or provision under applicable law); or
(iv) agree to any amendment, modification or other change to or waiver of any of its rights under any Material Contract if such amendment, modification, change or waiver would be adverse in any material respect to any Loan Party or any of its Subsidiaries or the Agents and the Lenders.
(n) Investment Company Act of 1940. Engage in any business, enter into any transaction, use any securities or take any other action or permit any of its Subsidiaries to do any of the foregoing, that would cause it or any of its Subsidiaries to become subject to the registration requirements of the Investment Company Act of 1940, as amended, by virtue of being an “investment company” or a company “controlled” by an “investment company” not entitled to an exemption within the meaning of such Act.
(o) ERISA.
(i) Cause, fail to prevent or suffer to exist, or permit any of its ERISA Affiliates to cause, fail to prevent or suffer to exist, an ERISA Event, or
(ii) adopt, or permit any of its ERISA Affiliates to adopt, any employee welfare benefit plan within the meaning of Section 3(1) of ERISA that provides benefits to employees after termination of employment other than as required by Section 601 of ERISA or other Requirements of Law.
(p) Environmental. Permit the use, handling, generation, storage, treatment, Release or disposal of Hazardous Materials on, in, at, under or from any property owned, leased or operated by it or any of its Subsidiaries, except in compliance with Environmental Laws (other than any noncompliance that could not reasonably be expected to result in any material Environmental Claim or Environmental Liability).
(q) Accounting Methods. Modify or change, or permit any of its Subsidiaries to modify or change, its method of accounting or accounting principles from those utilized in the preparation of the Financial Statements (other than as may be required to conform to GAAP).
(r) Sanctioned Persons; Anti-Corruption Laws; Anti-Money Laundering Laws.
(i) Conduct, nor permit any of its Subsidiaries to conduct, any business or engage in any transaction or deal with or for the benefit of any Sanctioned Person, including the making or receiving of any contribution of funds, goods or services to, from or for the benefit of any Sanctioned Person; or
(ii) Use, nor permit any of its Subsidiaries to use, directly or indirectly, any of the proceeds of any Loan, (A) to fund any activities or business of or with any Sanctioned Person or in any other manner that would result in a violation of any Sanctions by any Person (including by any Person participating in any Loan, whether as underwriter, advisor, investor or otherwise), or (B) for the purpose of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Law.
(s) Foreign Exchange Availability. Fail to maintain in full force and effect and comply with the terms of all Requirements of Law required to enable it to pay solely and exclusively in Dollars all amounts which a Loan Party is or may be required to pay under the Loan Documents.
(t) Pari Passu. Fail to take all actions necessary to cause all Obligations to rank at all times at least pari passu in priority in right of payment and in all other respects with all other of unsecured and unsubordinated Indebtedness of any Loan Party.
(u) No Excess Cash.
(i) Maintain, or permit any of its Subsidiaries to maintain, an average monthly balance of cash and Cash Equivalents in all of the checking, savings and other accounts of the Loan Parties and their Subsidiaries in excess of $20,000,000 in the aggregate at the close of business on the last Business Day of any month; or
(ii) Maintain, or permit any of its Subsidiaries to maintain, an average monthly balance of cash and Cash Equivalents in all of the checking, savings and other accounts of the Foreign Loan Parties and the Subsidiaries of the Ultimate Parent that are not Loan Parties in excess of $3,000,000 in the aggregate at the close of business on the last Business Day of any month.
Section 7.03 Financial Covenants. So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid (other than Contingent Indemnity Obligations) or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing:
(a) [Reserved].
(b) Leverage Ratio. Permit the Leverage Ratio of the Ultimate Parent and its Subsidiaries for any period of 4 consecutive fiscal quarters of the Ultimate Parent and its Subsidiaries for which the last quarter ends on a date set forth below to be greater than the ratio set forth opposite such date:
Fiscal Quarter End |
Leverage Ratio |
|
|
March 31, 2021 |
8.00 to 1.00 |
|
|
June 30, 2021 |
5.00 to 1.00 |
|
|
September 30, 2021 |
4.00 to 1.00 |
|
|
December 31, 2021 |
3.75 to 1.00 |
|
|
March 31, 2022 |
3.50 to 1.00 |
|
|
June 30, 2022 |
3.25 to 1.00 |
|
|
September 30, 2022 |
3.00 to 1.00 |
|
|
December 31, 2022 |
2.75 to 1.00 |
|
|
March 31, 2023 |
2.75 to 1.00 |
|
|
June 30, 2023 |
2.75 to 1.00 |
|
|
September 30, 2023 and each fiscal quarter of the Parent ending thereafter |
2.50 to 1.00 |
(c) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio of the Ultimate Parent and its Subsidiaries for any period of 4 consecutive fiscal quarters of the Ultimate Parent and its Subsidiaries for which the last quarter ends on a date set forth below to be less than the ratio set forth opposite such date:
Fiscal Quarter End |
Fixed Charge Coverage Ratio |
|
|
March 31, 2021 |
1.375 to 1.00 |
|
|
June 30, 2021 |
1.375 to 1.00 |
|
|
September 30, 2021 |
1.375 to 1.00 |
|
|
December 31, 2021 |
1.375 to 1.00 |
|
|
March 31, 2022 |
1.375 to 1.00 |
|
|
June 30, 2022 and each fiscal quarter of the Parent ending thereafter |
1.30 to 1.00 |
ARTICLE VIII
CASH MANAGEMENT ARRANGEMENTS
AND OTHER COLLATERAL MATTERS
Section 8.01 Cash Management Arrangements.
(a) The Loan Parties shall (i) establish and maintain cash management services of a type and on terms reasonably satisfactory to the Agents at one or more of the banks set forth on Schedule 8.01 hereto (each a “Cash Management Bank”) and (ii) except as otherwise provided under Section 8.01(b), deposit or cause to be deposited promptly, and in any event no later than the next Business Day after the date of receipt thereof, all proceeds in respect of any Collateral, all Collections (of a nature susceptible to a deposit in a bank account) and all other amounts received by any Loan Party (including payments made by Account Debtors directly to any Loan Party) into a Cash Management Account.
(b) On or prior to the Effective Date, the Loan Parties shall, with respect to each Cash Management Account (other than Excluded Accounts), deliver to the Collateral Agent a Control Agreement with respect to such Cash Management Account. The Loan Parties shall not maintain, and shall not permit any of their Subsidiaries to maintain, cash, Cash Equivalents or other amounts in any deposit account or securities account, unless the Collateral Agent shall have received a Control Agreement in respect of each such Cash Management Account (other than Excluded Accounts).
(c) Upon the terms and subject to the conditions set forth in a Control Agreement with respect to a Cash Management Account, all amounts received in such Cash Management Account shall at the Administrative Agent’s direction be wired each Business Day into the Administrative Agent’s Account, except that, so long as no Event of Default has occurred and is continuing, the Administrative Agent will not direct the Cash Management Bank to transfer funds in such Cash Management Account to the Administrative Agent’s Account.
(d) So long as no Default or Event of Default has occurred and is continuing, the Borrowers may amend Schedule 8.01 to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to the Collateral Agent and the Collateral Agent shall have consented in writing in advance to the opening of such Cash Management Account with the prospective Cash Management Bank, and (ii) prior to the time of the opening of such Cash Management Account, each Loan Party and such prospective Cash Management Bank shall have executed and delivered to the Collateral Agent a Control Agreement. Each Loan Party shall close any of its Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from the Collateral Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in the Collateral Agent’s reasonable judgment, or that the operating performance, funds transfer, or availability procedures or performance of such Cash Management Bank with respect to Cash Management Accounts or the Collateral Agent’s liability under any Control Agreement with such Cash Management Bank is no longer acceptable in the Collateral Agent’s reasonable judgment.
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01 Events of Default. Each of the following events shall constitute an event of default (each, an “Event of Default”):
(a) any Borrower shall fail to pay, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), (i) any interest on any Loan, any Collateral Agent Advance, or any fee, indemnity or other amount payable under this Agreement (other than any portion thereof constituting principal of the Loans) or any other Loan Document, and such failure continues for a period of 3 Business Days or (ii) all or any portion of the principal of the Loans;
(b) any representation or warranty made or deemed made by or on behalf of any Loan Party or by any officer of the foregoing under or in connection with any Loan Document or under or in connection with any certificate or other writing delivered to any Secured Party pursuant to any Loan Document shall have been incorrect in any material respect (or in any respect if such representation or warranty is qualified or modified as to materiality or “Material Adverse Effect” in the text thereof) when made or deemed made;
(c) any Loan Party shall fail to perform or comply with any covenant or agreement contained in Sections 7.01(a),Section 7.01(c)(i), 7.01(d), 7.01(f), 7.01(h), 7.01(k), 7.01(m), 7.01(o), 7.02 or 7.03, or Article VIII, or any Loan Party shall fail to perform or comply with any covenant or agreement contained in any Security Agreement to which it is a party or any Mortgage to which it is a party;
(d) any Loan Party shall fail to perform or comply with any other term, covenant or agreement contained in any Loan Document to be performed or observed by it and, except as set forth in subsections (a), (b) and (c) of this Section 9.01, such failure, if capable of being remedied, shall remain unremedied for 20 days after the earlier of the date a senior officer of any Loan Party has knowledge of such failure and the date written notice of such default shall have been given by any Agent to such Loan Party;
(e) any Loan Party or any of its Subsidiaries shall fail to pay when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) any principal, interest or other amount payable in respect of Indebtedness (excluding Indebtedness evidenced by this Agreement) having an aggregate amount outstanding in excess of $2,500,000, and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case, prior to the stated maturity thereof;
(f) any Loan Party or any of its Subsidiaries (i) shall institute any proceeding or voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, (ii) shall be generally not paying its debts as such debts become due or shall admit in writing its inability to pay its debts generally, (iii) shall make a general assignment for the benefit of creditors or (iv) shall take any action to authorize or effect any of the actions set forth above in this subsection (f);
(g) any proceeding shall be instituted against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, and either such proceeding shall remain undismissed or unstayed for a period of 45 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against any such Person or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur;
(h) any material provision of any Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against any Loan Party intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by any Loan Party or any Governmental Authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or any Loan Party shall deny in writing that it has any liability or obligation purported to be created under any Loan Document;
(i) any Security Agreement, any Mortgage or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Collateral Agent for the benefit of the Agents and the Lenders on any Collateral purported to be covered thereby;
(j) one or more judgments, orders or awards (or any settlement of any litigation or other proceeding that, if breached, could result in a judgment, order or award) for the payment of money exceeding $2,500,000 in the aggregate (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has been notified and has not denied coverage) shall be rendered against any Loan Party or any of its Subsidiaries and remain unsatisfied and (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order, award or settlement or (ii) there shall be a period of 10 consecutive days after entry thereof during which (A) a stay of enforcement thereof is not be in effect or (B) the same is not vacated, discharged, stayed or bonded pending appeal;
(k) any Borrower (individually) is, or the Loan Parties (taken as a whole) are, enjoined, restrained or in any way prevented by the order of any court or any Governmental Authority from conducting, or otherwise ceases to conduct for any reason whatsoever, all or any material part of its or their business for more than 15 consecutive days, other than any order or action of a Governmental Authority as a result of the Covid-19 pandemic which affects similarly situated businesses in the Borrower’s industry or geography generally;
(l) any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than 15 consecutive days, the cessation or substantial curtailment of revenue producing activities of any Borrower (individually) or the Loan Parties (taken as a whole);
(m) the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any Loan Party or any of its Subsidiaries, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect;
(n) the indictment of any Loan Party under any criminal statute, or commencement of criminal or civil proceedings against any Loan Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of any Loan Party;
(o) (i) there shall occur one or more ERISA Events that individually or in the aggregate results in, or could reasonably be expected to result in, liability of any Loan Party or any of its ERISA Affiliates in excess of $2,500,000, or (ii) there exists any fact or circumstance that could reasonably be expected to result in the imposition of a Lien pursuant to Section 430(k) of the Internal Revenue Code or Section 4068 of ERISA upon the property or rights to property of any Loan Party or any of its ERISA Affiliates;
(p) (i) there shall occur and be continuing any “Event of Default” (or any comparable term) under, and as defined in the documents evidencing or governing any Subordinated Indebtedness, (ii) any of the Obligations for any reason shall cease to be “Senior Indebtedness” or “Designated Senior Indebtedness” (or any comparable terms) under, and as defined in the documents evidencing or governing any Subordinated Indebtedness, (iii) any Indebtedness other than the Obligations shall constitute “Designated Senior Indebtedness” (or any comparable term) under, and as defined in, the documents evidencing or governing any Subordinated Indebtedness, (iv) any holder of Subordinated Indebtedness shall fail to perform or comply with any of the subordination provisions of the documents evidencing or governing such Subordinated Indebtedness, or (v) the subordination provisions of the documents evidencing or governing any Subordinated Indebtedness shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Subordinated Indebtedness;
(q) (i) any Loan Party or any of its Subsidiaries shall breach or default under any material term, condition, provision, covenant, representation or warranty contained in any Specified Material Contract and such breach or default shall continue unremedied for a period of cure provided within such Specified Material Contract without being cured, (ii) any party to any Specified Material Contract (other than any Loan Party or any of its Subsidiaries) shall breach or default under any material term, condition, provision, covenant, representation or warranty contained therein and such breach or default shall continue unremedied for a period of 20 days without being cured, or (iii) (A) any party to any Specified Material Contract shall have terminated such Specified Material Contract and the Loan Party or Subsidiary that is a party to such Specified Material Contract has not replaced such Specified Material Contract with a substitute contract having terms that are substantially similar to the terminated Specified Material Contract within 60 days of its termination; or (B) any Specified Material Contract shall have become invalid or illegal or otherwise ceased to be in full force and effect; or
(r) a Change of Control shall have occurred;
then, and in any such event, the Collateral Agent may, and shall at the request of the Required Lenders, by notice to the Administrative Borrower, (i) terminate or reduce all Commitments, whereupon all Commitments shall immediately be so terminated or reduced, (ii) declare all or any portion of the Loans then outstanding to be accelerated and due and payable, whereupon all or such portion of the aggregate principal of all Loans, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, together with the payment of the Applicable Premium with respect to the Commitments so terminated and the Loans so repaid, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and (iii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents; provided, however, that upon the occurrence of any Event of Default described in subsection (f) or (g) of this Section 9.01 with respect to any Loan Party, without any notice to any Loan Party or any other Person or any act by any Agent or any Lender, all Commitments shall automatically terminate and all Loans then outstanding, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement and the other Loan Documents, including, without limitation, the Applicable Premium, shall be accelerated and become due and payable automatically and immediately, without presentment, demand, protest or notice of any kind, all of which are expressly waived by each Loan Party.
Section 9.02 Cure Right. In the event that the Borrowers fail to comply with the requirements of any financial covenant set forth in Section 7.03, until the expiration of the 10th day after the date on which financial statements are required to be delivered with respect to the applicable fiscal quarter hereunder, the Ultimate Parent shall have the right to issue Permitted Cure Equity for cash or otherwise receive cash contributions to the capital of the Ultimate Parent, and, in each case, to contribute any such cash to the capital of the Borrowers, and apply the amount of the proceeds thereof to increase Consolidated EBITDA of the Ultimate Parent and its Subsidiaries with respect to such applicable quarter (the “Cure Right”); provided that (a) such proceeds are actually received by the Borrowers no later than 10 days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder, (b) such proceeds do not exceed the aggregate amount necessary to cure (by addition to Consolidated EBITDA) such Event of Default under Section 7.03 for such period, (c) the Cure Right shall not be exercised more than four times during the term of the Loans, (d) the Cure Right shall not be exercised in consecutive fiscal quarters, (e) [reserved], (f) there shall be no pro forma reduction in Indebtedness with the proceeds of the Cure Right for purposes of determining compliance with the financial covenants in Section 7.03 or for determining any pricing, financial covenant based conditions or baskets with respect to the covenants contained in this Agreement, in each case in the fiscal quarter in which the Cure Right is used or subsequent periods that include such fiscal quarter, and (g) such proceeds shall be applied to prepay the Loans in accordance with Section 2.05(c)(v). If, after giving effect to the foregoing pro forma adjustment (but not, for the avoidance of doubt, giving pro forma adjustment to any repayment of Indebtedness in connection therewith), the Borrowers are in compliance with the financial covenants set forth in Section 7.03, the Borrowers shall be deemed to have satisfied the requirements of such Section as of the relevant date of determination with the same effect as though there had been no failure to comply on such date, and the applicable breach or default of such Section 7.03 that had occurred shall be deemed cured for purposes of this Agreement. The parties hereby acknowledge that this Section may not be relied on for purposes of calculating any financial ratios other than as applicable to Section 7.03 and shall not result in any adjustment to any amounts other than the amount of the Consolidated EBITDA referred to in the immediately preceding sentence.
ARTICLE X
AGENTS
Section 10.01 Appointment. Each Lender (and each subsequent maker of any Loan by its making thereof) hereby irrevocably appoints, authorizes and empowers the Administrative Agent and the Collateral Agent to perform the duties of each such Agent as set forth in this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto, including: (i) to receive on behalf of each Lender any payment of principal of or interest on the Loans outstanding hereunder and all other amounts accrued hereunder for the account of the Lenders and paid to such Agent, and, subject to Section 2.02, to distribute promptly to each Lender its Pro Rata Share of all payments so received; (ii) to distribute to each Lender copies of all material notices and agreements received by such Agent and not required to be delivered to each Lender pursuant to the terms of this Agreement, provided that the Agents shall not have any liability to the Lenders for any Agent’s inadvertent failure to distribute any such notices or agreements to the Lenders; (iii) to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Loans, and related matters and to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Collateral and related matters; (iv) to execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to this Agreement or any other Loan Document; (v) to make the Loans and Collateral Agent Advances, for such Agent or on behalf of the applicable Lenders as provided in this Agreement or any other Loan Document; (vi) to perform, exercise, and enforce any and all other rights and remedies of the Lenders with respect to the Loan Parties, the Obligations, or otherwise related to any of same to the extent reasonably incidental to the exercise by such Agent of the rights and remedies specifically authorized to be exercised by such Agent by the terms of this Agreement or any other Loan Document; (vii) to incur and pay such fees necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to this Agreement or any other Loan Document; (viii) subject to Section 10.03, to take such action as such Agent deems appropriate on its behalf to administer the Loans and the Loan Documents and to exercise such other powers delegated to such Agent by the terms hereof or the other Loan Documents (including, without limitation, the power to give or to refuse to give notices, waivers, consents, approvals and instructions and the power to make or to refuse to make determinations and calculations); and (ix) to act with respect to all Collateral under the Loan Documents, including for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Loans), the Agents shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), and such instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents) shall be binding upon all Lenders and all makers of Loans; provided, however, the Agents shall not be required to take any action which, in the reasonable opinion of any Agent, exposes such Agent to liability or which is contrary to this Agreement or any other Loan Document or applicable law.
Section 10.02 Nature of Duties; Delegation.
(a) The Agents shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. The duties of the Agents shall be mechanical and administrative in nature. The Agents shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. Nothing in this Agreement or any other Loan Document, express or implied, is intended to or shall be construed to impose upon the Agents any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein. Each Lender shall make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the making and the continuance of the Loans hereunder and shall make its own appraisal of the creditworthiness of the Loan Parties and the value of the Collateral without reliance upon the Administrative Agent or any other Lender or any of their Related Parties, and neither the Agents nor any of their Related Parties shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into their possession before the initial Loan hereunder or at any time or times thereafter, provided that upon the reasonable request of a Lender, each Agent shall provide to such Lender any documents or reports delivered to such Agent by the Loan Parties pursuant to the terms of this Agreement or any other Loan Document. If any Agent seeks the consent or approval of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents) to the taking or refraining from taking any action hereunder, such Agent shall send notice thereof to each Lender. Each Agent shall promptly notify each Lender any time that the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents) have instructed such Agent to act or refrain from acting pursuant hereto.
(b) Each Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any of its Related Parties or any other trustee, co-agent or other Person (including any Lender). Any such Related Party, trustee, co-agent or other Person shall benefit from this Article X to the extent provided by the applicable Agent.
Section 10.03 Rights, Exculpation, Etc. The Agents and their Related Parties shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Without limiting the generality of the foregoing, the Agents (i) may treat the payee of any Loan as the owner thereof until the Collateral Agent receives written notice of the assignment or transfer thereof, pursuant to Section 12.07, signed by such payee and in form satisfactory to the Collateral Agent; (ii) may consult with legal counsel (including, without limitation, counsel to any Agent or counsel to the Loan Parties), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel or experts; (iii) make no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding the existence, value or collectibility of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agents be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. The Agents shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 4.03, and if any such apportionment or distribution is subsequently determined to have been made in error, and the sole recourse of any Lender to whom payment was due but not made shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled. The Agents may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agents are permitted or required to take or to grant, and if such instructions are promptly requested, the Agents shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until they shall have received such instructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents).
Section 10.04 Reliance. Each Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
Section 10.05 Indemnification. To the extent that any Agent or any Related Party of the foregoing is not reimbursed and indemnified by any Loan Party, and whether or not such Agent has made demand on any Loan Party for the same, the Lenders will, within five days of written demand by such Agent, reimburse such Agent and such Related Parties for and indemnify such Agent and such Related Parties from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, client charges and expenses of counsel or any other advisor to such Agent and such Related Parties), advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Agent and the Related Parties in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by such Agent and such Related Parties under this Agreement or any of the other Loan Documents, in proportion to each Lender’s Pro Rata Share, including, without limitation, advances and disbursements made pursuant to Section 10.08; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements for which there has been a final non-appealable judicial determination that such liability resulted from such Agent’s or such Related Party’s gross negligence or willful misconduct. The obligations of the Lenders under this Section 10.05 shall survive the payment in full of the Loans and the termination of this Agreement.
Section 10.06 Agents Individually. With respect to its Pro Rata Share of the Total Commitment hereunder and the Loans made by it, each Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or maker of a Loan. The terms “Lenders” or “Required Lenders” or any similar terms shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity as a Lender or one of the Required Lenders. Each Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Borrower as if it were not acting as an Agent pursuant hereto without any duty to account to the other Lenders.
Section 10.07 Successor Agent.
(a) Any Agent may at any time give at least 30 days prior written notice of its resignation to the Lenders and the Administrative Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the written consent of Administrative Borrower, to appoint a successor Agent; provided, however, that the written consent of the Administrative Borrower (i) shall not be unreasonably withheld, conditioned or delayed, (ii) shall not be required upon the occurrence and during the continuance of an Event of Default and (iii) shall be deemed given if not denied in writing by the Administrative Borrower within 5 Business Days of the date of the written request therefor. If no such successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Agent. Whether or not a successor Agent has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) With effect from the Resignation Effective Date, (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) all payments, communications and determinations provided to be made by, to or through such retiring Agent shall instead be made by or to each Lender directly, until such time, if any, as a successor Agent shall have been appointed as provided for above. Upon the acceptance of a successor’s Agent’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article, Sections 12.04 and 12.15 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by it while the retiring Agent was acting as Agent.
Section 10.08 Collateral Matters.
(a) The Collateral Agent may from time to time make such disbursements and advances (“Collateral Agent Advances”) which the Collateral Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by the Borrowers of the Loans and other Obligations or to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 12.04. The Collateral Agent Advances shall be repayable on demand and be secured by the Collateral and shall bear interest at a rate per annum equal to the rate then applicable to Revolving Loans that are Reference Rate Loans. The Collateral Agent Advances shall constitute Obligations hereunder which may be charged to the Loan Account in accordance with Section 4.01. The Collateral Agent shall notify each Lender and the Administrative Borrower in writing of each such Collateral Agent Advance, which notice shall include a description of the purpose of such Collateral Agent Advance. Without limitation to its obligations pursuant to Section 10.05, each Lender agrees that it shall make available to the Collateral Agent, upon the Collateral Agent’s demand, in Dollars in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each such Collateral Agent Advance. If such funds are not made available to the Collateral Agent by such Lender, the Collateral Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Collateral Agent, at the Federal Funds Rate for three Business Days and thereafter at the Reference Rate.
(b) The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral upon termination of the Total Commitment and payment and satisfaction of all Loans and all other Obligations (other than Contingent Indemnity Obligations) in accordance with the terms hereof; or constituting property being sold or disposed of in the ordinary course of any Loan Party’s business or otherwise in compliance with the terms of this Agreement and the other Loan Documents; or constituting property in which the Loan Parties owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Lenders in accordance with Section 12.02. Upon request by the Collateral Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Section 10.08(b).
(c) Without in any manner limiting the Collateral Agent’s authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon request by the Collateral Agent, the authority to release Collateral conferred upon the Collateral Agent under Section 10.08(b). Upon receipt by the Collateral Agent of confirmation from the Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by any Loan Party, the Collateral Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Collateral Agent for the benefit of the Agents and the Lenders upon such Collateral; provided, however, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in the Collateral Agent’s opinion, would expose the Collateral Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by any Loan Party.
(d) Anything contained in any of the Loan Documents to the contrary notwithstanding, the Loan Parties, each Agent and each Lender hereby agree that no Lender shall have any right individually to realize upon any of the Collateral under any Loan Document or to enforce any Guaranty, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Collateral Agent for the benefit of the Lenders in accordance with the terms thereof.
(e) The Agents and the Lenders hereby irrevocably authorize the Collateral Agent, as agent for and representative of the Agents and the Lenders (but not any other Agent or any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing), to credit bid all or any portion of the Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (i) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Section 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (ii) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Collateral Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Obligations owed to the Agents and the Lenders shall be entitled to be, and shall be, credit bid by the Collateral Agent (but not any other Agent or any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid (A) the Collateral Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (B) each of the Agents’ and the Lenders’ ratable interests in the Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (C) the Collateral Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Collateral Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 12.02), (D) the Collateral Agent, on behalf of such acquisition vehicle or vehicles, shall be authorized to issue to each of the Agents and the Lenders, ratably on account of the relevant Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Agent, any Lender or any acquisition vehicle to take any further action, and (E) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of Obligations credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Agents and the Lenders pro rata with their original interest in such Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Agent, any Lender or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Obligations of each Agent and each Lender are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (B) above, each Agent and each Lender shall execute such documents and provide such information regarding such Person (and/or any designee of such Person that will receive interests in or debt instruments issued by such acquisition vehicle) as the Collateral Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
(f) The Collateral Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by the Loan Parties or is cared for, protected or insured or has been encumbered or that the Lien granted to the Collateral Agent pursuant to this Agreement or any other Loan Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 10.08 or in any other Loan Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein.
Section 10.09 Agency for Perfection. Each Agent and each Lender hereby appoints each other Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code, can be perfected only by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and each Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agents and the Lenders as secured party. Should the Administrative Agent or any Lender obtain possession or control of any such Collateral, the Administrative Agent or such Lender shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request therefor shall deliver such Collateral to the Collateral Agent or in accordance with the Collateral Agent’s instructions. In addition, the Collateral Agent shall also have the power and authority hereunder to appoint such other sub-agents as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the Collateral and under the Loan Documents. Each Loan Party by its execution and delivery of this Agreement hereby consents to the foregoing.
Section 10.10 No Reliance on any Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on any Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other requirements imposed by the USA PATRIOT Act or the regulations issued thereunder, including the regulations set forth in 31 C.F.R. §§ 1010.100(yy), (iii), 1020.100, and 1020.220 (formerly, 31 C.F.R. § 103.121), as hereafter amended or replaced (“ CIP Regulations”), or any other Anti-Money Laundering Laws, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any recordkeeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or other regulations issued under the USA PATRIOT Act. Each Lender, Affiliate, participant or assignee subject to Section 326 of the USA PATRIOT Act will perform the measures necessary to satisfy its own responsibilities under the CIP Regulations.
Section 10.11 No Third-Party Beneficiaries. The provisions of this Article are solely for the benefit of the Secured Parties, and no Loan Party shall have rights as a third-party beneficiary of any of such provisions.
Section 10.12 No Fiduciary Relationship. It is understood and agreed that the use of the term “agent” herein or in any other Loan Document (or any other similar term) with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 10.13 Reports; Confidentiality; Disclaimers. By becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that each Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report with respect to the Ultimate Parent or any of its Subsidiaries (each, a “Report”) prepared by or at the request of such Agent, and each Agent shall so furnish each Lender with each such Report;
(b) expressly agrees and acknowledges that the Agents (i) do not make any representation or warranty as to the accuracy of any Reports, and (ii) shall not be liable for any information contained in any Reports;
(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that any Agent or other party performing any audit or examination will inspect only specific information regarding the Ultimate Parent and its Subsidiaries and will rely significantly upon the Ultimate Parent’s and its Subsidiaries’ books and records, as well as on representations of their personnel;
(d) agrees to keep all Reports and other material, non-public information regarding the Ultimate Parent and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 12.19; and
(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold any Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of the Borrowers, and (ii) to pay and protect, and indemnify, defend and hold any Agent and any other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by any such Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.
Section 10.14 Collateral Custodian. Upon the occurrence and during the continuance of any Default or Event of Default, the Collateral Agent or its designee may at any time and from time to time employ and maintain on the premises of any Loan Party a custodian selected by the Collateral Agent or its designee who shall have full authority to do all acts necessary to protect the Agents’ and the Lenders’ interests. Each Loan Party hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever the Collateral Agent or its designee may reasonably request to preserve the Collateral. All costs and expenses incurred by the Collateral Agent or its designee by reason of the employment of the custodian shall be the responsibility of the Borrowers and charged to the Loan Account.
Section 10.15 [Reserved].
Section 10.16 [Reserved].
Section 10.17 Collateral Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Collateral Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether any Agent shall have made any demand on the Borrowers) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Secured Parties (including any claim for the compensation, expenses, disbursements and advances of the Secured Parties and their respective agents and counsel and all other amounts due the Secured Parties hereunder and under the other Loan Documents) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Secured Party to make such payments to the Collateral Agent and, in the event that the Collateral Agent shall consent to the making of such payments directly to the Secured Parties, to pay to the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Collateral Agent and its agents and counsel, and any other amounts due the Collateral Agent hereunder and under the other Loan Documents.
Section 10.18 Erroneous Distribution. If all or any part of any payment or other distribution by or on behalf of the Administrative Agent to any Borrower, Lender or other Person is determined by the Administrative Agent in its sole discretion to have been made in error as determined by the Administrative Agent (any such payment or other distribution, an “Erroneous Distribution”), then the relevant Borrower, Lender or other Person shall forthwith on written demand (accompanied by a reasonably detailed calculation of such Erroneous Distribution) repay to the Administrative Agent the amount of such Erroneous Distribution received by such Person. Any determination by the Administrative Agent, in its sole discretion, that all or a portion of any payment or other distribution to a Borrower, Lender or other Person was an Erroneous Distribution shall be conclusive absent manifest error. Each Borrower, Lender and other potential recipient of an Erroneous Distribution hereunder waives any claim of discharge for value and any other claim of entitlement to, or in respect of, any Erroneous Distribution.
ARTICLE XI
GUARANTY
Section 11.01 Guaranty. Each Guarantor hereby jointly and severally and unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Borrowers now or hereafter existing under any Loan Document, whether for principal, interest (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of any Borrower, whether or not a claim for post-filing interest is allowed in such Insolvency Proceeding) fees, commissions, expense reimbursements, indemnifications or otherwise (such obligations, to the extent not paid by the Borrowers, being the “Guaranteed Obligations”), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Secured Parties in enforcing any rights under the guaranty set forth in this Article XI. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrowers to the Secured Parties under any Loan Document but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Borrower. Notwithstanding any of the foregoing, Guaranteed Obligations shall not include any Excluded Swap Obligations. In no event shall the obligation of any Guarantor hereunder exceed the maximum amount such Guarantor could guarantee under any Debtor Relief Law.
Section 11.02 Guaranty Absolute. Each Guarantor jointly and severally guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Secured Parties with respect thereto. Each Guarantor agrees that this Article XI constitutes a guaranty of payment when due and not of collection and waives any right to require that any resort be made by any Agent or any Lender to any Collateral. The obligations of each Guarantor under this Article XI are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce such obligations, irrespective of whether any action is brought against any Loan Party or whether any Loan Party is joined in any such action or actions. The liability of each Guarantor under this Article XI shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) the existence of any claim, set-off, defense or other right that any Guarantor may have at any time against any Person, including, without limitation, any Secured Party;
(e) any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Loan Party; or
(f) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Secured Parties that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.
This Article XI shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by Secured Parties or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as though such payment had not been made.
Section 11.03 Waiver. Each Guarantor hereby waives (i) promptness and diligence, (ii) notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Article XI and any requirement that the Secured Parties exhaust any right or take any action against any Loan Party or any other Person or any Collateral, (iii) any right to compel or direct any Secured Party to seek payment or recovery of any amounts owed under this Article XI from any one particular fund or source or to exhaust any right or take any action against any other Loan Party, any other Person or any Collateral, (iv) any requirement that any Secured Party protect, secure, perfect or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against any Loan Party, any other Person or any Collateral, and (v) any other defense available to any Guarantor. Each Guarantor agrees that the Secured Parties shall have no obligation to marshal any assets in favor of any Guarantor or against, or in payment of, any or all of the Obligations. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 11.03 is knowingly made in contemplation of such benefits. Each Guarantor hereby waives any right to revoke this Article XI, and acknowledges that this Article XI is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
Section 11.04 Continuing Guaranty; Assignments. This Article XI is a continuing guaranty and shall (a) remain in full force and effect until the later of the cash payment in full of the Guaranteed Obligations (other than Contingent Indemnity Obligations) and all other amounts payable under this Article XI and the Final Maturity Date, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Secured Parties and their successors, pledgees, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, its Loans owing to it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted such Lender herein or otherwise, in each case as provided in Section 12.07.
Section 11.05 Subrogation. No Guarantor will exercise any rights that it may now or hereafter acquire against any Loan Party or any other guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Article XI, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Secured Parties against any Loan Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Loan Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations (other than Contingent Indemnity Obligations) and all other amounts payable under this Article XI shall have been paid in full in cash and the Final Maturity Date shall have occurred. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations (other than Contingent Indemnity Obligations) and all other amounts payable under this Article XI and the Final Maturity Date, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Secured Parties to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Article XI, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Article XI thereafter arising. If (i) any Guarantor shall make payment to the Secured Parties of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Article XI shall be paid in full in cash and (iii) the Final Maturity Date shall have occurred, the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.
Section 11.06 Contribution. All Guarantors desire to allocate among themselves, in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Guarantor shall be entitled to a contribution from each of the other Guarantors in an amount sufficient to cause each Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to any Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution Amount” means, with respect to any Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Guarantor under this Guaranty that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Guarantor for purposes of this Section 11.06, any assets or liabilities of such Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Guarantor. “Aggregate Payments” means, with respect to any Guarantor as of any date of determination, an amount equal to (A) the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 11.06), minus (B) the aggregate amount of all payments received on or before such date by such Guarantor from the other Guarantors as contributions under this Section 11.06. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Guarantor. The allocation among Guarantors of their obligations as set forth in this Section 11.06 shall not be construed in any way to limit the liability of any Guarantor hereunder. Each Guarantor is a third-party beneficiary to the contribution agreement set forth in this Section 11.06.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices, Etc.
(a) Notices Generally. All notices and other communications provided for hereunder shall be in writing and shall be delivered by hand, sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, or telecopier. In the case of notices or other communications to any Loan Party, Administrative Agent or the Collateral Agent, as the case may be, they shall be sent to the respective address set forth below (or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 12.01):
If to any Loan Party, to it at the following address:
Obagi Cosmeceuticals LLC
3760 Kilroy Airport Way, Suite 500
Long Beach, Los Angeles County, CA 90806
Attention: | Jaime B. Castle; Sue L. Collins |
Telephone: | 562.276.9034; 562.276.9466 |
E-mail: | jaimec@obagi.com; suec@obagi.com |
with a copy to:
Morgan Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: | Michael Pedrick |
Telephone: | 215.963.4808 |
E-mail: | michael.pedrick@morganlewis.com |
If to any Agent, to it at the following address:
TCW Asset Management Company LLC
1251 Avenue of the Americas, Suite 4700
New York, New York 10020
Attention: | Ryan Carroll |
Telephone: | 212.771.4271 |
E-mail: | Ryan.Carroll@tcw.com; |
tcw@alterdomus.com
with a copy to:
Proskauer Rose LLP
11 Times Square
New York, New York 10036
Attention: | Michael M. Mezzacappa |
Telephone: | 212.969.3000 |
Telecopier: | 212.969.2900 |
E-mail: | mmezzacappa@proskauer.com |
All notices or other communications sent in accordance with this Section 12.01, shall be deemed received on the earlier of the date of actual receipt or three Business Days after the deposit thereof in the mail; provided that (i) notices sent by overnight courier service shall be deemed to have been given when received and (ii) notices by facsimile or email shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient), provided, further, that notices to any Agent pursuant to Article II shall not be effective until received by such Agent.
(b) Electronic Communications.
(i) Each Agent and the Administrative Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agents, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Agents that it is incapable of receiving notices under such Article by electronic communication.
(ii) Unless the Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (A), of notification that such notice or communication is available and identifying the website address therefor; provided that for both clauses (A) and (B) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
Section 12.02 Amendments, Etc.
(a) No amendment or waiver of any provision of this Agreement or any other Loan Document (excluding the Fee Letter), and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (x) in the case of an amendment, consent or waiver to cure any ambiguity, omission, defect or inconsistency or granting a new Lien for the benefit of the Agents and the Lenders or extending an existing Lien over additional property, by the Agents and the Borrowers (or by the Administrative Borrower on behalf of the Borrowers), (y) in the case of any other waiver or consent, by the Required Lenders (or by the Collateral Agent with the consent of the Required Lenders) and (z) in the case of any other amendment, by the Required Lenders (or by the Collateral Agent with the consent of the Required Lenders) and the Borrowers (or by the Administrative Borrower on behalf of the Borrowers), with a copy provided to the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall:
(i) increase the Commitment of any Lender, reduce the principal of, or interest on, the Loans payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend any scheduled date fixed for any payment of principal of, or interest or fees on, the Loans payable to any Lender, in each case, without the written consent of such Lender;
(ii) increase the Total Commitment without the written consent of each Lender;
(iii) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that is required for the Lenders or any of them to take any action hereunder without the written consent of each Lender;
(iv) amend the definition of “Required Lenders” or “Pro Rata Share” without the written consent of each Lender;
(v) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Collateral Agent for the benefit of the Agents and the Lenders, subordinate the Obligations in right of payment, or release any Borrower or any Guarantor (except in connection with a Disposition of the Equity Interests thereof permitted by Section 7.02(c)(ii)), in each case, without the written consent of each Lender; or
(vi) amend, modify or waive Section 4.02, Section 4.03 or this Section 12.02 without the written consent of each Lender.
(b) Notwithstanding anything to the contrary in Section 12.02(a):
(i) no amendment, waiver or consent shall, unless in writing and signed by an Agent, affect the rights or duties of such Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents;
(ii) any amendment, waiver or consent to any provision of this Agreement (including Sections 4.01 and 4.02) that permits any Loan Party, any Permitted Holder (or other Equity Holder) or any of their respective Affiliates to purchase Loans on a non-pro rata basis, become an eligible assignee pursuant to Section 12.07 and/or make offers to make optional prepayments on a non-pro rata basis shall require the prior written consent of the Required Lenders rather than the prior written consent of each Lender directly affected thereby;
(iii) any Control Agreement, Guaranty, Mortgage, Security Agreement, collateral access agreement, landlord waiver, or other agreement or document purporting to create or perfect a security interest in any of the Collateral (a “Collateral Document”) may be amended, waived or otherwise modified with the consent of the applicable Agent and the applicable Loan Party without the need to obtain the consent of any Lender or any other Person if such amendment, modification, supplement or waiver is delivered in order (A) to comply with local Requirements of Law (including foreign law or regulatory requirements) or advice of local counsel, (B) to cure any ambiguity, inconsistency, omission, mistake or defect, or (C) to cause such Collateral Document to be consistent with this Agreement and the other Loan Documents, and if the Administrative Agent and the Administrative Borrower shall have jointly identified an ambiguity, inconsistency, omission, mistake or defect, in each case, in any provision of any Loan Document (other than a Collateral Document), then the Administrative Agent and the Administrative Borrower shall be permitted to amend such provision; any amendment, waiver or modification pursuant to this paragraph shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders within five Business Days following receipt of notice thereof;
(iv) no consent of any Loan Party shall be required to change any order of priority set forth in Sections 2.05(d) and Section 4.03; and
(v) the Administrative Agent and the Administrative Borrower may enter into an amendment to this Agreement pursuant to Section 2.07(g) to reflect an alternate service or index rate and such other related changes to this Agreement as may be applicable; and
(vi) no Defaulting Lender, Loan Party, Permitted Holder (or other Equity Holder) or any of their respective Affiliates that is a Lender shall have any right to approve or disapprove any amendment, waiver or consent under the Loan Documents and any Loans held by such Person for purposes hereof shall be automatically deemed to be voted pro rata according to the Loans of all other Lenders in the aggregate (other than such Defaulting Lender, Loan Party, Permitted Holder (or other Equity Holder) or Affiliate).
(c) If any action to be taken by the Lenders hereunder requires the consent, authorization, or agreement of all of the Lenders or any Lender affected thereby, and a Lender (the “Holdout Lender”) fails to give its consent, authorization, or agreement, then the Collateral Agent, upon at least five Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 12.07. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make its Pro Rata Share of Loans.
Section 12.03 No Waiver; Remedies, Etc. No failure on the part of any Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Agents and the Lenders provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Agents and the Lenders under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agents and the Lenders to exercise any of their rights under any other Loan Document against such party or against any other Person.
Section 12.04 Expenses; Attorneys’ Fees. The Borrowers will pay on demand, all reasonable costs and expenses incurred by or on behalf of each Agent (and, in the case of clauses (b) through (m) below, each Lender), regardless of whether the transactions contemplated hereby are consummated, including, without limitation, reasonable fees, costs, client charges and expenses of counsel for each Agent (and, in the case of clauses (b) through (m) below, each Lender), accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, the rating of the Loans, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Agreement and the other Loan Documents (including, without limitation, the preparation of any additional Loan Documents pursuant to Section 7.01(b) or the review of any of the agreements, instruments and documents referred to in Section 7.01(f)), (b) any requested amendments, waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (c) the preservation and protection of the Agents’ or any of the Lenders’ rights under this Agreement or the other Loan Documents, (d) the defense of any claim or action asserted or brought against any Agent or any Lender by any Person that arises from or relates to this Agreement, any other Loan Document, the Agents’ or the Lenders’ claims against any Loan Party, or any and all matters in connection therewith, (e) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Agreement or any other Loan Document, (f) the filing of any petition, complaint, answer, motion or other pleading by any Agent or any Lender, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of any Collateral or other security in connection with this Agreement or any other Loan Document, (h) any attempt to enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (i) any attempt to collect from any Loan Party, (j) any Environmental Claim, Environmental Liability or Remedial Action arising from or in connection with the past, present or future operations of, or any property currently, formerly or in the future owned, leased or operated by, any Loan Party, any of its Subsidiaries or any predecessor in interest, (k) any Environmental Lien, (l) the rating of the Loans by one or more rating agencies in connection with any Lender’s Securitization, or (m) the receipt by any Agent or any Lender of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Loan Document: (x) the Borrowers agree to pay all broker fees that may become due in connection with the transactions contemplated by this Agreement and the other Loan Documents, and (y) if the Borrowers fail to perform any covenant or agreement contained herein or in any other Loan Document, any Agent may itself perform or cause performance of such covenant or agreement, and the expenses of such Agent incurred in connection therewith shall be reimbursed on demand by the Borrowers. The obligations of the Borrowers under this Section 12.04 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents.
Section 12.05 Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, any Agent or any Lender may, and is hereby authorized to, at any time and from time to time, without notice to any Loan Party (any such notice being expressly waived by the Loan Parties) and to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Agent or such Lender or any of their respective Affiliates to or for the credit or the account of any Loan Party against any and all obligations of the Loan Parties either now or hereafter existing under any Loan Document, irrespective of whether or not such Agent or such Lender shall have made any demand hereunder or thereunder and although such obligations may be contingent or unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of set-off, (a) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 4.04 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agents and the Lenders, and (b) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of set-off. Each Agent and each Lender agrees to notify such Loan Party promptly after any such set-off and application made by such Agent or such Lender or any of their respective Affiliates provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agents and the Lenders under this Section 12.05 are in addition to the other rights and remedies (including other rights of set-off) which the Agents and the Lenders may have under this Agreement or any other Loan Documents of law or otherwise.
Section 12.06 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 12.07 Assignments and Participations.
(a) This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of each Loan Party and each Agent and each Lender and their respective successors and assigns; provided, however, that none of the Loan Parties may assign or transfer any of its rights hereunder or under the other Loan Documents without the prior written consent of each Lender and any such assignment without the Lenders’ prior written consent shall be null and void.
(b) Subject to the conditions set forth in clause (c) below, each Lender may assign to one or more other lenders or other entities all or a portion of its rights and obligations under this Agreement with respect to:
(i) all or a portion of its Term Loan Commitment and any Term Loan made by it with the written consent of the Collateral Agent and the Administrative Borrower, and
(ii) all or a portion of its Revolving Credit Commitment and the Revolving Loans made by it with the written consent of each Agent and the Administrative Borrower;
provided, however, that (A) the written consent of the Administrative Borrower (1) shall not be unreasonably withheld, conditioned or delayed, (2) shall not be required upon the occurrence and during the continuance of an Event of Default and (3) shall be deemed given if not denied in writing by the Administrative Borrower within 5 Business Days of the date of the written request therefor and (B) no written consent of any Agent or the Administrative Borrower shall be required (1) in connection with any assignment by a Lender to an Agent or a Lender, an Affiliate of an Agent or a Lender or a Related Fund of an Agent or a Lender or (2) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of such Lender.
(c) Assignments shall be subject to the following additional conditions:
(i) Each such assignment shall be in an amount which is at least $5,000,000 or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender’s Commitment) (except such minimum amount shall not apply to an assignment by a Lender to (A) a Lender, an Affiliate of such Lender or a Related Fund of such Lender or (B) a group of new Lenders, each of whom is an Affiliate or Related Fund of each other to the extent the aggregate amount to be assigned to all such new Lenders is at least $5,000,000 or a multiple of $1,000,000 in excess thereof); and
(ii) The parties to each such assignment shall execute and deliver to the Collateral Agent (and the Administrative Agent, if applicable), for its acceptance, an Assignment and Acceptance, together with any promissory note subject to such assignment and such parties shall deliver to the Collateral Agent, for the benefit of the Collateral Agent, a processing and recordation fee of $5,000 (except the payment of such fee shall not be required in connection with an assignment by a Lender to a Lender, an Affiliate of such Lender or a Related Fund of such Lender); and
(iii) No such assignment shall be made to (A) any Loan Party, any Permitted Holder (or other Equity Holder) or any of their respective Affiliates, or (B) any Defaulting Lender or any of its Affiliates, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).
(d) Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance and recordation on the Register, which effective date shall be at least three Business Days after the delivery thereof to the Collateral Agent (or such shorter period as shall be agreed to by the Collateral Agent and the parties to such assignment), (A) the assignee thereunder shall become a “Lender” hereunder and, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance, the assigning Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto; (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or any of its Subsidiaries or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the assigning Lender, any Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents; (v) such assignee appoints and authorizes the Agents to take such action as agents on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agents by the terms hereof and thereof, together with such powers as are reasonably incidental hereto and thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender.
(f) The Administrative Agent shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain, or cause to be maintained at the Payment Office, a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitments of, and the principal amount of the Loans (and stated interest thereon) (the “Registered Loans”) owing to each Lender from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agents and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Administrative Borrower and any Lender at any reasonable time and from time to time upon reasonable prior written notice.
(g) Upon receipt by the Administrative Agent of a completed Assignment and Acceptance, and subject to any consent required from the Administrative Agent or the Collateral Agent pursuant to Section 12.07(b) (which consent of the applicable Agent must be evidenced by such Agent’s execution of an acceptance to such Assignment and Acceptance), the Administrative Agent shall accept such assignment, record the information contained therein in the Register (as adjusted to reflect any principal payments on or amounts capitalized and added to the principal balance of the Loans and/or Commitment reductions made subsequent to the effective date of the applicable assignment, as confirmed in writing by the corresponding assignor and assignee in conjunction with delivery of the assignment to the Administrative Agent) and provide to the Collateral Agent a copy of the fully executed Assignment and Acceptance.
(h) A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s).
(i) If any Lender sells participations in a Registered Loan, such Lender shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain, or cause to be maintained, a register, on which it enters the names and addresses of all participants in the Registered Loans held by it and the principal amount (and stated interest thereon) of the portion of the Registered Loan that is the subject of the participation (the “Participant Register”). A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(j) Any Non-U.S. Lender who purchases or is assigned or participates in any portion of such Registered Loan shall comply with Section 2.09(d).
(k) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Commitments and the Loans made by it); provided that (i) such Lender’s obligations under this Agreement (including without limitation, its Commitments hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and the Borrowers, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents; and (iii) a participant shall not be entitled to require such Lender to take or omit to take any action hereunder except (A) action directly effecting an extension of the maturity dates or decrease in the principal amount of the Loans, (B) action directly effecting an extension of the due dates or a decrease in the rate of interest payable on the Loans or the fees payable under this Agreement, or (C) actions directly effecting a release of all or a substantial portion of the Collateral or any Loan Party (except as set forth in Section 10.08 or any other Loan Document). The Loan Parties agree that each participant shall be entitled to the benefits of Sections 2.09 and 2.10 with respect to its participation in any portion of the Commitments and the Loans as if it was a Lender.
(l) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or loans made to, or other indebtedness issued by, such Lender pursuant to a securitization transaction (including any structured warehouse credit facility, collateralized loan obligation transaction or similar facility or transaction, and including any further securitization of the indebtedness or equity issued under such a transaction) (a “Securitization”); provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. The Loan Parties shall cooperate with such Lender and its Affiliates to effect a Securitization, including, without limitation, by providing such information as may be reasonably requested by such Lender in connection with the rating of its Loans or any Securitization.
Section 12.08 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by telecopier or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telecopier or electronic mail also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.
Section 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
Section 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY ANY MEANS PERMITTED BY APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. THE LOAN PARTIES AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENTS AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) Each Loan Party irrevocably and unconditionally agrees that it will not commence any action or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against any Agent, any Lender or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof.
(c) Each Foreign Loan Party hereby irrevocably appoints C T Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011 as its agent to receive on behalf of each Foreign Loan Party service of the summons and complaint and any other process which may be served in any action or proceeding described above. Such service may be made by mailing or delivering a copy of such process to each Foreign Loan Party, in care of the Process Agent at the address specified above for such Process Agent, and such Foreign Loan Party hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. Each Foreign Loan Party covenants and agrees that, for so long as it shall be bound under this Agreement or any other Loan Document, it shall maintain a duly appointed agent for the service of summons and other legal process in New York, New York, United States of America, for the purposes of any legal action, suit or proceeding brought by any party in respect of this Agreement or such other Loan Document and shall keep the Agents advised of the identity and location of such agent. If for any reason there is no authorized agent for service of process in New York, each Foreign Loan Party irrevocably consents to the service of process out of the said courts by mailing copies thereof by registered United States air mail postage prepaid to it at its address specified in Section 12.01. Nothing in this Section 12.10 shall affect the right of any Secured Party to (i) commence legal proceedings or otherwise sue any Foreign Loan Party in the country in which it is domiciled or in any other court having jurisdiction over such Foreign Loan Party or (ii) serve process upon any Foreign Loan Party in any manner authorized by the laws of any such jurisdiction.
Section 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, EACH AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT.
Section 12.12 Consent by the Agents and Lenders. Except as otherwise expressly set forth herein to the contrary or in any other Loan Document, if the consent, approval, satisfaction, determination, judgment, acceptance or similar action (an “Action”) of any Agent or any Lender shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which any Loan Party is a party and to which any Agent or any Lender has succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by such Agent or such Lender, in its sole discretion, with or without any reason, and without being subject to question or challenge on the grounds that such Action was not taken in good faith.
Section 12.13 No Party Deemed Drafter. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement.
Section 12.14 Reinstatement; Certain Payments. If any claim is ever made upon any Secured Party for repayment or recovery of any amount or amounts received by such Secured Party in payment or on account of any of the Obligations, such Secured Party shall give prompt notice of such claim to each other Agent and Lender and the Administrative Borrower, and if such Secured Party repays all or part of such amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such Secured Party or any of its property, or (ii) any good faith settlement or compromise of any such claim effected by such Secured Party with any such claimant, then and in such event each Loan Party agrees that (A) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the termination of this Agreement or the other Loan Documents, and (B) it shall be and remain liable to such Secured Party hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by such Secured Party.
Section 12.15 Indemnification; Limitation of Liability for Certain Damages.
(a) In addition to each Loan Party’s other Obligations under this Agreement, each Loan Party agrees to, jointly and severally, defend, protect, indemnify and hold harmless each Secured Party and all of their respective Related Parties (collectively called the “Indemnitees”) from and against any and all losses, damages, liabilities, obligations, penalties, fees, reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Indemnitees, whether prior to or from and after the Effective Date, whether direct, indirect or consequential, as a result of or arising from or relating to or in connection with any of the following: (i) the negotiation, preparation, execution or performance or enforcement of this Agreement, any other Loan Document or of any other document executed in connection with the transactions contemplated by this Agreement, (ii) any Agent’s or any Lender’s furnishing of funds to the Borrowers under this Agreement or the other Loan Documents, including, without limitation, the management of any such Loans or the Borrowers’ use of the proceeds thereof, (iii) the Agents and the Lenders relying on any instructions of the Administrative Borrower or the handling of the Loan Account and Collateral of the Borrowers as herein provided, (iv) any matter relating to the financing transactions contemplated by this Agreement or the other Loan Documents or by any document executed in connection with the transactions contemplated by this Agreement or the other Loan Documents, or (v) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (collectively, the “Indemnified Matters”); provided, however, that the Loan Parties shall not have any obligation to any Indemnitee under this subsection (a) for any Indemnified Matter caused by the gross negligence or willful misconduct of such Indemnitee, as determined by a final non-appealable judgment of a court of competent jurisdiction.
(b) The indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees set forth in this Section 12.15 are chargeable against the Loan Account. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15 may be unenforceable because it is violative of any law or public policy, each Loan Party shall, jointly and severally, contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
(c) No Loan Party shall assert, and each Loan Party hereby waives, any claim against the Indemnitees, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or seek any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
(d) The indemnities and waivers set forth in this Section 12.15 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents.
Section 12.16 Records. The unpaid principal of and interest on the Loans, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitments, and the accrued and unpaid fees payable pursuant to Section 2.06 hereof, shall at all times be ascertained from the records of the Agents, which shall be conclusive and binding absent manifest error.
Section 12.17 Binding Effect. This Agreement shall become effective when it shall have been executed by each Loan Party, each Agent and each Lender and when the conditions precedent set forth in Section 5.01 have been satisfied or waived in writing by the Agents, and thereafter shall be binding upon and inure to the benefit of each Loan Party, each Agent and each Lender, and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of each Agent and each Lender, and any assignment by any Lender shall be governed by Section 12.07.
Section 12.18 Highest Lawful Rate. It is the intention of the parties hereto that each Agent and each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby or by any other Loan Document would be usurious as to any Agent or any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to such Agent or such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document or any agreement entered into in connection with or as security for the Obligations, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to any Agent or any Lender that is contracted for, taken, reserved, charged or received by such Agent or such Lender under this Agreement or any other Loan Document or agreements or otherwise in connection with the Obligations shall under no circumstances exceed the maximum amount allowed by such applicable law, any excess shall be canceled automatically and if theretofore paid shall be credited by such Agent or such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Agent or such Lender, as applicable, to the Borrowers); and (ii) in the event that the maturity of the Obligations is accelerated by reason of any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Agent or any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall, subject to the last sentence of this Section 12.18, be canceled automatically by such Agent or such Lender, as applicable, as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Agent or such Lender, as applicable, on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Agent or such Lender to the Borrowers). All sums paid or agreed to be paid to any Agent or any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Agent or such Lender, be amortized, prorated, allocated and spread throughout the full term of the Loans until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (x) the amount of interest payable to any Agent or any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Agent or such Lender pursuant to this Section 12.18 and (y) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Agent or such Lender would be less than the amount of interest payable to such Agent or such Lender computed at the Highest Lawful Rate applicable to such Agent or such Lender, then the amount of interest payable to such Agent or such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Agent or such Lender until the total amount of interest payable to such Agent or such Lender shall equal the total amount of interest which would have been payable to such Agent or such Lender if the total amount of interest had been computed without giving effect to this Section 12.18.
For purposes of this Section 12.18, the term “applicable law” shall mean that law in effect from time to time and applicable to the loan transaction between the Borrowers, on the one hand, and the Agents and the Lenders, on the other, that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of New York and, to the extent controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations does not include the right to accelerate any interest that has not accrued as of the date of acceleration.
Section 12.19 Confidentiality. Each Agent and each Lender agrees (on behalf of itself and its Related Parties) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound practices of comparable commercial finance companies, any non-public information supplied to it by the Loan Parties pursuant to this Agreement or the other Loan Documents which is identified by the Loan Parties as being confidential at the time the same is delivered to such Person (and which at the time is not, and does not thereafter become, publicly available or available to such Person from another source not known to be subject to a confidentiality obligation to such Person not to disclose such information), provided that nothing herein shall limit the disclosure by any Agent or any Lender of any such information (i) to its Affiliates, its Related Parties or the Related Parties of any Person described in clause (ii) or (iii) below) (it being understood that the Persons to whom such disclosure is made either will be informed of the confidential nature of such information and instructed to keep such information confidential in accordance with this Section 12.19 or is subject to other customary confidentiality obligations); (ii) to any other party hereto; (iii) to any assignee or participant (or prospective assignee or participant) or any party to a Securitization, so long as such assignee or participant (or prospective assignee or participant) or party to a Securitization agrees, in writing, to be bound by or is otherwise subject to customary confidentiality obligations (including, without limitation, confidentiality provisions similar in substance to this Section 12.19); (iv) to the extent required by any Requirement of Law or judicial process or as otherwise requested by any Governmental Authority; (v) to the National Association of Insurance Commissioners or any similar organization, any examiner, auditor or accountant or any nationally recognized rating agency; (vi) in connection with any litigation to which any Agent or any Lender is a party; (vii) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (viii) to any other Person if such information is general portfolio information that does not identity the Loan Parties; or (ix) with the consent of the Administrative Borrower. In addition, the Agents and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to any Agent or any Lender in connection with the administration of this Agreement, the other Loan Documents and the Commitments.
Section 12.20 Public Disclosure. Each Loan Party agrees that neither it nor any of its Affiliates will now or in the future issue any press release or other public disclosure using the name of an Agent, any Lender or any of their respective Affiliates or referring to this Agreement or any other Loan Document without the prior written consent of such Agent or such Lender, except to the extent that such Loan Party or such Affiliate is required to do so under applicable law (in which event, such Loan Party or such Affiliate will consult with such Agent or such Lender before issuing such press release or other public disclosure). Each Loan Party hereby authorizes each Agent and each Lender, after consultation with the Borrowers, to advertise the closing of the transactions contemplated by this Agreement, and to make appropriate announcements of the financial arrangements entered into among the parties hereto, as such Agent or such Lender shall deem appropriate, including, without limitation, on a home page or similar place for dissemination of information on the Internet or worldwide web, or in announcements commonly known as tombstones, in such trade publications, business journals, newspapers of general circulation and to such selected parties as such Agent or such Lender shall deem appropriate.
Section 12.21 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.
Section 12.22 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA PATRIOT Act hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the entities composing the Borrowers, which information includes the name and address of each such entity and other information that will allow such Lender to identify the entities composing the Borrowers in accordance with the USA PATRIOT Act. Each Loan Party agrees to take such action and execute, acknowledge and deliver at its sole cost and expense, such instruments and documents as any Lender may reasonably require from time to time in order to enable such Lender to comply with the USA PATRIOT Act.
Section 12.23 Judgment Currency. This is an international financial transaction in which the specification of a currency and payment in New York is of the essence. Dollars shall be the currency of account in the case of all payments pursuant to or arising under this Agreement or under any other Loan Document, and all such payments shall be made to the Administrative Agent’s Account in New York in immediately available funds. To the fullest extent permitted by applicable law, the obligations of each Loan Party to the Secured Parties under this Agreement and under the other Loan Documents shall not be discharged by any amount paid in any other currency or in a place other than to the Administrative Agent’s Account in New York to the extent that the amount so paid after conversion under this Agreement and transfer to New York does not yield the amount of Dollars in New York due under this Agreement and under the other Loan Documents. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder in Dollars into another currency (the “Other Currency”), to the fullest extent permitted by applicable law, the rate of exchange used shall be that at which the Administrative Agent could, in accordance with normal procedures, purchase Dollars with the Other Currency on the Business Day preceding that on which final judgment is given. The obligation of each Loan Party in respect of any such sum due from it to the Secured Parties hereunder shall, notwithstanding any judgment in such Other Currency, be discharged only to the extent that, on the Business Day immediately following the date on which the Administrative Agent receives any sum adjudged to be so due in the Other Currency, the Administrative Agent may, in accordance with normal banking procedures, purchase Dollars with the Other Currency. If the Dollars so purchased are less than the sum originally due to the Secured Parties in Dollars, each Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Secured Parties against such loss, and if the Dollars so purchased exceed the sum originally due to the Secured Parties in Dollars, the Secured Parties agrees to remit to the Loan Parties such excess.
Section 12.24 Waiver of Immunity. To the extent that any Loan Party has or hereafter may acquire (or may be attributed, whether or not claimed) any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service of process or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such Loan Party hereby irrevocably waives and agrees not to plead or claim, to the fullest extent permitted by law, such immunity in respect of (a) its obligations under the Loan Documents, (b) any legal proceedings to enforce such obligations and (c) any legal proceedings to enforce any judgment rendered in any proceedings to enforce such obligations. Each Loan Party hereby agrees that the waivers set forth in this Section 12.24 shall be to the fullest extent permitted under the Foreign Sovereign Immunities Act and are intended to be irrevocable for purposes of the Foreign Sovereign Immunities Act.
Section 12.25 English Language. This Agreement and each other Loan Document have been negotiated and executed in English. All certificates, reports, notices and other documents and communications given or delivered by any party hereto pursuant to this Agreement or any other Loan Document shall be in English or, if not in English, accompanied by a certified English translation thereof. The English version of any such document shall control the meaning of the matters set forth herein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BORROWER: | |||
OBAGI COSMECEUTICALS LLC | |||
By: |
/s/ Jaime B. Castle
|
||
Name: | Jaime B. Castle | ||
Title: | President and Chief Executive Officer | ||
PARENT AND GUARANTOR: | |||
OBAGI HOLDINGS COMPANY LIMITED | |||
By: | /s/ Jaime B. Castle | ||
Name: | Jaime B. Castle | ||
Title: | President | ||
ULTIMATE PARENT AND GUARANTOR: | |||
OBAGI GLOBAL HOLDINGS LIMITED | |||
By: | /s/ Jaime B. Castle | ||
Name: | Jaime B. Castle | ||
Title: | Director |
[Signature Page to Financing Agreement]
OTHER GUARANTORS: | |||
CLINACTIV TECHNOLOGY LIMITED | |||
By: | /s/ Jaime B. Castle | ||
Name: | Jaime B. Castle | ||
Title: | President | ||
CLINACTIV(US) LLC | |||
By: | /s/ Jaime B. Castle | ||
Name: | Jaime B. Castle | ||
Title: | President |
[Signature Page to Financing Agreement]
COLLATERAL AGENT: | |||
TCW ASSET MANAGEMENT COMPANY LLC | |||
By: | /s/ Suzanne Grosso | ||
Name: | Suzanne Grosso | ||
Title: | Managing Director | ||
ADMINISTRATIVE AGENT: | |||
TCW ASSET MANAGEMENT COMPANY LLC | |||
By: | /s/ Suzanne Grosso | ||
Name: | Suzanne Grosso | ||
Title: | Managing Director |
[Signature Page to Financing Agreement]
LENDERS: | ||
US SPECIALTY INSURANCE COMPANY, as a Lender | ||
By: TCW Asset Management Company LLC, | ||
its Investment Manager and Attorney-in-Fact | ||
By: | /s/ Suzanne Grosso | |
Name: Suzanne Grosso | ||
Title: Managing Director | ||
SAFETY NATIONAL CASUALTY CORPORATION, as a Lender | ||
By: TCW Asset Management Company LLC, | ||
its Investment Manager and Attorney-in-Fact | ||
By: | /s/ Suzanne Grosso | |
Name: Suzanne Grosso | ||
Title: Managing Director | ||
RELIANCE STANDARD LIFE INSURANCE COMPANY, as a Lender | ||
By: TCW Asset Management Company LLC, | ||
its Investment Manager and Attorney-in-Fact | ||
By: | /s/ Suzanne Grosso | |
Name: Suzanne Grosso | ||
Title: Managing Director | ||
PHILADELPHIA INDEMNITY INSURANCE COMPANY, as a Lender | ||
By: TCW Asset Management Company LLC, | ||
its Investment Manager and Attorney-in-Fact | ||
By: | /s/ Suzanne Grosso | |
Name: Suzanne Grosso | ||
Title: Managing Director |
[Signature Page to Financing Agreement]
LENDERS (CONT.): | |||
MACQUARIE INVESTMENTS US INC., as a Lender | |||
By: | /s/ Joshua Karlin | ||
Name: | Joshua Karlin | ||
Title: | Authorized Signatory | ||
By: | /s/ Michael Greenblatt | ||
Name: | Michael Greenblatt | ||
Title: | Authorized Signatory |
[Signature Page to Financing Agreement]
Schedule 1.01(A)
Lenders |
Revolving Credit
Commitment |
Term Loan
Commitment |
Total Commitment |
SCHEDULE 1.01(B)
Facilities
SCHEDULE 1.01(C)
Immaterial Subsidiaries
SCHEDULE 6.01(e)
Capitalization; Subsidiaries
SCHEDULE 6.01(f)
Litigation
SCHEDULE 6.01(i)
ERISA
SCHEDULE 6.01(l)
Nature of Business
SCHEDULE 6.01(p)
Employee and Labor Matters
SCHEDULE 6.01(q)
Environmental Matters
SCHEDULE 6.01(r)
Insurance
SCHEDULE 6.01(u)
Intellectual Property
SCHEDULE 6.01(v)
Material Contracts
SCHEDULE 6.01(gg)
Health Care
SCHEDULE 7.02(a)
Existing Liens
SCHEDULE 7.02(b)
Existing Indebtedness
SCHEDULE 7.02(e)
Existing Investment
SCHEDULE 7.02(j)
Transactions with Affiliates
SCHEDULE 7.02(k)
Limitations on Dividends and Other Payment Restrictions
SCHEDULE 8.01
Cash Management Accounts
EXHIBIT A
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT, dated as of ____________ (this “Agreement”), to the Financing Agreement referred to below is entered into by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder or otherwise guaranties all or any part of the Obligations (as defined therein), each, a “Guarantor” and, collectively, the “Guarantors”), [NAME OF ADDITIONAL BORROWER OR GUARANTOR], a _________________ ______________ (the “Additional [Borrower][Guarantor]”), the lenders from time to time party thereto (each a “Lender” and collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and together with the Collateral Agent, each an “Agent” and collectively, the “Agents”)
WHEREAS, the Ultimate Parent, the Parent, each Borrower [(other than the Additional Borrower)], the Guarantors [(other than the Additional Guarantor)], the Lenders and the Agents have entered into that certain Financing Agreement, dated as of March 16, 2021 (such agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, the “Financing Agreement”), pursuant to which the Lenders have agreed to make certain term loans and revolving loans (each a “Loan” and collectively the “Loans”), to the Borrowers;
WHEREAS, the Borrowers’ obligation to repay the Loans and all other Obligations are guaranteed, jointly and severally, by the Guarantors;
WHEREAS, pursuant to Section 7.01(b) of the Financing Agreement, the Additional [Borrower][Guarantor] is required to become a [Borrower][Guarantor] by, among other things, executing and delivering this Agreement to the Collateral Agent; and
WHEREAS, the Additional [Borrower][Guarantor] has determined that the execution, delivery and performance of this Agreement directly benefit, and are within the corporate purposes and in the best interests of, the Additional [Borrower][Guarantor].
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Reference is hereby made to the Financing Agreement for a statement of the terms thereof. All terms used in this Agreement which are defined therein and not otherwise defined herein shall have the same meanings herein as set forth therein.
SECTION 2. Joinder of Additional [Borrower][Guarantor].
(a) Pursuant to Section 7.01(b) of the Financing Agreement, by its execution of this Agreement, the Additional [Borrower][Guarantor] hereby (i) confirms that, as to the Additional [Borrower][Guarantor], the representations and warranties contained in Article VI of the Financing Agreement are true and correct in all material respects as of the effective date of this Agreement (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date), and (ii) agrees that, from and after the effective date of this Agreement, the Additional [Borrower][Guarantor] shall be a party to the Financing Agreement and shall be bound, as a [Borrower][Guarantor], by all the provisions thereof and shall comply with and be subject to all of the terms, conditions, covenants, agreements and obligations set forth therein and applicable to the [Borrowers][Guarantors], [including, without limitation, the guaranty of the Obligations made by the Guarantors, jointly and severally with the other Loan Parties, in favor of the Agents and the Lenders pursuant to Article XI of the Financing Agreement]. The Additional [Borrower][Guarantor] hereby agrees that from and after the effective date of this Agreement, each reference to a [“Borrower”][“Guarantor”] or a “Loan Party” and each reference to the [“Borrowers”][“Guarantors”] or the “Loan Parties” in the Financing Agreement shall include the Additional [Borrower][Guarantor]. The Additional [Borrower][Guarantor] acknowledges that it has received a copy of the Financing Agreement and each other Loan Document and that it has read and understands the terms thereof.
(b) Attached hereto are supplements to each Schedule to the Financing Agreement revised to include all information required to be provided therein with respect to, and only with respect to, the Additional [Borrower][Guarantor]. The Schedules to the Financing Agreement shall, without further action, be amended to include the information contained in each such supplement.
SECTION 3. Effectiveness. This Agreement shall become effective upon its execution by the Additional [Borrower][Guarantor], each Borrower, each Guarantor and each Agent and receipt by the Agents of the following, in each case in form and substance reasonably satisfactory to the Agents:
(a) original counterparts to this Agreement, duly executed by each Borrower, each Guarantor, the Additional [Borrower][Guarantor] and the Agents, together with the Schedules referred to in Section 2(b) hereof;
(b) a Supplement to the Security Agreement, substantially in the form of Exhibit C to the Security Agreement (the “Security Agreement Supplement”), duly executed by the Additional [Borrower][Guarantor], and any instruments of assignment or other documents required to be delivered to the Agents pursuant to the terms thereof;
(c) a Pledge Amendment to the Security Agreement to which the parent company of the Additional [Borrower][Guarantor] is a party, in substantially the form of Exhibit A to the Security Agreement, duly executed by such parent company and providing for all Equity Interests of the Additional [Borrower][Guarantor] to be pledged to the Collateral Agent pursuant to the terms thereof;
(d) (i) certificates, if any, representing 100% of the issued and outstanding Equity Interests of the Additional [Borrower][Guarantor] and each Subsidiary of the Additional [Borrower][Guarantor] and (ii) all original promissory notes of such Additional [Borrower][Guarantor], if any, in each case, that are required to be delivered under the Loan Documents, in each case, accompanied by instruments of assignment and transfer in such form as the Collateral Agent may reasonably request;
(e) to the extent required under the Financing Agreement, a Mortgage (the “Additional Mortgage”), duly executed by the Additional [Borrower][Guarantor], with respect to the real property owned or leased, as applicable, by the Additional [Borrower][Guarantor], together with all other applicable Real Property Deliverables, agreements, instruments and documents as the Collateral Agent may reasonably require, whether comparable to the documents required under Section 7.01(o) of the Financing Agreement or otherwise;
(f) (i) appropriate financing statements on Form UCC-1 duly filed in such office or offices as may be necessary or in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by the Security Agreement Supplement and any Mortgage and (ii) evidence reasonably satisfactory to the Collateral Agent of the filing of such UCC-1 financing statements;
(g) a favorable written opinion of counsel to the Loan Parties as to such matters as the Agents may reasonably request; and
(h) such other agreements, instruments or other documents reasonably requested by the Collateral Agent in order to create, perfect, establish the first priority (subject to Permitted Liens) of or otherwise protect any Lien purported to be covered by the Security Agreement Supplement or any Additional Mortgage or otherwise to effect the intent that the Additional [Borrower][Guarantor] shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary shall become Collateral for the Obligations free and clear of all Liens other than Permitted Liens.
SECTION 4. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, postage prepaid and return receipt requested), telecopied or delivered by hand, Federal Express or other reputable overnight courier, if to the Additional [Borrower][Guarantor], to it at its address set forth below its signature to this Agreement, and if to any Borrower, any Guarantor, any Lender or any Agent, to it at its address specified in the Financing Agreement or Joinder Agreement (as applicable); or as to any such Person at such other address as shall be designated by such Person in a written notice to such other Person, complying as to delivery with the terms of this Section 4. All such notices and other communications shall be effective in accordance with Section 12.01 of the Financing Agreement.
SECTION 5. General Provisions. (a) Each Borrower, each Guarantor and the Additional [Borrower][Guarantor] hereby confirms that each representation and warranty made by it under the Loan Documents is true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date), and that no Default or Event of Default has occurred or is continuing under the Financing Agreement. Each Borrower and each Guarantor and the Additional [Borrower][Guarantor] hereby represents and warrants that as of the date hereof there are no claims or offsets against or defenses or counterclaims to their respective obligations under the Financing Agreement or any other Loan Document.
(b) Except as supplemented hereby, the Financing Agreement and each other Loan Document shall continue to be, and shall remain, in full force and effect. This Agreement shall not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Financing Agreement or any other Loan Document or (ii) to prejudice any right or rights which the Agents or the Lenders may now have or may have in the future under or in connection with the Financing Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement instrument or agreement therefor.
(c) The Additional [Borrower][Guarantor] hereby expressly (i) authorizes the Collateral Agent to file appropriate financing statements or continuation statements, and amendments thereto, (including, without limitation, any such financing statements that indicate the Collateral as “all assets” or words of similar import) in such office or offices as may be necessary or in the opinion of the Collateral Agent, desirable to perfect the Liens to be created by the Security Agreement Supplement and each of the other Loan Documents and (ii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements or amendments thereto prior to the date hereof. A photocopy or other reproduction of the Security Agreement Supplement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Each Borrower agrees to pay on demand all costs and expenses incurred by or on behalf of each Agent in connection with the negotiation, preparation, execution, delivery and performance of this Agreement, including, without limitation, the reasonable fees, costs, client charges and expenses of counsel for each Agent.
(d) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by telecopier or electronic transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telecopier or electronic transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement.
(e) Section headings in this Agreement are included herein for the convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(f) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH OTHER LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH OTHER LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY ANY MEANS PERMITTED BY APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN THE FINANCING AGREEMENT AND TO THE SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH OTHER LOAN PARTY AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENTS AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ADDITIONAL [BORROWER][GUARANTOR] OR ANY OTHER LOAN PARTY IN ANY OTHER JURISDICTION. THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH OTHER LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
(h) THE ADDITIONAL [BORROWER][GUARANTOR], EACH OTHER LOAN PARTY, EACH AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. THE ADDITIONAL [BORROWER][GUARANTOR] AND EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT.
(i) This Agreement, together with the Financing Agreement and the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and thereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.
(j) This Agreement constitutes a “Loan Document” under and as defined in the Financing Agreement and is subject to the terms and provisions therein regarding Loan Documents.
[Remainder of page left intentionally blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BORROWERS: | |||
OBAGI COSMECEUTICALS LLC | |||
By: | |||
Name: | |||
Title: |
[________________________________________________________] |
By: | |||
Name: | |||
Title: |
GUARANTORS: | |||
OBAGI HOLDINGS COMPANY LIMITED | |||
By: | |||
Name: | |||
Title: |
OBAGI GLOBAL HOLDINGS LIMITED | |||
By: | |||
Name: | |||
Title: |
CLINACTIV TECHNOLOGY LIMITED | |||
By: | |||
Name: | |||
Title: |
[Signature Page to Joinder Agreement]
CLINACTIV (US) LLC | |||
By: | |||
Name: | |||
Title: |
[Signature Page to Joinder Agreement]
COLLATERAL AGENT: | |||
TCW ASSET MANAGEMENT COMPANY LLC | |||
By: | |||
Name: | |||
Title: |
[Signature Page to Joinder Agreement]
ADDITIONAL [BORROWER][GUARANTOR]: | |
[________________________________________________________] |
By: | |||
Name: | |||
Title: |
[Signature Page to Joinder Agreement]
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of [_____] [__], 20[__] between [___________] (“Assignor”) and [______________] (“Assignee”). Reference is made to the agreement described in Item 2 of Annex I annexed hereto (as amended, restated, amended and restated, modified or otherwise supplemented from time to time, the “Financing Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Financing Agreement.
1. In accordance with the terms and conditions of Section 12.07 of the Financing Agreement, the Assignor hereby irrevocably sells, transfers, conveys and assigns without recourse, representation or warranty (except as expressly set forth herein) to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents with respect to the Obligations owing to the Assignor, and the Assignor’s portion of the Commitments and the Loans as specified on Annex I.
2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim, and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; and (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (a) confirms that it has received copies of the Financing Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon the Administrative Agent, the Collateral Agent, the Assignor or any other Lender, based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (c) confirms that it is eligible as an assignee under the terms of the Financing Agreement; (d) appoints and authorizes each of the Administrative Agent and the Collateral Agent to take such action as the Administrative Agent or the Collateral Agent (as the case may be) on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent or the Collateral Agent (as the case may be) by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; and (f) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Financing Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment Agreement by the Assignor and the Assignee, it will be delivered by the Assignor to the Agents for recording by the Administrative Agent. The effective date of this Assignment Agreement (the “Settlement Date”) shall be the latest of (a) the date of the execution hereof by the Assignor and the Assignee, (b) the date this Assignment Agreement has been accepted by the Collateral Agent (and the Administrative Agent if required by the Financing Agreement) and recorded in the Register by the Administrative Agent, (c) the date of receipt by the Collateral Agent of a processing and recordation fee in the amount of $5,0001, (d) the settlement date specified on Annex I, and (e) the receipt by Assignor of the Purchase Price specified in Annex I.
5. As of the Settlement Date (a) the Assignee shall be a party to the Financing Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Financing Agreement and the other Loan Documents.
6. Upon recording by the Administrative Agent, from and after the Settlement Date, the Administrative Agent shall make all payments under the Financing Agreement and the other Loan Documents in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees (if applicable) with respect thereto) to the Assignee. The Assignor and the Assignee shall make all appropriate adjustments in payments under the Financing Agreement and the other Loan Documents for periods prior to the Settlement Date directly between themselves on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
8. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED UPON OR ARISING OUT OF THIS ASSIGNMENT AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
9. This Assignment Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Assignment Agreement by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart.
10. This Assignment Agreement constitutes a “Loan Document” under and as defined in the Financing Agreement and is subject to the terms and provisions therein regarding Loan Documents.
[Remainder of page left intentionally blank.]
1 The payment of such fee shall not be required in connection with an assignment by a Lender to a Lender, an Affiliate of such Lender or a Related Fund of such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed and delivered by their respective officers thereunto duly authorized, as of the date first above written.
ASSIGNOR | |||
[NAME OF ASSIGNOR], as Assignor | |||
By: | |||
Name: | |||
Title: | |||
Date: |
ASSIGNEE | |||
[NAME OF ASSIGNEE], as Assignee | |||
By: | |||
Name: | |||
Title: | |||
Date: |
[Signature Page to Assignment and Acceptance Agreement]
ACCEPTED AND CONSENTED TO this [___] day | ||
of [_______], 20[__] | ||
[[TCW ASSET MANAGEMENT LLC], | ||
as Collateral Agent | ||
By: | ||
Name: | ||
Title: | ||
[TCW ASSET MANAGEMENT LLC], | ||
as Administrative Agent | ||
By: | ||
Name: | ||
Title:]2 | ||
[[OBAGI COSMECEUTICALS LLC], | ||
as Administrative Borrower | ||
By: | ||
Name: | ||
Title:]3 |
2 | Insert if required by the Financing Agreement |
3 | Insert if required by the Financing Agreement |
[Signature Page to Assignment and Acceptance Agreement]
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX I
1. | Administrative Borrower: OBAGI COSMECEUTICALS LLC, a Delaware limited liability company | |
2. | Name and Date of Financing Agreement: Financing Agreement, dated as of March 16, 2021 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, or otherwise guaranties all or any part of the Obligations (as thereinafter defined) each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (each, a “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and collectively, the “Agents”). | |
3. | Date of Assignment Agreement: | $ ___________________ |
4. | Amount of Revolving Credit Commitment Assigned: | $ ___________________ |
5. | Amount of Term Loan Commitment Assigned: | $ ___________________ |
6. | Amount of Term Loan Assigned: | $ ___________________ |
7. | Amount of Revolving Loan Assigned: | $ ___________________ |
8. | Purchase Price: | $ ___________________ |
9. | Settlement Date: | $ ___________________ |
10. | Notice and Payment Instructions, etc. | $ ___________________ |
EXHIBIT C
FORM OF NOTICE OF BORROWING
[LETTERHEAD OF THE BORROWER]
[___________] [__], 20[_]
TCW Asset Management Company LLC, as Administrative Agent
for the Lenders party to the Financing Agreement referred to below
1251 Avenue of the Americas, Suite 4700
New York, NY 10020
Attention: Ryan Carroll
Telephone: 212.771.4271
Email: Ryan.Carroll@tcw.com; tcw@alterdomus.com
Ladies and Gentlemen:
The undersigned, Obagi Cosmeceuticals LLC, a Delaware limited liability company (the “Borrower”), (i) refers to that certain Financing Agreement, dated as of the date hereof (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), the Borrower (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collective, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”) , as collateral agent for the Lenders (in such capacity, together with its successors and assigns, the “Collateral Agent”), and TCW as administrative agent for the Lenders (in such capacity, together with its successors and assigns, the “Administrative Agent”, and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”) and (ii) hereby gives you notice pursuant to Section 2.02 of the Financing Agreement that the undersigned hereby requests a Loan under the Financing Agreement (the “Proposed Loan”), and in connection therewith sets forth below the information relating to such Proposed Loan as required by Section 2.02 of the Financing Agreement. All capitalized terms used but not defined herein have the same meanings herein as set forth in the Financing Agreement.
a. | The borrowing date of the Proposed Loan is [_________] (the “Proposed Borrowing Date”). |
b. | The Proposed Loan is a [Term Loan] [Revolving Loan]. |
c. | The aggregate principal amount of the Proposed Loan is $_________. |
d. | The Proposed Loan shall be a [Reference Rate Loan][LIBOR Rate Loan with an Interest Period of [one][two][three] month(s)]. |
e. | The proceeds of the Proposed Loan are to be disbursed pursuant to the instructions set forth on Exhibit A attached hereto. |
The undersigned certifies as of the date of this notice and as of the date the Proposed Loan is made that (i) the representations and warranties contained in the Article VI of the Financing Agreement and in each other Loan Document are true and correct [in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification)]4 on and as of the Proposed Borrowing Date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date), (ii) no Default or Event of Default shall have occurred and be continuing on the Proposed Borrowing Date or would result from the Financing Agreement or any other Loan Documents becoming effective in accordance with its or their respective terms or the making of the Proposed Loan and (iii) all applicable conditions set forth in Section 5.02 of the Financing Agreement shall have been satisfied or waived in writing by the applicable Lenders as of the Proposed Borrowing Date.
[signature page follows]
4 For borrowing requests made after the Effective Date.
Very truly yours, | ||
OBAGI COSMECEUTICALS LLC,
as Borrower |
||
By: | ||
Name:
Title: |
[Signature Page to Notice of Borrowing]
EXHIBIT A
WIRING INSTRUCTIONS
Payee | Wiring Instructions | |
[____________________________] | Bank: | |
[City/State] | ||
ABA# | ||
Account # | ||
Ref: |
EXHIBIT D
FORM OF LIBOR NOTICE
[LETTERHEAD OF BORROWERS]
[DATE]
TCW Asset Management Company LLC, as Administrative Agent
for the Lenders party to the Financing Agreement referred to below
1251 Avenue of the Americas, Suite 4700
New York, NY 10020
Attention: Ryan Carroll
Telephone: 212.771.4271
Email: Ryan.Carroll@tcw.com; tcw@alterdomus.com
Ladies and Gentlemen:
Reference is made to that certain Financing Agreement, dated as of March 16, 2021 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (each, a “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each an “Agent” and, collectively, the “Agents”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Financing Agreement.
This LIBOR Notice represents the Borrowers’ request to [convert into] [continue as] [LIBOR Rate Loans] [Reference Rate Loans] $[________] of the outstanding principal amount of the [Term Loan] [Revolving Loans] (the “Requested LIBOR Rate Loan”)[, and is a written confirmation of the telephonic notice of such election previously given to the Administrative Agent].
[Such Requested LIBOR Rate Loan will have an Interest Period of [1] [2] [3] month(s), commencing on ____________.]
[This LIBOR Notice further confirms each Borrower’s acceptance, for purposes of determining the rate of interest based on the LIBOR Rate under the Financing Agreement, of the LIBOR Rate as determined pursuant to the Financing Agreement.]
S
[signature page follows]
The undersigned certifies that (i) the representations and warranties contained in Article VI of the Financing Agreement and in each other Loan Document, certificate or other writing delivered to any Agent or any Lender pursuant thereto on or prior to the date of the [conversion] [continuation] of the Requested LIBOR Rate Loan are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date) and (ii) no Default or Event of Default has occurred and is continuing or would result from the [conversion] [continuation] of the Requested LIBOR Rate Loan.
OBAGI COSMECEUTICALS LLC | |||
By: | |||
Name: | |||
Title: |
[Signature Page to LIBOR Notice]
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
OBAGI GLOBAL HOLDINGS LIMITED
TCW Asset Management Company LLC, as Administrative Agent
for the Lenders party to the Financing Agreement referred to below
1251 Avenue of the Americas, Suite 4700
New York, NY 10020
Attention: Ryan Carroll
Telephone: 212.771.4271
Email: Ryan.Carroll@tcw.com; tcw@alterdomus.com
Re: | Compliance Certificate dated [_________] [__], 20[__] |
Ladies and Gentlemen:
Reference is made to that certain Financing Agreement, dated as of March 16, 2021 (as the same may be amended, restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (together with its successors and permitted assigns, individually, the “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and, TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”). Capitalized terms used in this Compliance Certificate have the meanings set forth in the Financing Agreement unless specifically defined herein.
Pursuant to the terms of the Financing Agreement, the undersigned officer of the Ultimate Parent hereby certifies, in such official capacity only and not in his/her individual capacity, that:
1. The financial statements of the Parent and its Subsidiaries furnished in Schedule 1 hereto pursuant to Section 7.01(a) of the Financing Agreement fairly present, in all material respects, the financial position of the Parent and its Subsidiaries as of the end of the period covered by such financial statements and the results of operations, retained earnings and cash flows of the Parent and its Subsidiaries for such period, in each case, in accordance with GAAP applied in a manner consistent with that of the most recent audited financial statements of the Parent and its Subsidiaries furnished to the Agents and the Lenders, subject to normal year-end adjustments and the absence of footnotes.
2. I have reviewed the provisions of the Financing Agreement and the other Loan Documents and have made, or caused to be made under my supervision, a review of the condition and operations of the Ultimate Parent and its Subsidiaries during the period covered by the financial statements delivered pursuant to Section 7.01(a) of the Financing Agreement with a view to determining whether the Ultimate Parent and its Subsidiaries were in compliance with all of the provisions of the Financing Agreement and the other Loan Documents during such period.
3. Such review has not disclosed the occurrence and continuance during such period, and I have no knowledge of the occurrence and continuance during such period, of a Default or Event of Default, except as listed on Schedule 2 hereto, describing the nature and period of existence thereof and the action the Ultimate Parent and its Subsidiaries have taken, are taking, or propose to take with respect thereto.
4. [The Parent and its Subsidiaries are in compliance with the applicable covenants contained in Section 7.03 of the Financing Agreement as demonstrated on Schedule 3 hereto.]5
5. [Set forth on Schedule 4 hereto, is a discussion and analysis of the financial condition and results of operations of the Parent and its Subsidiaries for the portion of the Fiscal Year elapsed as of the date hereof and discussing the reasons for any significant variations from the financial projections for such period and the figures for the corresponding period in the previous Fiscal Year.]6
6. [Set forth on Schedule 5 hereto, is a summary of all material insurance coverage maintained as of the date hereof by any Loan Party or any of its Subsidiaries and evidence that such insurance coverage meets the requirements set forth in Section 7.01 of the Financing Agreement, each Security Agreement and each Mortgage, together with such other related documents and information as the Administrative Agent has reasonably required.]7
7. [Set forth on Schedule 6 hereto, is the calculation of the Excess Cash Flow in accordance with the terms of Section 2.05(c)(i) of the Financing Agreement.]8
8. [There have been no changes to the information contained in the Perfection Certificate delivered on the Effective Date or the date of the most recently updated Perfection Certificate delivered pursuant to Section 7.01(a)(iv) of the Financing Agreement, except as contained in the updated Perfection Certificate attached hereto as Schedule 7.]9
5 To be included in certificates delivered pursuant to Sections 7.01(a)(i) and (ii).
6 To be included in certificates delivered pursuant to Sections 7.01(a)(ii) and (iii).
7 To be included in certificates delivered pursuant to Section 7.01(a)(iii).
8 To be included in certificates delivered pursuant to Section 7.01(a)(iii).
9 To be included in certificates delivered pursuant to Section 7.01(a)(iii).
This Compliance Certificate is a Loan Document and is subject to the terms and provisions in the Financing Agreement regarding Loan Documents. To the extent the provisions set forth in this Compliance Certificate conflict with any provision in the Financing Agreement, the Financing Agreement shall govern.
[signature page follows]
IN WITNESS WHEREOF, this Compliance Certificate is duly executed by the undersigned as of the date first above written.
OBAGI GLOBAL HOLDINGS LIMITED, as Ultimate Parent | ||
By: | ||
Name: | ||
Title: |
[Signature Page to Compliance Certificate]
SCHEDULE 1
Financial Statements
[See Attached]
SCHEDULE 2
Default or Event of Default
[See Attached]
SCHEDULE 3
Financial Covenants
1. | Leverage Ratio. |
Parent and its Subsidiaries’ Leverage Ratio, measured on a [fiscal quarter-end basis], for the period of [four consecutive fiscal quarters] of the Parent and its Subsidiaries ended on [_________], [________] is __:1.0, which [is/is not] less than or equal to the ratio set forth in Section 7.03(b) of the Financing Agreement for the corresponding period.
2. | Fixed Charge Coverage Ratio. |
Parent and its Subsidiaries’ Fixed Charge Coverage Ratio, measured on a [fiscal quarter-end basis], for the period of [four consecutive fiscal quarters] of the Parent and its Subsidiaries ended on [_________], [________] is ___:1.0, which [is/is not] greater than or equal to the ratio set forth in Section 7.03(c) of the Financing Agreement for the corresponding period.
SCHEDULE 4
Discussion and Analysis
[See Attached]
SCHEDULE 5
Material Insurance Coverage
[See Attached]
SCHEDULE 6
Calculation of Excess Cash Flow
[See Attached]
SCHEDULE 7
Updated Perfection Certificate
[See Attached]
EXHIBIT F
FORM OF [TERM][REVOLVING] LOAN NOTE
$[__________________] | [_____________] [__], 20[__] |
FOR VALUE RECEIVED, Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” under the Financing Agreement (as defined below), each a “Borrower” and collectively, the “Borrowers”)), hereby [jointly and severally] unconditionally promise[s] to pay to the order of [__________________] (together with its successors and assigns, the “Lender”) the principal amount of [_____________] DOLLARS AND [_______] CENTS ($[__________]) or, if less, the aggregate unpaid principal amount of the [Revolving Loans][Term Loan] made by the Lender to the Borrowers under that certain Financing Agreement, dated as of March 16, 2021 (including all annexes, exhibits and schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified from time to time, including any replacement agreement therefor, being hereinafter referred to as the “Financing Agreement”), by and among the Borrower and the other Borrowers from time to time party thereto, Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder or otherwise guaranties all or any part of the Obligations (as defined therein), each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto, TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and together with the Collateral Agent, each an “Agent” and collectively, the “Agents”). This Note is one of the promissory notes referred to in the Financing Agreement. Any capitalized term used herein and not defined herein shall have the meaning assigned to it in the Financing Agreement.
Until maturity (whether by acceleration or otherwise), interest shall accrue and be payable on the outstanding principal balance hereof at the per annum rates of interest set forth in the Financing Agreement. In accordance with the provisions of the Financing Agreement, upon the occurrence and during the continuance of an Event of Default, interest shall accrue at a rate per annum equal at all times to the Post-Default Rate. The Post-Default Rate shall apply both before and after any judgment or arbitration decision, until the Lender receives full payment in costs. All amounts payable by the Borrower[s] hereunder shall be paid in accordance with the terms and conditions of the Financing Agreement in immediately available funds.
[Each] [The] Borrower hereby waives the requirements of demand, presentment, protest, notice of protest and dishonor, notice of intent to accelerate, notice of acceleration, and all other demands or notices of any kind in connection with the delivery, acceptance, performance, default, dishonor or enforcement of this Note. No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof or a consent thereto; nor shall a single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
This Note and all provisions hereof shall be binding upon the Borrower[s] and all persons claiming under or through the Borrower[s], and shall inure to the benefit of the Agents and the Lender, together with each of their respective successors and assigns, including each owner and holder from time to time of this Note. [The obligations of the Borrowers under this Note shall be joint and several obligations of the Borrowers, and of each the Borrowers’ successors and assigns.]
[Signature Page to [Revolving Loan Note]/[Term Loan Note]]
[Each] [The] Borrower promises and agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting or attempting to collect this Note, including all reasonable attorneys’ fees and disbursements, as described in the Financing Agreement.
This Note may be executed in any number of counterparts and by different parties hereto or thereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
To the extent of any inconsistency between any of the terms and conditions of this Note and the terms and conditions of the Financing Agreement, the terms and conditions of the Financing Agreement shall control.
This Note is secured by the Collateral described in the Financing Agreement and the other Loan Documents, to which reference is hereby made for a more complete statement of the terms and conditions under which the [Revolving Loans][Term Loan] evidenced hereby [is] [are] made and [is] [are] to be prepaid or accelerated, and is hereby entitled to all the benefits and rights of the Financing Agreement and such other Loan Documents (including, without limitation, any guarantees delivered in connection therewith).
This Note constitutes a “Loan Document” under and as defined in the Financing Agreement and is subject to the terms and provisions therein regarding Loan Documents.
The provisions of Sections 12.09, 12.10, 12.11, 12.12, 12.13, 12.14, 12.15 and 12.21 of the Financing Agreement are hereby incorporated by reference herein, mutatis mutandis, as to apply to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, and intending to be legally bound hereby, [each] [the] Borrower has caused this Note to be executed by its duly authorized officer as of the day and year first above written.
OBAGI COSMECEUTICALS LLC | ||
By: | ||
Name:
Title: |
[ADDITIONAL BORROWERS] | ||
By: | ||
Name:
Title: |
[Signature Page to [Revolving Loan Note]/[Term Loan Note]]
EXHIBIT 2.09(d)-1
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to that certain Financing Agreement, dated as of March 16, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (together with its successors and permitted assigns, individually, the “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and, TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”). Unless otherwise defined herein, terms defined in the Financing Agreement and used herein shall have the meanings given to them in the Financing Agreement.
Pursuant to the provisions of Section 2.09(d) of the Financing Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan or Loans (as well as any promissory note evidencing any such Loan) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of a Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (iv) it is not a controlled foreign corporation related to a Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished the Administrative Agent and the Administrative Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Administrative Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[signature page follows]
[NAME OF LENDER] | ||
By: | ||
Name: | ||
Title: | ||
Date: [_________] [__], 20[ ] |
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-1]
EXHIBIT 2.09(d)-2
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to that certain Financing Agreement, dated as of March 16, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (together with its successors and permitted assigns, individually, the “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and, TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”). Unless otherwise defined herein, terms defined in the Financing Agreement and used herein shall have the meanings given to them in the Financing Agreement.
Pursuant to the provisions of Section 2.09(d) of the Financing Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of a Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a controlled foreign corporation related to a Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[signature page follows]
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-1]
[NAME OF PARTICIPANT] | ||
By: | ||
Name: | ||
Title: | ||
Date: _________ __, 20[ ] |
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-2]
EXHIBIT 2.09(d)-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Financing Agreement, dated as of March 16, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (together with its successors and permitted assigns, individually, the “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and, TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”). Unless otherwise defined herein, terms defined in the Financing Agreement and used herein shall have the meanings given to them in the Financing Agreement.
Pursuant to the provisions of Section 2.09(d) of the Financing Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners or members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners or members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners or members is a ten percent shareholder of a Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners or members is a controlled foreign corporation related to a Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[signature page follows]
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-2]
[NAME OF PARTICIPANT] | ||
By: | ||
Name: | ||
Title: | ||
Date: _________ __, 20[ ] |
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-3]
EXHIBIT 2.09(d)-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Financing Agreement, dated as of March 16, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Obagi Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Ultimate Parent”), Obagi Holdings Company Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (the “Parent”), Obagi Cosmeceuticals LLC, a Delaware limited liability company (together with each other Person that executes a joinder agreement and becomes a “Borrower” thereunder, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of the Ultimate Parent listed as a “Guarantor” on the signature pages thereto (together with the Ultimate Parent, the Parent and each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder, each, a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (together with its successors and permitted assigns, individually, the “Lender” and, collectively, the “Lenders”), TCW Asset Management Company LLC, a Delaware limited liability company (“TCW”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and, TCW, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and, together with the Collateral Agent, each, an “Agent” and, collectively, the “Agents”). Unless otherwise defined herein, terms defined in the Financing Agreement and used herein shall have the meanings given to them in the Financing Agreement.
Pursuant to the provisions of Section 2.09(d) of the Financing Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan or Loans (as well as any promissory note evidencing any such Loan) in respect of which it is providing this certificate, (ii) its direct or indirect partners or members are the sole beneficial owners of such Loan or Loans (as well as any promissory note evidencing such Loan), (iii) with respect to the extension of credit pursuant to this Financing Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners or members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners or members is a ten percent shareholder of a Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners or members is a controlled foreign corporation related to a Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished the Administrative Agent and the Administrative Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Administrative Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
[signature page follows]
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-4]
[NAME OF LENDER] | ||
By: | ||
Name: | ||
Title: | ||
Date: _________ __, 20[ ] |
[Signature Page to U.S. Tax Compliance Certificate 2.09(d)-4]
Exhibit 10.30
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item (601)(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
DISTRIBUTION SERVICES AGREEMENT
This Distribution Services Agreement (this “Agreement”), effective as of June 27, 2018 (the “Effective Date”), is by and between WBC Group, LLC, an Ohio limited liability company (“WBC”), and Obagi Cosmeceuticals LLC, a Delaware limited liability company (“Supplier”).
BACKGROUND
A. WBC is engaged in the business of providing distribution services with respect to various [***], skincare, dermatology, [***] and [***] products.
B. Supplier (directly or through its Affiliates) is engaged in the design, development, manufacture and/or supply of the products listed or described on Exhibit A attached hereto (the “Product” or “Products”). For purposes of this Agreement, an “Affiliate” of a person or entity means any other person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person or entity, with the term “control” (including the terms “controlled by” and “under common control with”) meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the person or entity, whether through the ownership of voting securities, by contract or otherwise.
C. Supplier wishes to engage WBC, and WBC wishes to be so engaged, to exclusively provide distribution services that include, without limitation, (i) integrated distribution services (including packing and shipping); (ii) customer service functions (including call center services); (iii) returns processing and reporting; (iv) customer credit, invoicing, and collection services; (v) accounts receivable and chargeback service; and (iv) data reporting (collectively, the “Services”) with respect to the Products to (x) physicians and other licensed practitioners and their related offices, clinics or other facilities, (y) distributors selling Products to such practitioners and facilities, and (z) pharmacies, in each case whether directly or online, within the United States of America and Puerto Rico (collectively, the “Physician-Dispensed Market”), on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1 APPOINTMENT
1.1 Exclusive Distributor for the Physician-Dispensed Market. Pursuant to the terms and subject to the conditions of this Agreement, in exchange for WBC’s willingness to invest in designing and building custom WBC Webpages (as defined below) for Supplier and providing dedicated project management resources in furtherance of the transactions contemplated hereby, and for the other consideration provided for herein, Supplier hereby appoints WBC as its exclusive provider of the Services with respect to the Products (including any new products or improvements, enhancements or redesigns of existing Product as provided in Section 2.11) in and to the Physician-Dispensed Market, and WBC hereby accepts such appointment. During the term of this Agreement, WBC will not and will agree not to enter into any agreement to provide substantially similar Services to [***] for goods or products that are competitive with any of the Products, without the express prior written consent of Supplier. As part of WBC’s exclusive appointment, from and after the Launch Date (as defined below), Supplier shall not, directly or indirectly through any Affiliate or third-party agents, representatives, distributors, or other entities (except WBC), sell or engage in the Services with respect to any Products to the Physician-Dispensed Market. WBC shall perform the Services (including, without limitation, all storage, handling, shipping and distribution) in accordance with generally accepted industry standards of operation and in conformity with all applicable laws.
1.2 Transition from Existing Distribution Channels; Customer Webpages. Promptly after the Launch Date (as defined below) hereof, the parties shall take all commercially reasonable steps to transition the distribution of Products to the Physician-Dispensed Market from Supplier’s existing distribution channels to WBC, culminating in Supplier ceasing to distribute Product to the Physician-Dispensed Market through any other channel. In furtherance of the foregoing, promptly after the execution of this Agreement, WBC will design and build, and provide a link or web portal to be included on Supplier’s website to, a website hosted and maintained by WBC and as further described on Exhibit B for purposes of Physician-Dispensed Market customer ordering and order fulfillment (the “WBC Webpages”). WBC retains all intellectual property and other rights in and with respect to the WBC Webpages. The parties shall use their commercially reasonable efforts to cause the launch of WBC assuming the distribution of Product to the Physician-Dispensed Market as contemplated hereby to occur on or before [October 31], 2018; provided that such launch shall not occur unless and until WBC [***] as provided in Section 4.2. The date such launch occurs is referred to herein as the “Launch Date.” WBC acknowledges that Valeant Pharmaceuticals North America LLC will provide transition services to Supplier during the term of this Agreement in support of its obligations hereunder, including but not limited to data receipt, order processing and certain permits, authorizations, licenses, certificates, approvals or similar requirements of or from any governmental authority in connection with the Services under this Agreement. Supplier agrees to transfer to WBC any existing toll-free telephone numbers that were established in connection with any prior distribution channels for the Product, and WBC agrees that any and all toll-free telephone numbers transferred to or established by WBC solely in connection with this Agreement will be transferred to Supplier following the termination of this Agreement for any reason.
1.3 Marketing Activities; Product Referrals. Supplier will use all commercially reasonable efforts to promote and market the sale and distribution of the Product to the Physician-Dispensed Market during the term of this Agreement. At a minimum, such efforts shall include continuing to perform such sales and marketing activities with respect to the Product for the Physician-Dispensed Market as conducted by Supplier prior to the Launch Date. WBC shall not be required to perform any marketing or sales activities with respect to the Product. Supplier shall include on its websites intended for customers or potential customers within the Physician-Dispensed Market a link, to be provided by WBC, that directs customers or potential customers of the Product in the Physician-Dispensed Market to the WBC Webpages. Supplier shall direct any customers or potential customers within the Physician-Dispensed Market who attempt to place Product orders with Supplier to WBC or the WBC Webpages. Supplier shall actively promote WBC with respect to the Products for the Physician-Dispensed Market on its websites intended for customers or potential customers within the Physician-Dispensed Market and in any communication or event where Product is promoted or displayed for the Physician-Dispensed Market, including applicable trade shows, brochures and advertisements.
ARTICLE 2 SUPPLY OF PRODUCT
2.1 Supply. Subject to the terms and conditions set forth herein, Supplier agrees to manufacture or otherwise supply, sell and ship Product to WBC as ordered from time to time by WBC under this Agreement, and WBC shall purchase from Supplier the Product so ordered. Supplier is responsible for procuring all materials and equipment required to produce and package or otherwise procure the Products ordered hereunder. Supplier is responsible for the quality of the Product and ensuring the Product is manufactured in a safe and sanitary environment as required under current good manufacturing practices (“cGMP”). Supplier shall ensure that the expiration date of all Product shipped to WBC hereunder is at least the following number of months after the date of shipment of such Product, as determined by each Product’s applicable product category as set forth on Exhibit A: (a) for Prescription Products, [***], and (b) for Non-Prescription Products, [***]. If Supplier ships WBC a Product not meeting its applicable minimum shelf life as set forth in the immediately preceding sentence, WBC shall notify Supplier and consider in good faith for at least 10 days any commercially reasonable remedy proposed by Supplier with respect to such Product prior to rejecting the Product as non-conforming pursuant to Section 2.6. Supplier shall maintain sufficient capability and capacity to meet forecasted demand for the Product in the Physician-Dispensed Market in accordance with Section 3.2. Supplier represents and warrants to WBC that it has and will convey to WBC good title to all the Product it sells to WBC hereunder and that such Product will be free and clear of all liens, claims or encumbrances.
2.2 Purchase Orders. From time to time, WBC shall submit to Supplier a purchase order for each order of Product hereunder via facsimile, email or EDI pursuant to its standard purchase order form, the terms and conditions of which are incorporated herein by reference to the extent such terms and conditions do not conflict with this Agreement. In the event of any discrepancy between any purchase order and this Agreement, the terms of this Agreement shall govern. Each purchase order will describe the Product ordered, quantity and the requested delivery date, provided that WBC will provide at least 10 days of lead time prior to the requested delivery date. Supplier shall accept and fulfill all purchase orders submitted in accordance with this Section 2.2.
2.3 Packaging; Advertising Claims. Supplier shall ensure that the Products are labeled and packaged in accordance with applicable United States Food and Drug Administration (“FDA”) labeling requirements and other requirements of applicable laws. Supplier shall pack Product properly to withstand transportation in accordance with cGMP. Supplier shall also ensure Product is stored properly under cGMP required practices. Prices for Product include, and Supplier is solely responsible for, all costs and expenses relating to packing, crating, boxing, and loading of Product ordered by WBC hereunder. Supplier is responsible for all marketing and advertising claims associated with the Product. Supplier shall ensure that (a) all marketing and advertising claims are properly supported and substantiated by scientific evidence and meet both state and federal requirements, including the Federal Trade Commission (“FTC”), FDA and all state attorney general and regulatory board marketing and advertising requirements, (b) all such substantiation evidence is documented in writing, and (c) all such documentation is securely maintained. Supplier shall provide copies of all such documentation to WBC at WBC’s reasonable written request.
2.4 Shipping. Supplier shall ship all Product to be received on or before the requested delivery date at the facility designated by WBC as set forth in the applicable purchase order. If Supplier becomes aware of any backorder or other anticipated delay that would result in a change to the requested delivery date, Supplier will promptly notify WBC. If there is any extended backorder or delay in shipment of a Product, and WBC exhausts its inventory of such Product, WBC may disclose on the WBC Webpages that there is a backorder or delay for delivery of such Product and shall be permitted to decline customer orders of such Product without being in breach of any obligation under this Agreement until such time as WBC is re-supplied with such Product by Supplier. All shipments of Product shall be FOB WBC’s designated delivery facility, unless otherwise mutually agreed upon by WBC and Supplier. Title and risk of loss to Product shall pass to WBC upon delivery of the Product to the designated delivery facility. Supplier shall bear the cost of freight and all other costs of shipping Product to the designated delivery facility.
2.5 Product Warranty; Specifications. Supplier represents and warrants to WBC that Product supplied by Supplier will (a) strictly conform to its product, labeling and packaging formulations, including the dimensions, count, weight and other specifications (the “Specifications”), and (b) be free from defects in material, workmanship and design, subject to all applicable industry standards. Supplier may make changes to the Specifications, provided the changes do not adversely affect the quality of the Product.
2.6 Non-Conforming Shipments. Upon receipt of each shipment of Products at the designated delivery location, WBC shall promptly inspect it for Product with non-concealed physical damage or defect and for non-concealed shortages or inconsistencies with the applicable purchase order or packing list, inventory or bill of lading that accompanies the shipment (each, a “Non-Conforming Shipment”). Notwithstanding the foregoing, WBC shall not be required to open and inspect individual cases of Product. WBC may reject any Non-Conforming Shipment by giving notice to Supplier in writing within [***] after receipt thereof. Any Non-Conforming Shipment not so rejected shall be deemed to have been accepted by WBC. Supplier shall bear all expenses and costs associated with handling, freight and return of any Non-Conforming Shipment. Final disposal of any Non-Conforming Shipment shall be the sole responsibility of Supplier, who shall retain ownership thereof.
2.7 Product Claims. Supplier shall be responsible for all product warranty (if any) and liability claims with respect to the Product, including any claim of (a) bodily injury or death of any person, or damage to any property, resulting from the use of the Product, or (b) any design or manufacturing defect in the Product (each, a “Product Claim”). Without limiting the foregoing, Supplier shall support all product warranties and technical questions relating to Product distributed by WBC.
2.8 No Charge Shipments. WBC will ship Product and other promotional items supplied by Supplier under the No Charge Programs set forth on Exhibit C as directed by Supplier from time to time (each, a “No Charge Shipment”). WBC shall charge Supplier for each No Charge Shipment an amount equal to [***] for each shipping package shipped by WBC to fulfill such No Charge Shipment.
2.9 Additional Services. If requested by Supplier, WBC shall affix “Tester,” “Sample,” or similar stickers to be provided by Supplier on designated Product distributed by WBC hereunder for a fee of [***] sticker; provided, however, that such stickering service shall not replace Supplier’s responsibility to provide all labeling and instructions on the Product required by law or regulation in accordance with Section 4.1. From time to time during the term of this Agreement, WBC may quote other services to be provided to Supplier in connection with the sale and distribution of Product to the Physician-Dispensed Market on such terms, conditions and specifications as may be agreed to by the parties.
2.10 Forecasting; Notice of Promotional Campaigns; Backorders. On a monthly basis, Supplier will provide WBC a good faith, rolling 12-month forecast of the anticipated monthly volume demand for Product in the Physician-Dispensed Market for each Product based on information available at the time to Supplier. In addition, Supplier shall provide WBC at least 30 days’ notice prior to Supplier launching any seasonal, holiday or other promotional campaign for the Physician-Dispensed Market with respect to any Product, and shall provide WBC with immediate notice of any Product that is, or is anticipated to become, on backorder.
2.11 Changes to Product Offering; Discontinued Product; New Products. Supplier shall provide WBC commercially reasonable prior written notice any proposed additions, deletions or changes to the Product to be distributed hereunder. Without limiting the foregoing, Supplier shall provide WBC (i) at least three (3) months’ notice before discontinuing a Product (“Discontinued Product”), and (ii) at least 60 days’ notice before introducing to the Physician-Dispensed Market any new product, or any improvements, enhancements or redesigns of existing Product, or any replacement for a Discontinued Product (each, a “New Product”). Upon receipt of such notice with respect to a Discontinued Product, WBC may, in its sole discretion, cancel any outstanding orders with Supplier of the Discontinued Product. Alternatively, WBC may make purchases of enough of the Discontinued Product from Supplier to fulfill WBC’s forecasted commitments to customers, and Supplier shall fulfill such orders, if available. Upon expiration of such notice period with respect to a Discontinued Product, WBC may return or destroy such Discontinued Product then in its stock for [***]. WBC shall have the unilateral right to delete from Exhibit A any Product that is subject to return by WBC or a Discontinued Product. With respect to any New Product, WBC shall have the right, but not the obligation, to add the New Product to Exhibit A as a “Product” hereunder effective as of the time of such New Product’s launch to the Physician-Dispensed Market; provided that WBC shall not be permitted to reject a New Product without a justifiable and reasonable cause. If WBC rejects any New Product, then such New Product shall be excluded from this Agreement (including the exclusivity provisions of Section 1.1) and Supplier shall be permitted to appoint another distributor for such New Product. During the term of the Agreement, Exhibit A shall be promptly amended to reflect any additions, deletions or changes to the Product to be distributed hereunder in accordance with this Section 2.11.
2.12 Periodic Reporting. WBC will provide to Supplier ongoing reporting at a reasonable frequency to be mutually agreed upon by the parties. Such reporting may include daily reports on orders, backorders, inventory, shipments, customers, transactions and billing related to the Products.
2.13 WBC Obligations. WBC (i) shall store and warehouse the Products in suitable storage facilities and distribute the Products in accordance with applicable laws and any storage or distribution requirements set forth in the Product’s Specifications and labeling (collectively, the “Requirements”); (ii) shall promptly notify Supplier of any Product complaints that may indicate a manufacturing/packaging defect, contamination or Product tampering; (iii) shall maintain a business continuity plan designed to avoid disruptions of distribution of the Products, including loss of data network, website, voice network, call center and distribution centers utilized to perform the Services; and (iv) shall not adulterate or misbrand Products.
2.14 WBC Returns. In addition to its return rights under Supplier’s returns policy as may be in effect from time to time, WBC will have the right to return to Supplier and receive full credit for its original purchase price for (a) outdated Product ([***]), (b) WBC’s inventory of [***] Product ([***]), (c) Discontinued Product pursuant to Section 2.11, provided that the parties shall first use commercially reasonable efforts in cooperation with each other to otherwise reduce WBC’s inventory of Discontinued Products, (d) Product still within [***] of its expiration date, (e) Product not meeting the warranties set forth in Section 2.5, (f) WBC’s remaining inventory of any Product subject to any recall or corrective action as described in Section 4.4, and (g) WBC’s remaining inventory of Product upon termination or expiration of this Agreement, in each case without incurring a Supplier restocking fee or similar charge or requiring a return authorization. [***] shall be responsible for all freight and other shipment and delivery costs relating to returns by WBC pursuant to this Section 2.14. If Supplier changes its return policy as in effect at the time of a Product order by WBC in a manner that further limits returns, WBC may return Product based on the returns policy in effect at the time of such order. No less than 30 days’ advance notice to WBC must be provided for all return policy changes by Supplier.
2.15 Customer Returns. WBC will handle all customer returns hereunder in accordance with the Customer Products Return Policy attached hereto as Exhibit D.
ARTICLE 3 PRICES, FEES, PAYMENT
3.1 Wholesale Acquisition Cost; Supplier Invoices; Payment Terms. Subject to Section 3.3, WBC agrees to pay Supplier the respective wholesale acquisition cost (“WAC”) set forth on Exhibit A for each Product distributed by Supplier hereunder, except samples which are at [***] cost. The respective WAC per Product as set forth on Exhibit A may be amended by Supplier from time to time upon 30 days’ prior written notice to WBC; provided, however, that the WAC for any particular Product cannot be reduced below the WAC for such Product as set forth on Exhibit A as of the Effective Date without the prior written approval of WBC. Supplier will submit an invoice to WBC for payment with or after delivery of the applicable Product. Payments for each order shall be made in U.S. dollars, net [***] from the later of (a) the date of delivery of the Product ordered to WBC’s facility or (b) the date of receipt by WBC of a complete and accurate invoice for such order. WBC shall pay Supplier when due all undisputed amounts and shall notify Supplier of any disputed amounts in writing. The parties shall work in good faith to resolve any disputed amounts as quickly as practicable. Other than any applicable sales tax relating to the sale of Product by Supplier to WBC, Supplier shall bear the cost of any taxes relating to its sourcing of the Product and its supply of Product to WBC hereunder, including any use, customs, import or excise tax. WBC shall be responsible for any taxes relating to its sale and distribution of any Product supplied by Supplier hereunder, including any sales, use, customs or excise tax.
3.2 Distribution by WBC to the Physician-Dispensed Market. Supplier will keep WBC informed of all pricing terms proposed by Supplier to the various customers in the Physician-Dispensed Market pursuant to its sales and marketing efforts, including any proposed discounts, rebates or other price concessions (the “Applicable Proposed Pricing Terms”). Subject to the terms of this Agreement, WBC will use its commercially reasonable efforts to, but shall not be obligated to, sell Product to customers ordering Product from WBC on the Applicable Proposed Pricing Terms to the extent known to WBC. Each customer in the Physician-Dispensed Market will be permitted to purchase Product from WBC via the WBC Webpages, phone, email, and fax, provided that WBC will determine, in its sole discretion, whether or not to extend credit to any customer. WBC will manage billing and collection of payments from customers. WBC will provide customers the option to pay by any major credit card, as well as any other payment option WBC may elect to provide. WBC will maintain adequate staff to service Supplier, including customer service agents and a dedicated Program Manager. WBC will same-day ship orders received by [***], with respect to orders being shipped by a distribution center located in the Eastern time zone, and [***], with respect to orders being shipped by a distribution center located in the Pacific time zone. WBC will ship orders received after the same-day cut-off times set forth above on the following business day. WBC shall be responsible for the cost of freight and all other packaging and shipping costs relating to its shipment of Product to the Physician-Dispensed Market, including No Charge Shipments. WBC will respond to all customer requests and resolve customer issues in a prompt and timely manner. WBC will manage its inventory of Product on a first-expiration, first-out basis. WBC shall, at all times, maintain on-hand inventory of not less than a [***] supply of Products. For purposes of this Agreement, a “[***] supply of Products” shall be deemed to be a supply of Products sufficient to satisfy reasonably anticipated orders from customers during a period of [***] without any further deliveries from Supplier.
3.3 Service Fee; Chargebacks. In consideration of its services provided hereunder, Supplier shall pay WBC a service fee (the “Service Fee”) equal to [***]% (the “Service Fee Percentage”) of the WAC, if any, charged by Supplier to WBC for all Product shipped to WBC by the Supplier for the Physician-Dispensed Market including any No Charge Shipment. In addition, Supplier shall reimburse WBC (a) the amount of the excess, if any, of (i) the WAC, if any, charged by Supplier to WBC of any Product shipped by WBC to the Physician-Dispensed Market (including any No-Charge Shipment) over (ii) the sales price actually charged by WBC for such Product to its customers (net of any rebates, discounts, price reductions, or other price concessions conferred upon such customers) (the “Applicable Net Sales Price”), but only to the extent the Applicable Net Sales Price charged by WBC was not less than the Applicable Proposed Pricing Terms, to the extent known by WBC (the “WAC Chargeback”), plus (b) the aggregate amount of fees and expenses incurred by WBC in connection with [***].
3.4 WBC Invoices. WBC shall invoice Supplier the Service Fee, with reasonable supporting detail, on a monthly basis within seven (7) business days following the end of each calendar month during which Product was shipped by WBC. WBC shall invoice Supplier for any WAC Chargebacks, with reasonable supporting detail, on a [***] basis within seven (7) business days following the end of each [***] during which Product that is subject to a WAC Chargeback was shipped by WBC. WBC shall invoice Supplier for any No Charge Shipments, Credit Card Pass Through and fees for additional services as contemplated by Section 2.9, with reasonable supporting detail, on a quarterly basis within seven (7) business days following the end of each calendar quarter during which Product that is subject to any No Charge Shipment or Credit Card Pass Through was shipped by WBC or any such services were provided by WBC. At WBC’s election, WBC shall have the right to offset the amount of any invoice against any amounts then-owed by WBC to Supplier hereunder. To the extent the amount of an invoice is not offset against amounts owed by WBC to Supplier, Supplier shall pay to WBC the net outstanding amount of the invoice in U.S. dollars within 30 days from the date of its receipt of the invoice, except to the extent such amount is disputed by Supplier in writing, in which case the parties shall work in good faith to resolve any disputed amounts as quickly as practicable. Supplier shall bear the cost of any taxes relating to any amounts invoiced by WBC hereunder, including any sales, use, customs, import or excise tax.
3.5 Adjustment to Service Fee Percentage. Supplier acknowledges that WBC entered into this Agreement, including with respect to the Service Fee Percentage agreed to herein, based on and in reliance on the assumption that the transactions contemplated by this Agreement will achieve metrics that, as a whole, will be materially consistent with or better than those set forth on Exhibit E (the “Transaction Assumptions”). Beginning on the date that is six (6) months after the Launch Date and at any time and from time to time thereafter (but not more frequently than once during any consecutive 12 month period), if WBC reasonably demonstrates that (a) actual results with respect to such metrics achieved during any applicable Review Period (as defined below) materially differ from the Transaction Assumptions, and (b) as a result of such difference, the earnings or profit margin achieved by WBC from its performance under this Agreement during such Review Period are materially less than the earnings or profit margin, as applicable, that WBC projected with respect to this Agreement at the time it entered into this Agreement, then WBC shall have the right to propose reasonable adjustments to the Service Fee Percentage as necessary to equitably account for such difference between actual results and the Transaction Assumptions (where “equitably account” means putting WBC in substantially the same position with respect to its earnings or profit margin, as applicable, from the date of the applicable Adjustment Notice (as defined below) through the remainder of the Term, assuming actual results will be consistent with the results achieved during the Review Period as opposed to the Transaction Assumptions). WBC shall exercise such right by giving written notice to Supplier (an “Adjustment Notice”), which notice shall state the Review Period to which it relates and shall set forth the proposed adjustments with reasonable supporting detail. If Supplier disagrees with the adjustment proposed by WBC in the Adjustment Notice, Supplier will so notify WBC within 60 days after its receipt thereof (an “Objection Notice”). If Supplier fails to deliver an Objection Notice before the expiration such 60-day period, the adjustment to the Services Fee Percentage proposed by WBC in the Adjustment Notice shall be deemed to have been accepted by Supplier. If the Supplier delivers the Objection Notice before the expiration of such 60-day period, WBC and the Supplier shall negotiate in good faith to resolve such objections within 30 days after WBC’s receipt of the Objection Notice (the “Resolution Period”). If Supplier and WBC fail to reach an agreement with respect to all of the matters set forth in the Objection Notice before expiration of the Resolution Period, then any issues remaining in dispute shall be submitted by the parties to an impartial, independent accounting firm who, acting as arbitrator, shall resolve the disputed issues and determine the applicable adjustment to the Service Fee Percentage, if any, which determination shall be final and binding on the parties. The fees and expenses of the accountant shall be borne by equally by WBC and Supplier. Any adjustment to the Service Fee Percentage pursuant to this Section 3.5 shall be effective as of the date of the applicable Adjustment Notice and shall apply for all periods thereafter during the Term until such time as it may be further adjusted pursuant to this Section 3.5. If WBC has already invoiced Supplier a Service Fee for any period to which the adjusted Service Fee Percentage applies, WBC shall invoice Supplier for the difference between the Service Fee previously invoiced and the Service Fee for such period as calculated using the adjusted Service Fee Percentage, which invoice shall be paid pursuant to, and shall otherwise be subject to, the provisions of Section 3.4. For purposes of this Section 3.5, “Review Period” means any period during the Term that (1) is not shorter than six (6) months, (2) is not longer than 12 months and (3) begins no earlier than 13 months prior to the date of the Adjustment Notice relating to such period. WBC’s determination of earnings and profit margin for purposes of this Section 3.5 shall be made in accordance with United States generally accepted accounting principles, consistently applied. No change from the date hereof in any accounting principles used by WBC in its determination of earnings and profit margin shall be the basis for an adjustment to the Service Fee Percentage pursuant to this Section 3.5
ARTICLE 4 COMPLIANCE WITH LAWS
4.1 Compliance with Laws. Each party shall comply with all applicable laws with respect to its activities hereunder, including those relating to the marketing and sale of the Product and the implementation or enforcement of any minimum advertised price (MAP) policy or other policy relating to pricing or advertising of the Product.
4.2 Licenses. Supplier has obtained and shall maintain all governmental approvals, consents, licenses, permits, authorizations, declarations, filings and registrations (collectively, “Licenses”) necessary under applicable law for its performance of the terms and conditions of this Agreement, including any Licenses required by the FDA and any pharmaceutical boards, as applicable. WBC shall use commercially reasonable efforts to obtain, by no later than [***] (the “Licensure Date”), and thereafter shall maintain, all Licenses necessary under applicable law for its performance of the terms and conditions of this Agreement, including any Licenses required by the FDA and any pharmaceutical boards, as applicable; provided, however, that WBC shall not be required to obtain Licenses for all of its distribution centers by the Licensure Date in order to be compliant with this Section 4.2. If WBC does not substantially fulfill its obligations under this Section 4.2 with respect to obtaining applicable Licenses, Supplier shall have the right to terminate this Agreement prior to the Launch Date by giving notice of such termination to WBC, in which case this Agreement shall become void and have no effect, without any liability on the part of any party. For the purposes of this Section 4.2 “substantially fulfill” means that at least one of WBC’s distribution centers has obtained, by no later than the Licensure Date, all the necessary Licenses under applicable law for its performance of the terms and conditions of this Agreement, unless (a) the failure to obtain all such Licenses by such date is a result of delay from causes beyond the reasonable control of WBC and (b) WBC has proposed a commercially reasonable alternative to fulfill the terms and conditions of this Agreement until such time as such Licenses have been obtained.
4.3 Product Regulations. Supplier represents and warrants that all Product, including Product packaging, advertising and labelling, will comply with all applicable laws, including all FTC laws and regulations, the Federal Food, Drug and Cosmetic Act, as amended (the “FDCA”), the California Safe Drinking Water and Toxic Enforcement Act of 1986 (aka Proposition 65), and all regulations, rules, declarations, interpretations and orders issued thereunder. Supplier agrees to perform, at no cost to WBC, all corrective action needed to fix any regulatory deficiencies in the Product, including Product packaging and labelling. Neither party will advertise the Product with claims that would require FDA approval or be considered false or misleading advertising under FTC standards.
4.4 Product Recalls or Market Withdrawal. In the event of any corrective action or recall or market withdrawal of any Product, Supplier will notify WBC promptly. Supplier will promptly take all necessary corrective action or conduct any recall or market withdrawal. WBC shall maintain records that identify the Products stored by WBC by lot number and shall fully cooperate in all commercially reasonable respects in effecting such recall or withdrawal. WBC will not be responsible for any costs associated with any recall or corrective action or withdrawal, except to the extent such recall or withdrawal is attributable to the gross negligence or willful misconduct of WBC, or the knowing failure of WBC to comply with and adhere to applicable Requirements of the affected Product. WBC will have the right to notify its customers of such actions and advise them of the remedy to be provided by Supplier. Supplier will promptly notify WBC of all customer remedies by promptly providing instructions to WBC to provide to its customers for return of Product to Supplier for correction and/or modification. Supplier will be responsible for all costs and expenses incurred in affecting such a remedy including costs of notices, replacement and shipping, as applicable.
4.5 Importing. In the event any Product is manufactured by or for Supplier at any location outside the U.S., Supplier shall ensure that all such Product (a) are imported into the U.S. in compliance with all applicable laws, (b) meet all the requirements of the U.S. Customs and Border Protection and (c) if applicable, remain held intact and not distributed until the FDA has issued a “may proceed” notice or other substantially similar release. The parties agree, and Supplier acknowledges, that Supplier shall be the initial importer/distributor for all Product manufactured at any location outside the U.S.
4.6 FDCA Debarment. WBC represents and warrants that neither WBC nor any of its officers, directors or current employees has been debarred pursuant to the FDCA or been excluded from participating in a federal health care program, including without limitation the Medicare or Medicaid programs. WBC agrees to promptly notify Supplier upon becoming aware that WBC or any of its officers, directors or employees is subsequently debarred under the FDCA or excluded from a federal health care program.
ARTICLE 5 AUDITS, RECORDS AND INSPECTION RIGHTS;
INTELLECTUAL PROPERTY; CONFIDENTIAL INFORMATION
5.1 Audits, Records and Inspection Rights. During the term of this Agreement and for such longer period as may be required by applicable law, WBC shall maintain records relating to the Services in compliance with all laws, rules and regulations and the terms of this Agreement, including all records relating to WAC Chargebacks. At any time during the term of this Agreement, and for one (1) calendar year after the termination of this Agreement, upon not less than ten (10) business days’ prior written notice, Supplier may perform an audit of the foregoing records regarding transactions relating to the Services that took place during the 12-month period immediately preceding such notice at Supplier’s sole expense. WBC shall make such records available to Supplier for inspection and copying. Such audits shall be performed during regular business hours using the services of a third party independent auditor mutually acceptable to the parties, provided that neither party shall unreasonably withhold or condition its approval of any auditor acceptable to the other party. No auditor shall be allowed to perform an audit without first executing a confidentiality agreement reasonably acceptable to the parties. Any such audit shall be conducted within 30 days of the date WBC provides the necessary documentation to the auditor. Any information provided in connection with the audit shall constitute Confidential Information of WBC subject to the terms of Section 5.3. Notwithstanding the foregoing, Supplier may not conduct more than one audit in any calendar year, unless an additional audit is required for compliance with applicable law, rules and regulations, or relate to Product quality.
5.2 Product Materials; Trademarks. To the extent useful or necessary for the WBC Webpages, Supplier shall provide to WBC, and cooperate with WBC to develop and/or enhance, materials relating to the Product, including product descriptions, photographs, videos, animations and illustrations (the “Product Materials”). Supplier hereby grants to WBC a royalty-free, non-exclusive right in the Physician-Dispensed Market to use the Product Materials and Supplier’s trademarks (the “Trademarks”) during the term of this Agreement for the purposes of WBC providing the Services hereunder. Supplier warrants that Supplier has the right and authority to grant the rights set forth in this Section 5.1 and that no Product Materials or Trademarks infringe any rights of any third party. WBC shall not alter or make any addition to the labelling or packaging of the Product displaying the Trademarks without the prior written consent of Supplier (which consent will not be unreasonably withheld, conditioned or delayed). Each party shall promptly give notice in writing to the other if it becomes aware of: (a) any infringement or suspected infringement of the Trademarks or any other intellectual property rights relating to the Product; or (b) any claim that any Product or the manufacture, use, sale or other disposal of any Product, whether or not under the Trademarks, infringes the rights of any third party. Each party shall, at the request and expense of the other, provide any reasonable assistance to the other in connection with any action to be taken by the other party with respect to such infringement or suspected infringement (including the use of its name in, or being joined as a party to, proceedings), provided that that party is given such indemnity as it may reasonably require against any losses, costs and expenses it may incur as a result of, or in connection with, providing that assistance.
5.3 Confidential Information. During the term of this Agreement, each party (the “Receiving Party”) may be provided with, have access to, or otherwise learn confidential and proprietary information of the other party (the “Disclosing Party”) (including certain technical information and materials) that is of substantial value to the Disclosing Party, which is identified as confidential at the time of disclosure or which should reasonably be considered to be confidential to the Disclosing Party (“Confidential Information”). All Confidential Information remains the property of the Disclosing Party. The Receiving Party may disclose the Confidential Information of the Disclosing Party only to its employees and contractors who need to know the Confidential Information for purposes of performing under this Agreement and who agree to be bound by the confidentiality obligations set forth herein. The Receiving Party will not use the Confidential Information without the Disclosing Party’s prior written consent except in performance under this Agreement. The Receiving Party will take measures to maintain the confidentiality of the Confidential Information equivalent to those measures the Receiving Party uses to maintain the confidentiality of its own confidential information of like importance but in no event less than commercially reasonable measures. The Receiving Party will give prompt notice to the Disclosing Party of any unauthorized use or disclosure of the Confidential Information and agrees to assist the Disclosing Party in remedying such unauthorized use or disclosure. The confidentiality obligations of this Section 5.2 do not extend to information which: (i) becomes part of the public domain without the fault of the Receiving Party; (ii) is rightfully obtained by the Receiving Party from a third party with the right to transfer such information without any known obligation of confidentiality; (iii) is independently developed by the Receiving Party without reference to or use of the Disclosing Party’s Confidential Information, as evidenced by written records; or (iv) was lawfully in the possession of the Receiving Party at the time of disclosure, without restriction on disclosure, as evidenced by written records. In addition, the Receiving Party may disclose Confidential Information of the Disclosing Party as may be required by law, a court order, or a governmental agency with jurisdiction, provided that before making such a disclosure the Receiving Party first notifies the Disclosing Party in writing, if legally permissible, and cooperates with the Disclosing Party, at the Disclosing Party’s reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure. Upon termination or expiration of this Agreement, the Receiving Party will return to the Disclosing Party all tangible copies of Confidential Information of the Disclosing Party in the Receiving Party’s possession or control and will erase from its computer systems all electronic copies thereof to the extent feasible.
ARTICLE 6 INDEMNIFICATION; INSURANCE
6.1 Indemnification.
(a) Supplier shall defend, indemnify and hold harmless WBC, its Affiliates, and their officers, directors, employees and agents (each, a “WBC Indemnified Party”) from and against any claims, suits, demands, litigation, actions, lawsuits, investigations, judgments, penalties, losses, damages, liabilities, costs, fines, and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) brought, imposed, or alleged against or incurred by any WBC Indemnified Party arising from:
(i) any breach of this Agreement or violation of any applicable law by Supplier or any of its agents or representatives;
(i) the gross negligence or willful misconduct of Supplier in connection with the manufacture, sourcing, packaging, shipment, or labelling of any Product or in connection with any documentation provided for or with any Product;
(ii) any Product Claim; and/or
(iii) any claims or allegations from any third party that any Product, or the sale, offer for sale or use thereof, constitutes or is alleged to constitute an infringement or violation of any patent, trademark, copyright, or other proprietary right.
Notwithstanding anything herein to the contrary, Supplier’s indemnification obligations under this Section 6.1(a) shall not apply to any Losses to the extent resulting from the grossly negligent, wrongful or fraudulent act or omission or willful misconduct of WBC or any of its agents or representatives.
(b) WBC shall defend, indemnify and hold harmless Supplier, its Affiliates, and their officers, directors, employees and agents (each, a “Supplier Indemnified Party” and, together with the WBC Indemnified Parties, the “Indemnified Parties”) from and against any Losses brought, imposed, or alleged against or incurred by any Supplier Indemnified Party arising from:
(i) any breach of this Agreement or violation of any applicable law by WBC or any of its agents or representatives; and/or
(ii) the gross negligence or willful misconduct of WBC in connection with its performance of the Services.
Notwithstanding anything herein to the contrary, WBC’s indemnification obligations under this Section 6.1(b) shall not apply to any Losses to the extent resulting from the grossly negligent, wrongful or fraudulent act or omission or willful misconduct of Supplier or any of its agents or representatives.
(c) The Indemnified Party shall promptly notify the party obligated to provide indemnification (the “Indemnifying Party”) of any claim for which the Indemnified Party seeks indemnification hereunder; provided, however, that no delay or failure on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is materially prejudiced thereby. If the claim for indemnity relates to a claim, action or allegation brought by a third party (a “Third-Party Claim”), the Indemnifying Party shall have the right to conduct the defense or settlement of such Third-Party Claim at the Indemnifying Party’s sole expense using counsel reasonably acceptable to the Indemnified Party, so long as the Indemnifying Party and such counsel conducts such defense actively and in a reasonably diligent manner and the Defense Conditions (defined below) have been, and continue to be, met. The Indemnified Party shall cooperate with the Indemnifying Party in connection such defense. The party not conducting the defense shall nonetheless have the right to participate in such defense at its own expense. The Indemnified Party shall have the right to approve the settlement of any Third-Party Claim that imposes any liability or obligation other than the payment of money damages for which the Indemnifying Party has accepted responsibility and has the financial wherewithal to satisfy. For purposes of this clause (c), “Defense Conditions” mean all of the following: (i) there is not, in the reasonable judgment of the Indemnified Party, a reasonable probability that the Third-Party Claim would adversely affect the business or goodwill of the Indemnified Party other than as a result of money damages and/or money payments (e.g., interfering with a business relationship); (ii) the Indemnifying Party has sufficient financial resources, in the reasonable judgment of the Indemnified Party, to satisfy the amount of any adverse monetary judgment that is reasonably likely to result; (iii) the Third-Party Claim does not include criminal charges; and (iv) the Indemnifying Party expressly agrees in writing to be fully responsible for all Losses relating to such Third-Party Claim, including any costs arising in connection with defending the claim.
(d) The rights and remedies of the parties set forth in this Agreement, including the indemnification rights set forth above, are not exclusive and are in addition to all other rights and remedies that may be available, including those under the Uniform Commercial Code.
6.2 Insurance. Throughout the term of this Agreement and for a period of three (3) years thereafter, each party will, at its own expense, maintain and carry insurance in full force and effect with financially sound and reputable third-party insurers insuring risks on commercially reasonable terms and in amounts customarily insured by persons engaged in the same or a similar business as such party, including (a) comprehensive general liability insurance covering bodily injury, property damage, contractual liability, products liability and completed operations; (b) worker’s compensation and employer’s liability insurance; and (c) umbrella liability insurance, all in such amounts as are necessary to insure against the risks to its operations. All policies must be primary and non-contributing and must include the other party as an additional insured with a waiver of all rights of subrogation. To the extent commercially feasible, each party will notify the other at least 30 days prior to the cancellation or implementation of a material change in the foregoing policy coverages that would affect the other party’s interests. Upon request, each party will furnish to the other party as evidence of insurance a certificate of insurance.
ARTICLE 7 TERM; TERMINATION
7.1 Term and Termination. This Agreement will commence as of the Effective Date and will continue in effect for an initial term (the “Initial Term”) ending on the fifth anniversary of the Launch Date, unless earlier terminated as set forth herein. Thereafter, this Agreement will automatically renew for additional one-year terms unless (a) the parties mutually agree in writing to not renew the Agreement; or (b) either party gives written notice of non-renewal to the other at least 90 days before the end of the then-current term. In addition, this Agreement may be terminated, effective immediately, (x) by Supplier giving WBC notice of termination prior to the Launch Date in accordance with Section 4.2, if applicable, or (y) by either party giving the other party written notice of termination if the other party (i) breaches any of its obligations under this Agreement and fails to cure such breach to the reasonable satisfaction of the non-breaching party within 30 days after written notice thereof from the terminating party; or (ii) dissolves, liquidates or ceases to conduct business; or (z) by Supplier, at its sole option, by giving WBC 60 days’ prior written notice of termination within 60 days after Supplier is notified or otherwise becomes aware of a Change of Control that is consummated on or prior to the second (2nd) anniversary of the Effective Date. For the purposes hereof, a “Change of Control” means one (1) or more transactions which result in one or more Persons who are not Affiliates of the record or beneficial holders of the equity securities of WBC as of the Effective Date directly or indirectly owning (x) more than 50% of the economic or voting interests in WBC or (y) substantially all of the assets of WBC.
7.2 Effects of Termination. Notwithstanding anything in this Agreement to the contrary, (a) the provisions of Section 5.2 and Articles 6 and 8 shall survive the expiration or termination of this Agreement, and (b) no termination or expiration of this Agreement, whether pursuant to this Article 7 or otherwise, will affect any party’s duty to satisfy any delivery, payment or other obligation pursuant to the terms of this Agreement that accrues prior to the effective date of such termination or expiration, including any Service Fee accruing prior to such termination or expiration or any obligation of Supplier pursuant to Section 7.3. In the event of the expiration or termination of this Agreement, (i) WBC shall cease all Services under this Agreement but shall fulfill all customer orders submitted prior to the effective date of termination or expiration, (ii) all customer orders for Products received by WBC after the effective date of termination or expiration shall be promptly referred to Supplier or its designee, and (iii) the parties shall reasonably cooperate to develop and effectuate a reasonable transition plan for an orderly cessation of the Services provided under this Agreement.
7.3 Termination Payment. In consideration of the significant capital expenditures and other investments by WBC in furtherance of the transactions contemplated hereby, if this Agreement is terminated prior to the expiration of the Initial Term, other than by Supplier pursuant to Section 7.1(x), 7.1(y) or 7.1(z), then Supplier shall make a lump-sum termination payment to WBC, payable in cash within 30 days after the termination date, in an amount determined as follows:
The termination | |
If the termination date is: | payment is: |
Prior to the 1st anniversary of the Launch Date | $[***] |
On or after the 1st anniversary of the Launch Date,
but prior to the 2nd anniversary of the Launch Date |
$[***] |
On or after the 2nd anniversary of the Launch Date,
but prior to the 3rd anniversary of the Launch Date |
$[***] |
On or after the 3rd anniversary of the Launch Date,
but prior to the 4th anniversary of the Launch Date |
$[***] |
WBC shall have the right to offset the amount of any termination payment owed pursuant to this Section 7.3 against any amounts owed by WBC to Supplier hereunder.
ARTICLE 8 MISCELLANEOUS
8.1 Notices. All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, (b) on the date of delivery if sent by email (without receipt of a notice of failed delivery), (c) on the first business day following the date of receipted delivery to a nationally recognized next-day courier, specifying overnight delivery or (d) on the earlier of confirmed receipt or the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth on the signature page hereto.
8.2 Governing Law; Binding Arbitration. This Agreement is governed by the laws of the State of Delaware without regard to the law of conflicts. [Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration by the American Arbitration Association (“AAA”) in accordance with its Arbitration Rules then in effect. There shall be one (1) arbitrator agreed to by the parties within 20 days of a written request for arbitration. If the parties cannot agree, an arbitrator will be appointed by the AAA in accordance with its Arbitration Rules. Any award from any such arbitration proceeding may be entered as a judgment in any court of competent jurisdiction. Each party shall bear its own costs in connection with any arbitration hereunder. Nothing herein shall prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the parties and the subject matter of the dispute as is necessary to protect either party’s proprietary rights.]
8.3 Force Majeure. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including fire, floods, earthquakes, natural disasters, embargoes, war, acts of war (whether war be declared or not), acts of terrorism, insurrections, riots, civil commotions, acts of God or acts, omissions or delays in acting by any governmental authority, provided that such party promptly notifies the other party and resumes performance as soon as possible.
8.4 Assignment. This Agreement and the rights and obligations hereunder shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Supplier may not assign any of its rights or delegate any of its obligations hereunder without the prior written consent of WBC, provided that Supplier may assign its rights hereunder without such consent to (a) any person or entity that acquires all or substantially all of its business or assets or the business and assets of the applicable business division or (b) an Affiliate of Supplier. Any purported assignment or delegation in violation of this section shall be null and void. No assignment or delegation shall relieve the assigning or delegating party of any of its obligations hereunder. Except as set forth in Section 6.1, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.5 Waiver. Except as specifically provided for herein, the waiver from time to time by either party of any right or failure to exercise any remedy shall not operate or be construed as a continuing waiver of the same right or remedy or of any other of such party’s rights or remedies provided under this Agreement. All waivers must be in writing.
8.6 Relationship of the Parties. The relationship of WBC and Supplier under this Agreement is that of independent contractors, and neither party nor its employees or agents shall be deemed to be employees or agents of the other for any purpose or under any circumstances. No partnership, joint venture, alliance, fiduciary or any relationship other than that of independent contractors is created hereby, expressly or by implication. Neither party has any authority under this Agreement to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any contract, agreement or undertaking with any third party.
8.7 Counterparts. This Agreement may be executed (by facsimile, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document) in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
8.8 Severability. If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid, void or unenforceable, then such provision will be changed and interpreted to accomplish the objectives of such provision to the greatest extent possible under applicable law and the remaining provisions of this Agreement will continue in full force and effect.
8.9 Warranty Disclaimer; Limitation of Liability.
(a) NO PARTY MAKES ANY WARRANTY WHATSOEVER WITH RESPECT TO ITS UNDERTAKINGS PURSUANT TO THIS AGREEMENT, INCLUDING ANY (I) WARRANTY OF MERCHANTABILITY; (II) WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; OR (III) WARRANTY AGAINST INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY; IN EACH CASE WHETHER EXPRESS OR IMPLIED BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE.
(b) IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE AND WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.
8.10 Entire Agreement; Amendments. This Agreement (including the exhibits hereto) sets forth all of the agreements and understandings between the parties with respect to the subject matter hereof, and supersedes and terminates all prior agreements and understandings between the parties with respect to the subject matter hereof. Except as expressly set forth in this Agreement, no subsequent amendment, modification or addition to this Agreement shall be binding upon the parties hereto unless reduced to writing and signed by the respective authorized officers of the parties.
8.11 Construction. The provisions of this Agreement shall be construed and interpreted fairly to both parties without regard to which party drafted the same. Whenever the context requires, words used in the singular shall be construed to mean or include the plural and vice versa, and pronouns of any gender shall be deemed to include and designate the masculine, feminine or neuter gender. The word “including” and words of similar import when used in this Agreement means “including without limitation.”
IN WITNESS WHEREOF, the parties, through their respective duly authorized officers, have executed this Agreement to be effective as of the Effective Date.
SUPPLIER: | ||
Obagi Cosmeceuticals LLC |
By: | /s/ Jaime Castle |
Name: |
Title: |
Address: | Obagi Cosmeceuticals LLC | |
3760 Kilroy Airport Way, #500, Long Beach,, CA 90806 | ||
Attn: Jaime Castle, President | ||
E-mail: jaimec@obagi.com |
WBC: | ||
WBC Group, LLC |
By: | /s/ Kurt R. Packer |
Name: | Kurt R. Packer |
Title: | President |
Address: | WBC Group, LLC | |
6333 Hudson Crossing Parkway | ||
Hudson, OH 44236 | ||
Attn: VP Finance | ||
E-mail: ecross@wbcgp.com |
Exhibit A – Products and WAC
Obagi Item Number | Obagi Item Description |
Product
Category |
WAC/US Physician
List Price |
362032116365 | Obagi Nu-Derm Sunfader 2.0 oz | $[***] | |
362032070452 | Nu-Derm Blend Fx™ 2.0 oz | $[***] | |
362032070445 | Nu-Derm Clear Fx™ 2.0 oz | $[***] | |
362032524047 | Obagi-C Rx System Norm-Dry | $[***] | |
362032523040 | Obagi-C Rx System Norm-Oily | $[***] | |
362032521602 | Obagi Nu-Derm Trial Kit Norm-Oily | $[***] | |
362032519005 | Obagi Nu-Derm Transformation Kit Norm-Oily | $[***] | |
362032106106 | Obagi-C Rx Clarify Serum N-D 1.0 oz | $[***] | |
362032105369 | Obagi-C Rx Therapy Night Cream 2.0 oz | $[***] | |
362032101361 | Obagi Nu-Derm Clear 2.0 oz | $[***] | |
362032100364 | Obagi Nu-Derm Blender 2.0 oz | $[***] | |
301876101168 | Obagi CLENZIderm Therapeutic Lotion 5% BPO 1.6 oz | $[***] | |
362032077840 | Obagi-C Fx C-Therapy Night Cream 2.0 oz | $[***] | |
362032077833 | Obagi-C Fx C-Clarifying Serum 1.0 fl oz | $[***] | |
362032075075 | Blue Peel RADIANCE® Kit | $[***] | |
301876103018 | Obagi CLENZIderm M.D. System | $[***] | |
301876102042 | Obagi CLENZIderm Pore Therapy 4.0 oz | $[***] | |
301876100048 | Obagi CLENZIderm Daily Care Foam Cleanser 4.0 oz | $[***] | |
362032070582 | Obagi Nu-Derm Healthy Skin Protection SPF 35 3.0 oz | $[***] | |
362032070568 | Obagi Back Bar Obagi Hydrate® 479 g | $[***] | |
362032070551 | Obagi Back Bar Foaming Gel 1.0 L | $[***] | |
362032070537 | Obagi Back Bar Sun Shield 479 g | $[***] | |
362032070520 | Obagi Back Bar Gentle Cleanser 1.0 L | $[***] | |
362032070513 | Obagi Back Bar Daily Care Foaming Cleanser 1.0 L | $[***] | |
362032070506 | Obagi Back Bar Exfoderm® Forte 479 g | $[***] | |
362032070490 | Obagi Back Bar Toner 1.0 L | $[***] | |
362032070193 | Obagi Hydrate 1.7 oz | $[***] | |
362032070186 | Obagi Nu-Derm Physical UV SPF 32 2.0 oz | $[***] | |
362032070131 | Obagi Nu-Derm Exfoderm Forte 2.0 oz | $[***] | |
362032070117 | Obagi Sun Shield Matte SPF 50 3.0 oz | $[***] | |
362032070063 | Obagi Nu-Derm Gentle Cleanser 6.7 oz | $[***] | |
362032070056 | Obagi Nu-Derm Foaming Gel 6.7 oz | $[***] | |
362032070018 | Obagi Nu-Derm Toner 6.7 oz | $[***] |
Obagi Item Number | Obagi Item Description |
Product
Category |
WAC/US Physician
List Price |
362032065038 | Obagi ELASTIderm Eye Complete Complex Serum 14 mL | $[***] | |
362032065007 | Obagi ELASTIderm Eye Cream 15 g | $[***] | |
362032050539 | Obagi Professional-C Serum 20% 1.0 oz | $[***] | |
362032050522 | Obagi Professional-C Serum 15% 1.0 oz | $[***] | |
362032050515 | Obagi Professional-C Serum 10% 1.0 oz | $[***] | |
362032122106 | Obagi-C Rx Clarify Serum N-O 1.0 oz | $[***] | |
362032050133 | Obagi-C Rx Balancing Toner 6.7 oz | $[***] | |
362032050089 | Obagi-C Rx Exfoliating Day Lotion 2.0 oz | $[***] | |
362032050010 | Obagi-C Rx Cleansing Gel 6.0 oz | $[***] | |
362032414201 | Obagi Tretinoin 0.025% Cream 20 g | $[***] | |
362032075006 | Original Blue Peel® Essential Kit | $[***] | |
362032070209 | Obagi Hydrate Luxe® 1.7 oz | $[***] | |
362032412207 | Obagi Tretinoin 0.05% Cream 20 g | $[***] | |
362032417202 | Obagi Tretinoin 0.1% Cream 20 g | $[***] | |
362032070940 | Obagi Gentle Rejuvenation Soothing Cleanser | $[***] | |
362032070728 | Obagi Gentle Rejuvenation Advanced Night Repair | $[***] | |
362032070872 | Obagi Gentle Rejuvenation Skin Rejuvenation Serum | $[***] | |
362032070704 | Obagi Gentle Rejuvenation Skin Calming Cream | $[***] | |
362032070896 | Obagi Gentle Rejuvenation Ultra Rich Eye Hydrating Cream | $[***] | |
362032070735 | Obagi Gentle Rejuvenation System Kit | $[***] | |
362032070919 | Obagi Nu-Derm Fx Starter System Norm-Oily | $[***] | |
362032050584 | Obagi-C Fx System Norm-Dry | $[***] | |
362032050577 | Obagi-C Fx System Norm-Oily | $[***] | |
362032050546 | Professional-C Suncare 1.7oz (48g) | $[***] | |
362032050553 | Professional-C Eye Brightener 0.5 fl oz (15ml) | $[***] | |
362032050560 | Professional-C Peptide Complex 1.0 fl oz (30 mL) | $[***] | |
362032070247 | Obagi360 HydraFactor Broad Spectrum SPF 30 2.5 oz | $[***] | |
362032070162 | Obagi360 Retinol 1.0 1.0 oz | $[***] | |
362032070179 | Obagi360 Retinol 0.5 1.0 oz | $[***] | |
362032413204 | Obagi Tretinoin 0.05% Gel 20 g | $[***] | |
362032810034 | Obagi Sun Shield Mineral SPF 50 3.0 oz | $[***] | |
362032150109 | Sun Shield Tint Broad Spectrum SPF 50 Cool 3.0 oz | $[***] | |
362032160108 | Sun Shield Tint Broad Spectrum SPF 50 Warm 3.0 oz | $[***] | |
301876104176 | Obagi CLENZIderm Therapeutic Moisturizer 1.7 oz | $[***] | |
362032580883 | Obagi360 System | $[***] | |
362032570518 | Obagi360 Exfoliating Cleanser 5.1 oz | $[***] |
Obagi Item Number | Obagi Item Description |
Product
Category |
WAC/US Physician
List Price |
362032072029 | Obagi Nu-Derm Exfoderm® 2.0 oz | $[***] | |
362032526065 | Obagi Nu-Derm Transformation Kit Norm-Dry | $[***] | |
362032527079 | Obagi Nu-Derm Fx Starter System Norm-Dry | $[***] | |
362032528076 | Obagi Nu-Derm Trial Kit Norm-Dry | $[***] | |
362032530451 |
KèraPhine Body Smoothing Lotion 6.7 oz |
$[***] | |
362032600017 | SuzanObagiMD Retivance® Skin Rejuvenating Complex 1.0 oz (30g) | $[***] | |
362032601021 | SuzanObagiMD Intensive Daily Repair Exfoliating and Hydrating Lotion 2oz (60g) | $[***] | |
362032602158 | SuzanObagiMD Soothing Complex Calming Lotion SPF25 1.6oz (47g) | $[***] | |
362032603667 | SuzanObagiMD Foaming Cleanser 6.7 fl oz (200ml) | $[***] | |
362032604664 | SuzanObagiMD. Balancing Toner 6.7 fl oz (200ml) | $[***] | |
362032605258 | SuzanObagiMD On the Go Cleansing and Makeup Removing Wipes 25’s | $[***] | |
362032606255 | SuzanObagiMD On the Go Cleansing Wipes for Oily or Acne Prone Skin 25’s | $[***] | |
Sample/Travel Sizes | $[***] | ||
362032078083 | Nu-Derm Toner 2OZ Travel | $[***] | |
362032078144 | Nu-Derm GENTLE CLEANSER 2OZ Travel | $[***] | |
362032078076 | Nu-Derm FOAM GEL 2OZ Travel | $[***] | |
362032070148 | SUNSHIELD MATTE SPF50 1OZ Travel | $[***] | |
362032150994 | OMP Sunshield Tint Cool SPF50 5gm Sample | $[***] | |
362032160993 | OMP Sunshield Tint Warm SPF50 5gm Sample | $[***] | |
362032075082 | BLUE PEEL RADIANCE PREP SOLUTION 6.7OZ - ships with Blue Peel Radiance Kit | $[***] |
Exhibit B – WBC Webpages
A customized, online ordering portal, designed, hosted and maintained by WBC, where both Supplier’s customers and Supplier field sales representatives (on behalf of an Supplier’s customer) will be able place electronic orders for all Products. Portal will include search functionality, order tracking, product images, descriptions, categories, features, product availability, favorites lists, and sales information for Supplier’s field sales representatives and can be accessed directly or through a link created by Supplier on Supplier Webpages.
Exhibit C – No Charge Programs
# of Orders | |||||
Units per | Annual | ||||
Free Product Services | Frequency | # of Orders | LPO | Order | Activity Est. |
Buy Back Program | [***] | [***] | [***] | [***] | [***] |
RX Samples to Physicians | [***] | [***] | [***] | [***] | [***] |
Non-Rx (OTC & cosmetic SKUS) Carstock to Sales Reps | [***] | [***] | [***] | [***] | [***] |
RX DEMO product to Sales Reps | [***] | [***] | [***] | [***] | [***] |
Obagi Medical System Seminar (OMSS) Supplies | [***] | [***] | [***] | [***] | [***] |
No Charge Replacements | [***] | [***] | [***] | [***] | [***] |
No Charge QA Replacements | [***] | [***] | [***] | [***] | [***] |
No Charge Marketing Collateral |
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
No Charge Product Shipments to patients | [***] | [***] | [***] | [***] | [***] |
No Charge (or high discounted charge) product shipments to physicians | [***] | [***] | [***] | [***] | [***] |
No Charge Product Shipments to physicians | [***] | [***] | [***] | [***] | [***] |
Exhibit D – Customer Product Returns Policy
Customer QA Replacements
● | WBC will triage all quality assurance related returns (defective, low fill, broken seal, visible contamination, twist and snap issue, etc.) to Supplier Customer Service |
● | Supplier Customer Service will document information received from the customer (lot, expiration date, quality issue). |
● | If required by Supplier Quality Assurance, Supplier Customer Service will provide a pre-paid shipping label to the customer to return the Product to Supplier. The Product goes directly for inspection or disposal to the Quality Assurance Department. |
● | If a replacement is required, the information will be e-mailed to WBC who is then authorized to re-ship the Product at no charge. WBC will use the case number as the purchase order for the Product re-shipment. WBC will bill Supplier under the No Charge Program – No Charge QA Replacements. |
● | In some instances, a Product credit will be authorized by Supplier Customer Service instead of a Product replacement. WBC will credit the customer’s account and bill Supplier for the Product cost. |
Customer non-QA Replacements
● | Supplier Customer Service will receive calls and emails from customers related to non-QA patient dissatisfaction returns seeking replacement Product. |
● | Twice monthly, Supplier Customer Service will provide a file to WBC with customer’s account number, shipping address, replacement Product, and quantity. |
● | WBC is authorized to ship the replacement Product, referencing the purchase order number on the file, and bill under the No Charge Program – No Charge Replacements. |
Customer Returns
● | WBC is responsible for processing customer returns and crediting the customer’s account without any pass through charges to Supplier for orders that are undeliverable or are returned due to carrier issues or other normal business processes inherent in WBC’s daily operations. This includes data entry errors by customer care and warehouse shipping errors. |
● | For any return outside of Product quality reasons or mis-shipments, customers can return Product within 30 days of date of original shipment date. WBC is responsible for processing returns and crediting the customer’s account. WBC will only bill Supplier for the Product cost if the Product cannot be restocked. |
● | No returns over 30 days unless approved by Supplier and may be subject to a restocking fee. Upon approval by Supplier, WBC is responsible for processing returns and crediting the customer’s account. WBC will only bill Supplier for the Product cost if the Product cannot be restocked. |
● | Any exceptions, including order errors by Supplier Sales Consultants, must be approved by Supplier. |
● | Product returned to WBC from customers can be restocked within 60 days of original shipment to the customer. If return Product cannot be restocked by WBC, WBC will require approval from Supplier to process the return, credit the customer’s account and bill Supplier for the cost of the Product. |
Exhibit E – Transaction Assumptions
Exhibit 10.31
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item (601)(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
Distribution Agreement
This Distribution Agreement is made as of the 19th day of October, 2018 (the “Effective Date”) by and between Obagi Cosmeceuticals LLC., a company established and existing under the laws of the State of Delaware, having its principal place of business at 3760 Kilroy Airport Drive, Suite 500, Long Beach, California 90806, USA (“Company”),and Gevie, Inc., a company organized and validly existing under the laws of the State of California, having an address at 5825 Lincoln Avenue, Ste. D42, Buena Park California 90620, USA (“Distributor”).
Background
A.
The Company is engaged in the manufacture, marketing, distribution and sale of certain proprietary pharmaceutical products.
B.
The Company wishes to appoint the Distributor to market, promote, distribute and sell the Product/s to Customers located in the Territory and the Distributor agrees to be appointed as the non-exclusive promoter and distributor to market, promote, distribute and sell the Products to Customers in the Territory in accordance with the terms and subject to the conditions of this Agreement.
C.
The Distributor wishes to be granted a license to use the Trademarks in the Territory and the Company agrees to grant the Distributor a license to use the Trademarks in the Territory in accordance with the terms and subject to the conditions of this Agreement.
In consideration of the terms, conditions and mutual covenants contained herein, the Company and Distributor hereto agree as follows:
1. | Definitions and interpretation |
1.1 | Definitions |
In this Agreement, unless the context otherwise requires;
Affiliate means any business entity that directly or indirectly controls, is controlled by, or under common control with either Party to this Agreement. For the purposes of the foregoing “control” shall mean (i) the direct or indirect ownership of more than fifty percent of the voting securities of any corporation, entity or organization, or (ii) the power to direct or cause the direction of the management or policies of such corporation, entity or organization through the ownership of securities or interests, by contract or otherwise;
Agreement means this agreement, including all schedules, annexes and appendices, and amendments agreed to in writing by the Parties in accordance with Section 22.10;
Associated Person means any owner (including any principal, shareholder or other person or entity having a direct or indirect financial interest), officer, director, partner, principal, employee, agent or any other person or entity, directly or indirectly, controlling, controlled by, or under common control with either Party to the agreement;
Business Day means a day, other than a Saturday or Sunday, on which banks are open for retail banking business in the United States;
Change of Control means the occurrence of an event or circumstance where a person, or entity, who is not presently able to do any of the following things becomes able to do one, or more, of the following things (whether directly or indirectly or through one or more intervening person(s) or entity):
(a)
control the composition of more than one half of the entity’s board of directors;
(b)
be in a position to cast, or control the casting of, more than one half of the maximum number of votes that might be cast at a general meeting of the members of the entity; or
(c)
hold or have a beneficial interest in more than one half of the issued share capital of the entity;
Confidential Information means all information of a Disclosing Party, its customers or suppliers which would reasonably be regarded as confidential, disclosed to the Receiving Party or information which the Disclosing Party may become aware of, before or after the Commencement Date, including information relating to:
(a)
the terms of this Agreement and its subject matter, including information submitted or disclosed by the Disclosing Party during negotiations, discussions and meetings relating to this Agreement;
(b)
the Disclosing Party’s business, operations, clients or suppliers or their products, services and Intellectual Property Rights;
(c)
financial information and other commercially valuable information including the Disclosing Party’s business plans, customer lists, product launches, inventions, trade secrets, know-how, formulae, technical and commercial information, dossiers, specifications, test results, research data, graphs, software, drawings, designs, biological materials, samples, devices, models and other materials of any form or substance;
whether disclosed verbally, in writing, in electronic or any other form or by any other means, but excluding information which:
(i)
the Receiving Party can prove by written records that it knew or possessed before the relevant information was disclosed or made available to it by or on behalf of the Disclosing Party;
(ii)
was lawfully acquired prior to the date of disclosure under this Agreement by the Receiving Party from a third party without any restrictions as to its use or disclosure
(iii)
is in or becomes part of the public domain other than as a result of the breach by the Receiving Party of this Agreement; or
(iv)
information which the Receiving Party can prove by its written records was independently developed by it or one of its employees or agents having no knowledge of the relevant disclosure by the Disclosing Party;
Customer means licensed medical professionals, properly licensed skincare clinics, or properly licensed beauty spas, or cosmetic pharmacies, or other agreed-upon (by the Company in writing) channels of distribution physically located within the Territory; or, licensed medical professionals, properly licensed skincare clinics, or properly licensed beauty spas, or cosmetic pharmacies, or other agreed-upon (by the Company in writing) channels of distribution selling online within the Territory and shipping only within the Territory;
Disclosing Party means the Party who discloses the Confidential Information;
Force Majeure means any act, event or cause including: (a) act of God, peril of the sea, accident of navigation, war, sabotage, riot, act of terrorism, insurrection, civil commotion, national emergency (whether in fact or law), martial law, fire, lightning, flood, cyclone, earthquake, landslide, storm or other adverse weather conditions, explosion, power shortage, strike (whether or not involving employees of the party concerned), epidemic, quarantine, radiation or radioactive contamination; or (b) action or inaction of a Government Entity, including expropriation, restraint, prohibition, intervention, requisition, requirement, direction or embargo by legislation, regulation, decree or other legally enforceable order, to the extent that the act, event or cause: (i) could not have been prevented by reasonable precautions, or could not reasonably have been circumvented by means of alternate sources, workarounds or other means; and (ii) directly or indirectly results in a Party being prevented from or delayed in performing any of its obligations under this Agreement;
Government Entity means a government-owned or controlled commercial enterprise, institution, agency, department, instrumentality or other public entity (regardless if it is whole or partial ownership or control), including Health Authorities, health care facilities, research institutions, universities and hospitals;
Government Official means any officer or employee of a Government Entity.
Health Authority means any and all government regulatory authorities or agencies in the Territory, approval from which is required to market, promote and sell the Products in the Territory;
Health Registrations means the required regulatory filings in the Territory that are approved by the appropriate Health Authority in the Territory that allows each Product to be lawfully sold in the Territory.
Intellectual Property Rights means all present and future intellectual and industrial property rights conferred by statute, at common law or in equity and wherever existing, including:
(a)
patents, designs, copyrights, Trademarks, domain names, proprietary ideas, inventions (whether patentable or not), discoveries, ideas, know how, trade secrets and any other rights subsisting in the results of intellectual effort in any field, whether or not registered or capable of registration;
(b)
any application or right to apply for registration of any of these rights;
(c)
any registration of any of those rights or any registration of any application referred to in paragraph (b); and
(d)
all renewals and extensions of these rights;
Minimum Purchase Requirements means the minimum purchases of Products that the Distributor must purchase from the Company as specified in Schedule 2;
Party means a party to this Agreement and its respective successors and permitted assigns and Parties mean both parties to this Agreement;
Products mean all products supplied by the Company to the Distributor for sale in the Territory, including: (a) the products specified in Schedule 2; (b) other products that the Parties agree to add to the products in Schedule 2 as an amendment pursuant to Section 22.10; and (c) new formulations or new indications for the products referred to in (a) and (b) that the Parties agree to add to the products in Schedule 2 as an amendment pursuant to Section 22.10. A reference to a Product or the Products is, so far as the context allows, a reference to one, several or all of the Products;
Product Prices means the prices for the Products as set forth in Schedule 2, based on US WAC less any approved discount but not including any rebates or post-purchase credit, as may be amended from time to time at the Company’s sole discretion;
Purchase Order means an order for Products as set out in Section 5.3;
Receiving Party means the party to whom Confidential Information is disclosed or who possesses or otherwise acquires Confidential Information belonging or relating to a Disclosing Party;
Registrar of Trademarks means the competent government intellectual property authority in the Territory or in another jurisdiction that is responsible for the registration of Intellectual Property Rights (including the Trademarks);
SKU means stock keeping unit;
Specifications means the specifications described in the pharmaceutical files/dossiers, registered with the Health Authority, including packaging specifications, as these specifications may be amended from time to time in accordance with applicable law;
Taxes means all taxes, charges and duties imposed by a government or statutory body relating to the supply, use or delivery of goods or services or otherwise arising out of this Agreement including sales tax, consumption tax, GST, value added tax (VAT) or other similar transaction tax, stamp duties, customs duties and excises, but does not include income or capital gains tax;
Term means a term, commencing on the Effective Date and ending on December 31, 2021;
Territory means the territory specified in Schedule 1;
Trademarks means the trademarks, trade names, service marks, brand names, product names, domain names and logos of the Company (all whether registered or unregistered), and other commercial symbols identifying the Company or its Products or services, including those specified in Schedule 1, and similar marks, and those developed in the future;
WAC means the wholesale acquisition cost of a Product as published by Company from time to time.
1.2 | Interpretation |
In this Agreement unless the context requires otherwise:
(a)
the singular includes the plural and vice versa;
(b)
a gender includes the other gender;
(c)
headings are used for convenience only and do not affect the interpretation of this Agreement;
(d)
a reference to a document includes the document as modified from time to time and any document replacing it;
(e)
if something is to be done on a day which is not a Business Day then that thing must be done on the next or following Business Day;
(f)
“person” includes a natural person and any body or entity whether incorporated or not;
(g)
“month” means calendar month and “year” means 12 months;
(h)
“in writing” includes any communication sent by letter, facsimile transmission or email;
(i)
a reference to any statute, proclamation, rule, regulation or ordinance includes any amendment, consolidation, modification, re-enactment or reprint of it or any statute, proclamation, rule, regulation or ordinance replacing it. A reference to a specified section, clause, paragraph, schedule or item of any statute, proclamation, rule, regulation or ordinance means a reference to the equivalent section of the statute, proclamation, rule, regulation or ordinance which is for the time being in force;
(j)
“including” and similar expressions are not words of limitation;
(k)
money amounts are stated in United States dollars unless otherwise specified;
(I)
“quarter” refers to a period of three months ending on 31st March, 30th June, 30th September and 31st December in each year; and
(m)
a reference to any agency or body, if that agency or body ceases to exist or is reconstituted, renamed or replaced or has its powers or functions removed (defunct body), means the agency or body which performs most closely the functions of the defunct body.
2. | Subject Matter of this Agreement and Term |
2.1 | Grant of Non-Exclusive Right |
The Company hereby grants the Distributor, which accepts, the non-exclusive right to import, market, promote, distribute and sell the Products in the Territory under the Trademarks, all in accordance with the terms and conditions of this Agreement.
2.2 | Agreement to Continue for Term |
This Agreement will commence on the Effective Date and will continue in force for the Term, unless terminated earlier in accordance with this Agreement.
3. | Title and Registration of Trademarks |
3.1 | License and Protection of the Company’s Title |
The Company grants to the Distributor a royalty-free, non-exclusive, non-transferable license to use the Trademarks during the Term solely in connection with the marketing, distribution, promotion, advertising and sale of the Products in the Territory.
The Distributor acknowledges the Company’s title to the Trademarks and the validity of the Trademarks and will not do the following, nor will not allow or assist any person or Affiliate do the following:
(a)
invalidate or put in dispute the Company’s title to the Trademarks;
(b)
oppose any application for registration of the Trademarks or invalidate any registration of the Trademarks;
(c)
support an application to remove any Trademark as a registered Trademark;
(d)
cause any Registrar of Trademarks to require a disclaimer of a monopoly in any Trademark;
(e)
adopt, use, register or attempt to register any trademarks, service marks, trade names, domain names, web addresses or portions thereof, or any other proprietary designations, or any account names or handles, or portions thereof, on any website, service or social network, which are similar to any Trademarks of the Company;
(f)
use the Trademarks either by themselves or as part of any other identification, name or mark in relation to any goods or services not manufactured, produced, provided or supplied by the Company; or
(g)
register or attempt to register any of the Trademarks — whether as trademarks, trade names, domain names, or otherwise — without the express written consent of the Company, which consent may be granted or withheld in the Company’s sole discretion.
3.2 | Registration of Trademarks; Domain Names |
The Distributor shall provide information, materials and other assistance, as may be reasonably requested by the Company, to assist with obtaining or maintaining registrations of the Trademarks. Such assistance shall include, but is not limited to, executing any documents as may be required by the Company to register or maintain registrations of the Trademarks. The decision to register or maintain a registration of any Trademark shall be in the Company’s sole discretion, and all filing, registration and maintenance fees associated with the registration process shall be the responsibility of the Company.
If the Distributor wishes to use a domain name that incorporates any of the Trademarks in connection with its business efforts, the Distributor may request that the Company register the domain name in the Company’s name, and the Company shall honor all such reasonable requests, provided that the Distributor agrees to cover all costs involved with registration and maintenance of the domain name, and provided that registration of the domain name will not expose the Company to liability for trademark infringement or otherwise. The Company may request that the Distributor prepay the costs associated with any registration or maintenance prior to taking the appropriate action. If the Distributor takes advantage of this option, the Distributor agrees that it, and not the Company, shall be responsible for all costs associated with the operation of the associated website. Further, the Distributor agrees that it shall use the website to promote and/or sell only authentic Company products; that the website shall not feature or include any third-party products or services or any links to any other websites that offer goods or services competitive with those offered by the Company, and that the domain name shall not be used to redirect traffic to any website that is not devoted exclusively to the promotion and/or sale of the Company’s products.
3.3 | Revocation or Expiry of Trademarks |
The revocation or expiry of any rights in the Trademarks will affect neither the validity of this Agreement nor the obligations of the Distributor to make payments under this Agreement.
4. | Use |
4.1 | General Conditions of Use; Quality Control |
The Distributor agrees that its use of the Trademarks, as well as all related advertising and promotional materials, will be in good taste and in such manner as will enhance the value of the Trademarks and the Company’s reputation for quality goods and services. The Distributor acknowledges that all use of the Trademarks by the Distributor, in connection with any goods or services, shall inure to the benefit of the Company.
The Company shall have the right, from time to time, to inspect the goods, services and materials offered by the Distributor in connection with its use of the Trademarks for quality control purposes. The Distributor agrees that the Company may terminate the license granted under Section 3.1, and that the Company may pursue its right to terminate this Agreement under Section 17, if the Company determines, in its sole discretion, that the Distributor’s use of the Trademarks is in violation of the terms of this Agreement or that the quality of the goods and services offered in connection with the Distributor’s use of the Trademarks falls below an acceptable level.
In addition, the Distributor must:
(a)
use the Trademarks from time to time and only for the particular purposes specified in or contemplated by this Agreement;
(b)
ensure that the Products are promoted in accordance with samples produced and directions given by the Company from time to time;
(c)
apply any description or legend that the Company prescribes must be used on Product promotional material for the Products that clearly identifies the Company as the manufacturer or supplier of the Products and licensor of the Trademarks, in each case in a form approved so far as necessary by the Health Authority;
(d)
not infringe the other Intellectual Property Rights of the Company or the Company’s licensors;
(e)
not, without the prior written consent of the Company, assign or otherwise transfer the benefit of this Agreement including, without limitation, by granting any sub-licenses or rights to use the Trademarks unless otherwise provided under this Agreement;
(f)
not use the Trademarks accompanied by words describing the Products unless the Trademarks are distinguished from the descriptive and surrounding text; and
(g)
change or cease any use of one or more of the Trademarks as requested by the Company.
4.2 | Continuous Use |
(a)
The Distributor must ensure that the Trademarks are used in connection with the Products on a regular basis throughout the Term in normal commercial, sales and distribution channels to maintain their validity and to prevent any challenge to their validity on the basis of abandonment.
(b)
If the Distributor fails to commence selling the Products within thirty (30) days of the Commencement Date, or stops offering for sale the Products for more than thirty (30) days, unless due to the Company’s inability to supply Product or requirement of the local Health Authority, the license granted under Section 3.1 will automatically terminate, and the Company may pursue its right to terminate this Agreement under Section 17.
(c)
If there are any new products to be added to the existing list of Products, the commencement date for promotion will be agreed between the Parties and documented in an addendum to this Agreement prior to launch of the new products.
4.3 | Promotion |
The Distributor shall use the Trademarks solely in connection with the Products and must ensure that the relevant Trademarks appear in all promotional material relating to the Products.
4.4 | Re-export and Parallel Import |
The Distributor shall exercise commercially reasonable efforts to ensure that Products are not exported from the Territory, either directly or indirectly, by the Distributor or its sub-distributors. This constitutes re-exporting. Breach of this obligation will be considered breach of the Distributor’s material obligations under this Agreement, permitting the Company to immediately terminate this Agreement at the Company’s discretion without any opportunity to cure such violation. The Distributor shall obtain Products only from the Company. The Distributor shall not seek customers for the Products outside of the Territory, shall not sell any excess inventory to any other distributor of the Company, or establish any office or distributor depot outside of the Territory without prior written permission from the Company. The Distributor expressly acknowledges that the re-export provisions of this Section 4.4 are of the essence for the Company, and that the Company would not have entered into this Agreement had such provisions not been included herein. The re-export provisions of this Section 4.4 may be temporarily modified for a specified period of time by express written permission of the Company.
Each Party shall promptly notify the other Party of any information on parallel imports of the Product into the Territory coming to such Party’s attention. Each Party shall take all necessary steps to protect the other Party against illegal parallel import. The Company and the Distributor shall cooperate and use commercially reasonable efforts to prevent and terminate any imports in the Territory of products bearing the Trademark, in each case originating from countries outside the Territory where the Company or its Affiliates sell and market such products either directly or through a third party.
The Distributor acknowledges it has no right to use the Trademarks outside the Territory or to use the Trademarks in connection with selling or marketing the Products outside the Territory or to knowingly sell the Products bearing the Trademarks to any person for resale outside the Territory.
The Distributor may sell the Products online in the Territory as specified in this Agreement, but the Products the Distributor or its Affiliates sell online may not ship or be allowed to be shipped outside the Territory. The Distributor must follow the Company’s MAP (minimum advertised price) policy for online sales, and at no time may the Distributor sell or allow to be sold the Products at prices below Amazon.com’s US prices or below any other distributor’s or authorized seller’s online prices. In connection with online sales, the Distributor shall use either its company name as set forth in this Agreement or a trade name approved in writing by Obagi, which approval shall not be unreasonably withheld. The Distributor shall ensure that its authorized name appears on all website pages, on all product listings it posts on third-party platforms, on all sales invoices, and on all communications with customers related to any online sales.
If Products purchased by the Distributor are found to have been sold outside the Territory, the Company may immediately suspend all discounts to the Distributor, or take other actions to deter these unauthorized sales, up to and including termination of this Agreement.
4.5 | Sub-distributors |
If the Distributor wishes to employ sub-distributors, to help market, sell and distribute the Products, the Distributor must first obtain written permission from the Company with respect to each sub-distributor it wishes to employ. Any permission granted by the Company with respect to any given sub-distributor shall be contingent on the Distributor ensuring that the sub-distributor is bound to the terms and conditions of this Agreement, as if an original signatory hereto, with respect to any obligations imposed in Sections 3, 4, 5.1, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21 and 22, as well as with the territorial limitations imposed by this Agreement. The Distributor shall be liable for any breach of this Agreement’s relevant provisions by any sub-distributor, and shall indemnify the Company against, any damage or losses incurred by the Company as a result of any sub-distributor’s actions or inactions. The Distributor agrees that the Company may, at any time in its sole discretion, revoke permission for any or all sub-distributors used by the Distributor upon ninety (90) days written notice. Further, the Distributor agrees to immediately cease use of a sub-distributor, and to recall all products from the sub-distributor, if the sub-distributor violates any of the terms and conditions of this Agreement set forth above.
5. | Products |
5.1 | Supply |
During the Term of this Agreement, the Distributor agrees to purchase the Products from the Company exclusively in accordance with the terms of this Agreement.
5.2 | Forecasts of Estimated Requirements |
(a)
Upon the Commencement Date and throughout the Term of this Agreement, the Distributor shall submit forecasts to the Company on January 1 for the twelve (12) months commencing April 1), April 1 (for the twelve (12) months commencing July 1), July 1 (for the twelve (12) months commencing October 1), and October 1 (for the twelve (12) months commencing January 1) of each calendar year; provided that if the Effective Date of this Agreement is other than the beginning of a month identified above, the initial forecast (and resulting purchase order) shall cover the period from the Effective Date to the date of the next forecast required to be submitted. If the Effective Date falls within a quarter, the first quarter forecast shall include only the remainder of that quarter (“Product Rolling Forecast”).
(b)
The Company is not obliged to supply the Distributor with quantities of Products exceeding the maximum requirements stated in the applicable Product Rolling Forecast for the period on which a Purchase Order is based. In the event that the Company is, or expects to be, unable to fulfill a Purchase Order due to the Distributor exceeding the maximum requirements ordered, the Company reserves the right to allocate production ratably among its other customers and in doing so the Company may favor its own supply needs above those of the Distributor.
(c)
In order to be able to purchase the Products at the Product Prices set forth in Schedule 2, Distributor must purchase at least ninety percent (90%) of the greater of (a) the remaining quarterly forecast contained in the initial January 1 forecast or (b) the quarterly forecasts provided on April 1, July 1 and October 1 of each calendar year thereafter. In addition, Distributor may not reduce any quarterly forecast following the initial rolling twelve (12) month forecast submitted on January 1 of any calendar year by more than ten percent (10%) without the Company’s prior written consent and due to demonstrated and substantiated changes in market conditions for the Products. Each Purchase Order shall confirm that each shipment of Product is legally permitted to be shipped into the Territory and that no other changes in rules or regulations related to the Products have occurred.
5.3 | Purchase Order |
(a)
The Distributor must order Products by completing a Purchase Order and delivering it to the Company by email as specified in Section 22.14 (Notice) or in a manner as advised by the Company from time to time.
(b)
A Purchase Order from the Distributor to the Company must be in writing, in the format (if any) prescribed by the Company and must specify: (i) the date the order is placed; (ii) the required quantity of the Products ordered; (iii) the territory within the Territory in which the Products will be sold; and (iv) any other relevant instructions or information.
In the event of any conflict between this Agreement and the Purchase Order, this Agreement shall prevail.
5.4 | Ordering of Products |
The Company is deemed to have accepted a Purchase Order if it does not reject the Purchase Order in writing within ten (10) Business Days of its receipt. The Company will use reasonable efforts to ensure that the Products will have at least [***] shelf life upon pickup by Distributor at the point of delivery, with expiry date of the Products to be mutually agreed upon in case the life is shorter than [***].
5.5 | Cancellation or Deferral of Purchase Order |
Subject to Section 11.5, once a Purchase Order has been delivered to the Company and deemed accepted by the Company pursuant to Section 5.4, the Purchase Order cannot be cancelled or delivery of the Products under the Purchase Order deferred by the Distributor unless (i) the Company provides its prior written consent and (ii) the Distributor agrees to fully indemnify the Company against any loss, damage, cost or liability suffered by it as a result of cancellation of the Purchase Order or deferral of delivery of Products unless such cancellation or deferral has been agreed to by the Company.
5.6 | Delivery |
(a)
During the Term of this Agreement, the Company will manufacture or allow for the Products to be manufactured by an approved manufacturer.
(b)
The Company will use commercially reasonable efforts to deliver ordered products within sixty (60) days of the date of receipt of a Purchase Order from Distributor, or such later date that is requested by Distributor, to a third party logistics provider (“3PL”) for pick up by Distributor. Distributor shall acquire the Products only from the Company through the 3PL and from no other source, except for a limited period of time following the Effective Date, all Products requiring a prescription in the US will be shipped to the Distributor from WBC Group, LLC. The Company will cease shipping prescription products from WBC Group, LLC as soon as prescription licenses have been secured for delivery to 3PL, and will provide at least one week notice to the Distributor. Following notice, all Products will be delivered to the 3PL. All units of Products delivered to Distributor under this Agreement shall be packed for shipment in the Company’s standard containers, and shall be shipped to the 3PL facilities (“3PL Facilities”) for pick up by Distributor.
(c)
Unless expressly agreed to in writing by the Company, the Company shall deliver all Products ordered by Distributor to the 3PL with labels and Product packaging approved for sale of the Products in the United States or the European Union. Distributor shall be responsible for ensuring at its sole cost and expense that any Product or Product packaging that is required to be re-labeled or repackaged (including any translation) to conform to applicable laws or regulations in the Territory shall be re-labeled or repackaged prior to any sale of such Product in the Territory.
(d)
Upon delivery of the Product to the Delivery Point (defined below), the Distributor or its representative shall visually inspect the Product. The Distributor will have fourteen (14) days after delivery to notify the Company in writing of any deficiencies or objections to the Product with respect to the quality or quantity of the Product that can be reasonably observed by inspection of the outer packaging of the Product. In case of hidden/latent defect to the Product, the Distributor will have fourteen (14) days after the discovery date to notify the Company in writing. The Distributor must be able to prove the Product was stored per the requirements on its label from the time of delivery to receive compensation or replacement in the case of hidden/latent defect.
(e)
If the Company does not agree with the Distributor that some quantities of Product are defective, the Parties will deliver a sample of the Product to a quality control laboratory chosen by mutual agreement and the determination concerning quality of the Product by such laboratory shall be binding on the Parties.
(f)
The Company shall be required to deliver substitute quantities of Product in the event that such quality control laboratory determines that the Product was defective. The Company will use commercially reasonable efforts to ensure the replacement Product will be ready for pickup by the Distributor as soon as possible and in no event later than sixty (60) days of such determination. If the Distributor does not notify the Company of any objections to the Product within the aforesaid period, it will be conclusively presumed that such quantities of Product were satisfactory.
5.7 | Risk and Title |
(a)
All deliveries of the Products shall be Ex Works (Incoterms 2016) 3PL Facilities (the Delivery Point), except as described in Section 5.6 (b). All customs duties, freight, insurance and other shipping expenses from the Delivery Point as well as any other special packing expenses requested by Distributor, shall be borne by the Distributor.
(b)
Title to each of the Products shall transfer upon delivery of the Products to Distributor at the Delivery Point. However, the Company shall retain a purchase money security interest in any such Product shipped and to which the Distributor has taken title. In this regard, the Distributor agrees to execute any such documents as are reasonably required by the Company to evidence this security interest.
(c)
The Company may, at its sole discretion, select or otherwise engage a new 3PL or change the Delivery Point to another 3PL facility upon thirty (30) days’ prior written notice to the Distributor (“3PL Change Notice”). Unless otherwise agreed in writing by the parties, any delivery made subsequent to the 30 day period shall be transacted as set forth in the 3PL Change Notice.
(d)
Notwithstanding Section 5.7(b), in the event that the Distributor defaults on payment, title in all unsold Products that the Distributor has not paid for shall revert to the Company.
5.8 | Minimum Purchase Requirements in the Territory |
Provided that the Company supplies the Products substantially in compliance with any Product Rolling Forecasts and order delivery dates agreed upon by the Parties, the Distributor must purchase from the Company minimum quantities of Product in order to meet the Minimum Purchase Requirements for each calendar year as set out in Schedule 2. In addition, all Products must be ordered in full cases, as indicated in Schedule 2.
5.9 | Failure to Meet Minimum Purchase Requirement |
If the Distributor fails to meet the Minimum Purchase Requirements, the Company may: (a) terminate this Agreement pursuant to Section 17(b)(i); and/or (b) appoint another distributor to sell the Products in the Territory.
5.10 | The Distributor Not to Avoid Obligations |
Section 5.9 is intended to ensure that the Distributor purchases from the Company the Minimum Purchase Requirements in order to market and sell the Products in the Territory. This Section is not intended to affect or derogate in any way from the Distributor’s obligation to comply with its obligations under Sections 8.1, 8.2 and 8.3.
5.11 | Price |
Subject to Section 5.12, the Product Prices are as specified in Schedule 2. Unless otherwise specified, the Product Prices are expressed in United States dollars.
5.12 | Price Changes |
The Company shall give at least thirty (30) days’ written notice to Distributor of any amendment to the Product Prices listed in Schedule 2.
In the event the Company increases the Product Price on any Product, any orders for such Product that have been shipped by the Company before the effective date of the price increase shall be invoiced at the previous, or lower price; provided however, if shipment is delayed due to backorder status, then such Products will be shipped at the previous or lower, price when such Products become available for shipment.
5.13 | Invoicing and Payment |
(a)
Upon acceptance of a Purchase Order, the Company will provide an invoice to the Distributor for the ordered Products (“Invoice”).
(b)
Each Invoice must be in a form and substance that will constitute a tax invoice, will include VAT or any applicable taxes, and will comply with all necessary VAT requirements, where applicable.
(c)
The Distributor must pay the Company, in immediately available funds, the amount stated in the Invoice before the ordered Products can be picked up at the Delivery Point by the Distributor, or once Payment Terms are approved, payment must be made in full within 30 days of delivery at the Delivery Point. If the Distributor has not paid in full by the end of 30 days, no further orders will be released. Maximum credit is [***].
(d)
As mutually agreed, all claims for credit by the Distributor for damaged stock, which can be reasonably observed by inspection of the outer packaging of the Product, must be reported to the Company within fourteen (14) days from the date of delivery to the Delivery Point and must be supported with (i) information including the batch number and date of delivery and (ii) evidence of such damage. Any such claims received more than 14 days after the date of delivery will be rejected except for latent defect.
6. | Payment |
6.1 | Payments Under This Agreement |
The Distributor must pay the Company the amount stipulated in the relevant Invoice for the Products ordered in accordance with Section 5.13.
The Distributor is responsible for all taxes and any additional import costs, if applicable.
6.2 | Late Payment |
Without prejudice to the Company’s other rights and subject to Section 6.4, if the Distributor fails to make payment for any Invoice or other sum owing by the due date, the Company may, after giving the Distributor fourteen (14) Business Days’ notice and no payment is made by the Distributor: (a) suspend performance of its obligations under this Agreement until such time as all payments due by the Distributor are paid in full; and (b) charge daily interest on the amount outstanding: (i) calculated from the due date of payment to the date of actual payment; and (ii) at an interest rate of 9% per annum above the Wall Street Journal Prime Rate on that day or the highest rate allowed by applicable law, whichever is lower.
6.3 | Other Rights and Obligations Not Affected |
The exercise by the Company of any of its rights under Section 6.2 does not affect: (a) the Distributor’s obligation to pay any money due and payable; or (b) any other rights or remedies the Company may have in relation to any failure by the Distributor to pay an amount due under this Agreement.
6.4 | Disputes |
If the Distributor disputes whether the whole or part of an Invoice submitted by the Company is payable:
(a)
the Distributor must pay the full amount of the Invoice by the relevant due date for payment;
(b)
the Distributor must give written notice to the Company within ten (10) Business Days after receiving the Invoice, of the amount disputed and reasons for the dispute;
(c)
if the Distributor and the Company are unable to resolve any dispute between them regarding the amount invoiced within fifteen (15) Business Days of the Company receiving the Distributor’s notice, they must invoke the dispute resolution process in Section 20; and
(d)
the Distributor and the Company must comply with its other obligations under this Agreement until the dispute is resolved.
7. | Taxes |
7.1 | General Tax |
(a)
Amounts payable by the Distributor under this Agreement are exclusive of any applicable Taxes payable in the Territory. Distributor shall be responsible for, all excise, sales, use, value added and other taxes, including any goods and services tax payable in the Territory, but excluding any tax on the income of Company. Notwithstanding the foregoing, the Parties understand that payments made by Distributor to Company may be subject to withholding taxes in the Territory, which, if applicable, shall be withheld and promptly paid by Distributor, on behalf of Company, to the applicable tax authorities and promptly evidenced by appropriate certificate of receipt or other evidence issued by such authorities; provided however, should the tax authorities in the Territory determine that any payments due Company from Distributor are subject to such taxes, Distributor shall use reasonable commercial efforts to provide Company such documentation as may be necessary for the Parties to receive the reduced rate of withholding tax under any applicable treaty. Company may, in its sole discretion, file an application with the applicable authorities for such reduced rate of withholding tax.
8. | Sale and Promotion of the Product |
8.1 | Commercially Reasonable Efforts |
The Distributor will use commercially reasonable efforts to maximize the sales of the Products to Customers in the Territory.
8.2 | Test of Commercially Reasonable Efforts |
(a)
In determining whether the Distributor has used its commercially reasonable efforts under Section 8.1, regard will be had among other matters to whether the Distributor has met the Minimum Purchase Requirement in respect of the relevant period as agreed to on an annual basis.
(b)
Meeting the Minimum Purchase Requirements agreed to in the marketing plans under this Section is not of itself conclusive evidence of the use of commercially reasonable efforts for the purposes of Section 8.1 but will not be considered as an Event of Default.
8.3 | Marketing and Promotion |
Without limiting Section 8.1, the Distributor must (to the extent appropriate):
(a)
devote commercially reasonable efforts to marketing, selling and servicing the Products in the Territory;
(b)
employ qualified, trained and informed sales and service and marketing staff;
(c)
maintain adequate compliant and suitable storage and transport facilities for the Products;
(e)
promptly develop an annual marketing plan for the Products, to be approved by the Company by the end of July of each calendar year. The annual marketing plan for the Products shall be submitted and approved by the Company prior to implementation, the Company’s approval to be provided to the Distributor within thirty (30) days from the date of submission by the Distributor.
(f)
promptly implement the annual marketing plan including developing and distributing catalogues, brochures, advertising, sales, promotion material and demonstration equipment;
(g)
provide the Company with a quarterly report by the sixth (6th) Business Day of each quarter in a format outlined by the Company and agreed to by the Distributor. The quarterly report will include but not be restricted to sales for the month and year to date, contract and tenders won and lost, promotional activities undertaken, stock levels and average selling prices;
(h)
comply with all laws and regulations applicable to the sale, marketing and distribution of the Products in the Territory;
(i)
not publish, distribute or circulate any advertising or promotional material or adopt any promotional action in relation to the Products which is not in the agreed annual marketing plan. All advertising or promotional material, including but not limited to, brochures and literatures, must have received the Company’s prior written approval, in accordance with Section 8.4, before submission to any local Health Authority.
(j)
ensure that all advertising, promotional material and promotional actions relating to the Products comply with all laws applicable to advertising and promotion in the Territory.
Throughout the Term of this agreement, the Company must:
at no cost, provide training and marketing assistance by sharing appropriate US-generated marketing assets, and providing coaching on sales and marketing strategies. The Company will not support promotions through cash or free product.
8.4 | Promotional Materials |
Prior to first use of any promotional materials, the Distributor must submit all such promotional materials to the Company for the Company’s review, comment and approval. The Distributor shall submit all such promotional materials no later than fifteen (15) Business Days prior to the use, publication or dissemination of such materials, and shall incorporate any comments that the Company may provide and make any changes requested by the Company, after which the materials must be resubmitted for further review and approval. The Company may in its discretion reject any promotional materials that are inconsistent or contradictory to the approved uses for the Products, or for any other reason on reasonable grounds.
8.5 | Internet Use |
(a)
Any new websites to be developed by the Distributor displaying or related to the Products shall be subject to the Company’s review and comment. The Distributor shall notify the Company no later than fifteen (15) Business Days prior to the publishing of any such website and shall incorporate any comments that the Company may provide and make any changes requested by the Company, after which the website must be resubmitted for further review and approval.
(b)
The Distributor shall identify, within five (5) days of the Effective Date, any existing websites that it has established or plans to use with the Products. Upon receiving approval from the Company, the Distributor may continue with all approved existing websites established for the Products. Notwithstanding the above, the Company may request the Distributor to make reasonable changes to such websites from time to time, related to the use of the Trademarks of the brand image associated with the Company’s products, and the Distributor shall make all such changes as soon as practicable. Until such notification of required changes from the Company, the Distributor may continue with all approved existing websites.
8.6 | Competing Product |
The Distributor undertakes to notify the Company, in writing, of all existing and future products promoted and marketed by its sales team, that are Competing Product. For the purpose of this Agreement, “Competing Product” shall mean any product that the Company deems to be similar to or competitively positioned against the Products being sold by the same sales team selling the Products in the Territory. The Company reserves the right to terminate this Agreement under Section 17.1(b)(ii) if a Competing Product is determined by the Company to be detrimental to the sale of the Products in the Territory.
This notice shall be made in writing within thirty (30) Business Days of:
(a)
the Effective Date of this Agreement for those Products being promoted and marketed by the Distributor’s sales team as of the Commencement Date;
(b)
any new product being added to Schedule 2;
(c)
a new Competing Product being scheduled to be first promoted and marketed by the Distributor’s sales team.
8.7 | Inspection of Goods Prior to Sale |
The Distributor shall inspect all Products prior to sale or other distribution to any authorized third party. If any Products appear defective or deficient in any way, including but not limited to damaged packaging or containers, the Distributor shall not sell or otherwise distribute those Products to any person. Similarly, if the Products bear a “sell by” or “best by” date, or other indication of shelf life, or the Distributor otherwise knows the Products’ shelf life, the Distributor shall not sell or otherwise distribute the Products after the printed or known date or within one (1) week prior to the printed or known date. The Distributor accepts and acknowledges that any defective or past-due products are its responsibility, and that the Company is not responsible to replace or compensate the Distributor for any such goods except as provided for in Section 5.6 of this Agreement.
9. | Packaging and Labeling |
9.1 | Packaging and Labeling |
(a)
The Product will be supplied by the Company to the Distributor in finished, packaged and labeled form, ready for resale to Customers, and the Distributor shall not modify or in any way alter the packaging and labeling elements and inserts, except for putting stickers and/or implementing modifications in order to comply with the requirements of any local Health Authority, in which event such stickers and/or modifications will be subject to the Company’s prior written approval. In no event shall the Distributor cover or otherwise obscure, in whole or in part, any printed information or designs on the products or their packaging except to the extent and in the exact manner permitted by the Company in writing. All costs associated with relabeling or over-labeling to comply with the relevant Health Authority are the responsibility of the Distributor.
(b)
The Parties agree that until the new packaging of the Products have been approved by the relevant Health Authority, the Distributor may continue to sell the Product in its current packaging until all existing stock has been sold off.
(c)
In the event the Company wishes to amend the specification of the packaging of the Product, the Company shall notify the Distributor in writing with a sufficient period of notice to be compliant to the regulatory matters related to such change. The Company further acknowledges and agrees that it shall in no case implement any change of packaging before obtaining the appropriate authorization(s) from the relevant Health Authority.
10. | Sales Reports and Records |
10.1 | Sales Reports |
Monthly Sales Reporting Requirements
By the sixth (6th) Business Day following the end of each month the Distributor must send to the Company via email the following information: (a) total unit sales of the Products in the preceding month, and units sold by SKU; (b) stock on hand of each SKU; (c) month’s stock cover by SKU; and (d) promotional activity summary for the previous and next month.
10.2 | Sales Records |
The Distributor shall keep accurate and detailed sales records of all sales made pursuant to this Agreement for a period of five (5) years following the sale of the products. Such records shall include, at a minimum, the following information: (a) name and contact information for the Customer; (b) shipping destination for the goods; (c) total unit sales and units sold by SKU; (d) amount paid for products purchased; and (e) lot numbers associated with purchased products and quantities of each lot number included in purchased goods.
10.3 | Sales Reports |
From time to time, the Company may request to discuss and understand sales pattern and demands in the Territory, and the Distributor shall provide information to support discussion accordingly.
11. | Regulatory Issues and Product Recalls |
11.1 | Obtaining and Maintaining Health Registration |
All matters pertaining to registration will be addressed in an addendum to this Distribution Agreement.
11.2 | Reporting |
(a)
The Company and the Distributor must report to the other Party any adverse drug events connected with the Products.
(b)
The Company shall at its own cost provide the Distributor product safety update reports and other reports to accord with additional or varied regulatory reporting requirements and compliance with industry best practice within the Territory.
11.3 | Product Recall |
(a)
A Party shall immediately consult with the other Party if it considers that an event, incident or circumstance has occurred which may result in the need for a recall or market withdrawal (“Recall”) of a Product (“Recalled Product”).
(b)
If the Parties determine that a Recall is necessary, the Parties will consult each other to determine the Recall procedure and the nature and extent of the Recall.
(c)
In the event of a Recall, the Distributor will be responsible for: (i) administering any Recall; (ii) consulting and reporting to the Company on the Recall; and (iii) paying all costs of the Recall if such Recall resulted from the Distributor’s own fault, omission or negligence. The Company shall bear the costs of all other Recalls.
12. | Quality Standards and Product Liability |
12.1 | Products to Comply with Standards |
The Distributor must ensure that the Products distributed, promoted and sold in the Territory by the Distributor comply with all applicable laws, standards and requirements. The Distributor will keep the Company informed of any significant interface or communication by the relevant Health Authority or other Government Entity regarding labeling, advertising and promotion of the Products in the Territory, or any applicable law, standard or requirement that may alter or adversely affect the manufacture or marketing of the Products in the Territory.
12.2 | Product Complaints |
The Company and Distributor shall work collaboratively and in good faith to collect, investigate and answer all complaints concerning the Products within the Territory, and the Distributor shall fully cooperate with the Company to resolve such complaints. No later than forty-eight (48) hours after notice of any material Customer complaint of any nature concerning the Products, or notice or awareness of serious or adverse reaction associated with the use of the Products, the Distributor will notify the Company. All such records of complaints concerning the Products within the Territory must be kept for no less than two (2) years following the termination of this Agreement. Please see Schedule 3 for further instructions.
12.3 | Insurance |
Each Party shall be responsible to ensure that all appropriate and adequate insurance coverage shall be maintained pursuant to the respective Party’s obligations under this Agreement (including damage or loss to third party) and will provide evidence of such coverage upon request from the other Party.
13. | Confidential Information |
13.1 | Obligations of Confidentiality |
Subject to Sections 13.2 and 13.3, the Receiving Party must during the Term of this Agreement and for five (5) years after its termination, or, in the case of trade secrets, for five (5) years or for as long as the Confidential Information remains a trade secret, whichever is longer:
(a) keep all Confidential Information confidential and not directly or indirectly disclose, divulge or communicate any Confidential Information to, or otherwise place any Confidential Information at the disposal of, any other person without the prior written approval of the Disclosing Party;
(b) take all reasonable steps to secure and keep secure all Confidential Information coming into its possession or control;
(c) not memorize, use, modify, reverse engineer or make copies, notes or records of the Confidential Information for any purpose other than in connection with the performance by the Receiving Party of its obligations under this Agreement; and
(d) take all reasonable steps to ensure that any person to whom the Receiving Party is permitted to disclose Confidential Information under Section 13.3 complies at all times with the terms of this Section 13 as if that person were a Receiving Party.
13.2 | Exceptions |
The obligations of confidentiality under Section 13.1 do not apply to:
Any disclosure of Confidential Information by the Receiving Party that is necessary to comply with any court order, law, or the applicable rules of any recognized stock exchange or other financial or securities market if, to the extent practicable and as soon as reasonably possible, the Receiving Party: (i) notifies the Disclosing Party of the proposed disclosure; (ii) consults with the Disclosing Party as to its content; and (iii) uses reasonable endeavors to comply with any reasonable request by the Disclosing Party concerning the proposed disclosure.
Notwithstanding any nondisclosure obligations contained in this Agreement, pursuant to Section 7 of the Defense of Trade Secrets Act, neither Party shall be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
13.3 | Authorized Disclosure |
A Receiving Party may disclose Confidential Information to any Affiliate, employee, agent, contractor, officer, professional adviser, banker, auditor or other consultant of the Receiving Party (each a “Recipient”) only if the disclosure is made to the Recipient strictly on a “need to know basis”, and prior to the disclosure:
(a)
the Receiving Party notifies the Recipient of the confidential nature of the Confidential Information to be disclosed;
(b)
the Recipient undertakes to the Receiving Party (for the benefit of the Disclosing Party) to be bound by the obligations in this Section 13 as if the Recipient were a Receiving Party in relation to the Confidential Information to be disclosed to the Recipient; and
(c)
if requested to do so by the Disclosing Party, the Recipient signs an undertaking or deed in a form acceptable to the Disclosing Party (and for the benefit of the Disclosing Party) agreeing to be bound by the obligations in this Section 13 as if it were a Receiving Party in relation to the Confidential Information to be disclosed to the Recipient.
13.4 | Return or Destruction of Confidential Information |
Immediately on the written request of the Disclosing Party or on the termination of this Agreement for any reason, a Receiving Party must:
(a)
cease the use of all Confidential Information of or relating to the Disclosing Party (or any related corporation of the Disclosing Party);
(b)
deliver to the Disclosing Party all documents and other materials in its possession or control containing, recording or constituting that Confidential Information or, at the option of the Disclosing Party, destroy, and certify to the Disclosing Party that it has destroyed, those documents and materials; and
(c)
for Confidential Information stored electronically, permanently delete that Confidential Information from all electronic media on which it is stored, such that it cannot be restored.
Notwithstanding the foregoing, a Disclosing Party may retain one (1) copy of any Confidential Information in its possession for legal archival purposes only, and will continue to treat such copy as Confidential Information.
13.5 | Warranties |
The Disclosing Party warrants to the Receiving Party that: (a) it has the right to disclose Confidential Information to the Receiving Party and to authorize the Receiving Party to use the Confidential Information as permitted by this Agreement; and (b) the use of the Confidential Information as permitted by this Agreement does not breach the Intellectual Property Rights of any other person.
13.6 | Liability for Breach by Recipient |
The Receiving Party is liable for any breach of this Section 13 by a Recipient as if the Recipient were a Receiving Party in relation to the Confidential Information disclosed to the Recipient.
14. | Infringement or Other Proceedings |
14.1 | Notice of Proceedings |
Promptly upon discovery of or otherwise becoming aware of any alleged infringement of any Intellectual Property Rights by a third party, of any challenge to the Company’s claim of ownership of any Intellectual Property Rights, including Trademarks, or of any action to contest, challenge or revoke any Intellectual Property Rights (collectively, “Infringement”), the Distributor shall inform the Company in writing of said Infringement and provide any available evidence thereof.
14.2 | Action by The Company |
The Company shall have the exclusive right, but shall not be obligated, to prosecute or defend at its own expense all Infringements. In furtherance of such right, the Distributor agrees that the Company may include it as a party plaintiff in any action related to said Infringements, without expense to the Distributor. Whether named as a plaintiff or not, the Distributor shall, at the request and expense of the Company, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. The total cost of any such Infringement action commenced or defended by the Company shall be borne by the Company and the Company shall keep any recovery or damages for past infringement derived therefrom.
15. | Warranties |
15.1 | Parties’ Warranties |
Each Party warrants to the other and it is a condition of this Agreement that:
(a)
it has exercised its independent skill and judgment and has carried out its own investigations in its decision to enter into this Agreement;
(b)
it has not relied on any advice, promise or representation made by the other Party which has not been expressly included in this Agreement;
(c)
it has obtained all authorizations, registrations, approvals or permits required by any governmental body or under any government legislation in connection with its entry into and performance of this Agreement;
(d)
it has the power and authority to enter into and perform its obligations under this Agreement;
(e)
this Agreement after its execution, constitutes a legal, valid and binding obligation of each party; and
(f)
it is not a party to any other agreement that would prohibit, restrict or limit in any way its performance of its obligations under this Agreement.
15.2 | The Company’s Warranties |
The Company represents and warrants to the Distributor that on the date of this Agreement:
(a)
it has the right to grant the license as granted in this Agreement;
(b)
to the best of the Company’s knowledge and belief, no other person’s consent is required in respect of the license of the Trademarks; and
(c)
to the best of the Company’s knowledge and belief, there is no litigation or claim pending or threatened, challenging or disputing the ownership of the Trademarks.
15.3 | Effect of Legislation |
Nothing in this Agreement shall be interpreted as excluding, restricting or modifying the application of any legislation, which by law cannot be excluded, restricted or modified.
15.4 | Exclusion of Implied Warranties |
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSES AND NON-INFRINGEMENT.
16. | Liability |
16.1 | Limitation of Liability |
NEITHER PARTY SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES OF ANY KIND (INCLUDING LOSS OF PROFITS, LOSS OF DATA, LOSS OF BUSINESS OPPORTUNITY AND LIABILITIES IN RESPECT OF THIRD PARTIES) WHICH MAY BE SUFFERED OR INCURRED OR WHICH MAY ARISE DIRECTLY OR INDIRECTLY IN CONNECTION WITH THIS AGREEMENT HOWEVER CAUSED, AND REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE FORESEEABLE, (B) WHETHER OR NOTTHE PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (C) WHETHER BASED ON BREACH OF CONTRACT, BREACH OF STATUTE, TORT (INCLUDING ANY NEGLIGENT ACT OR OMISSION) OR OTHERWISE. THIS SECTION SHALL NOT APPLY TO CLAIMS FOR INDEMNIFICATION FOR THIRD-PARTY CLAIMS AS SET FORTH IN SECTION 16.2.
16.2 | Indemnity |
Without limiting any other indemnity obligation set forth in this Agreement, the Parties’ respective indemnity obligations are as follows:
(a)
Company’s Indemnification
(i)
The Company shall defend, indemnify hold harmless the Distributor from and against any claim of a third party to the extent arising from the breach by the Company in the performance of its obligations under this Agreement. The Company will pay resulting court costs, damages and legal fees finally awarded, provided Distributor promptly notifies the Company in writing of any such claim, The Company has sole control of the defense and all related settlement negotiations, and the Distributor shall provide the Company with such assistance and all related information for such defense as the Company may reasonably request.
(ii)
Subject to provisions of Section 14, the Company shall indemnify and hold harmless the Distributor from and against any claim that the Products, the Company’s technical and sales literature or the Trademarks infringe, in the Territory, a patent, trademark or copyright of a third party (“Claim”), and pay resulting court costs, damages and legal fees incurred in connection with such Claim, provided (i) Distributor notified the Company promptly in writing of any such Claim and (ii) gives the Company sole control of the defense of the same and all negotiations for its settlement or compromise. Should any Products become, or in the Company’s opinion be likely to become, the subject of a claim of Infringement, the Distributor shall permit the Company, at the Company’s option and expense, to (i) procure for the Distributor the right to continue using the Products, (ii) replace or modify the Products to become non-infringing, or (iii) if neither procurement or replacement are commercially reasonable, terminate this Agreement by giving written notice thereof to the Distributor, with no further obligation or liability to the Distributor. Notwithstanding the foregoing, the Company shall have no liability for any claim of infringement to the extent based upon any modification of the Products, any combination of the Products with non- Company materials or technology (where such Product alone would not have given rise to the Claim), or modification of the Company’s technical and sales literature and Trademarks not made or authorized by the Company or its authorized representatives.
(b) | Distributor’s Indemnification |
The Distributor shall defend, indemnify and hold harmless the Company from and against any claim of a third party to the extent arising out of resulting from:
(i)
Any negligent or more culpable act or omission (including any recklessness or willful misconduct) of the Distributor, its sub-distributors, or the agents and representatives of either, in connection with the performance of its obligations under this Agreement, including but not limited to the registration, promotion and sale of the Products. The registration, promotion and sale of the Products includes, without limitation, the registration, storage, shipment, use, import, marketing, promotion, advertising, distribution (including re-packaging), adulteration, misbranding and sale of the Products, including but not limited to Distributor’s, sub-distributor’s, agents’ and representatives’ promotional or advertising materials for the Products;
(ii)
Any statements, claims, representations or warranties made by Distributor, its sub-distributors, or the agents or representatives of either, relating to the Products, other than as authorized or made by the Company in writing, including but not limited to those made in the Company’s technical and sales literature and materials;
(iii)
Any breach or non-fulfillment of any representation, warranty or covenant under this Agreement by Distributor, its sub-distributors, or the agents or representatives of either;
(iv)
Any failure by Distributor, its sub-distributors, or the agents or representatives of either, to comply with any applicable laws relating to the performance of its obligations under this Agreement;
(v)
Any infringement or claim thereof of any patent, copyright, trademark, service mark, trade name, trade secret or any other property right of a third party arising from the use by the Distributor, any sub-distributors, or any of their agents or representatives, of any symbol, insignia, name or identifying characteristic other than the Trademarks;
(vi)
Any combination of any Trademark with any materials not provided or approved by the Company;
(vii)
Any modification to the Products not made by the Company or combination of the Products with other products;
(viii)
Any use of the Products not authorized or certified by the Company or by the Company’s technical and sales literature and materials; and
(ix)
Any allegation that Distributor, its sub-distributors, or the agents or representatives of either, breached its agreement with a third party as a result or in connection with entering into, performing under or terminating this Agreement.
The Distributor shall pay resulting court costs, damages and legal fees finally awarded, provided the Company promptly notifies Distributor in writing of any such claim, and the Company provides the Distributor with such assistance and all related information for such defense as the Distributor may reasonably request.
16.3 | Scope of Limitations |
Any provision of this Agreement that purports to exclude or limit the liability of, or the warranties given by each Party under this Agreement applies to the maximum extent permitted by law.
17. | Termination |
17.1 | The Parties’ Right to Terminate |
(a)
Without in any way affecting its other rights under this Agreement or at law including any separate right of termination, either Party shall have the right to immediately terminate this Agreement if the other Party fails to comply with any material term hereof and fails to correct such compliance within thirty (30) days after receipt of written notice of such failure.
(b)
Either Party may immediately terminate this Agreement for cause by giving written notice of such termination to the other Party upon the occurrence of any of the following events:
(i) | if the other Party makes a voluntary petition in bankruptcy, insolvency or similar petition; |
(ii) | an involuntary petition in bankruptcy, insolvency or similar petition is made against the other Party which are not dismissed or otherwise resolved within sixty (60) days after the filing of such petition; |
(iii) | if the other Party becomes insolvent or makes a general assignment for the benefit of creditors, suffers or permits an appointment of a receiver for its business or assets or is liquidated; or |
(iv) | the enactment or adoption of any change in laws, rules, regulations or governmental policies or other change in circumstances that makes it illegal, impossible or impracticable to export, import, market, sell and distribute the Products to or in the Territory as contemplated by this Agreement. |
17.2 | The Company’s Right to Terminate |
(a)
Without limiting or altering the Company’s right to terminate the Agreement as set forth in Section 17.1, the Company shall have the right to terminate this Agreement, upon not less than ninety (90) days’ notice:
(i)
in the event of the sale, transfer, merger or assignment of all, or substantially all, of the assets or business of Distributor, or the sale or transfer of all, or substantially all, of Distributor’s business activities related to this Agreement, including the Products;
(ii)
if, pursuant to Section 4.2(b) the Distributor does not commence selling the Products within thirty (30) days of the Effective Date or stops offering for sale the Products for more than thirty (30) days; or
(iii)
if the Company reasonably forms the opinion that the Distributor’s use of the Trademarks is likely to infringe the Intellectual Property Rights of any third party; or
(iv)
if the Company determines that the Distributor’s use of the Trademarks is in violation of the terms of this Agreement or that the quality of the goods and services offered in connection with the Distributor’s use of the Trademarks falls below an acceptable level; or
(v)
if a competent Health Authority imposes new standards for the manufacture, testing or approval of the Products that materially impacts the Territory and that results in a significant negative economic impact for the Company; or
(vi)
if Distributor or any of its Associated Person(s) has failed to meet their obligations in Section 21.
(b)
Without limiting or altering the Company’s right to terminate the Agreement as set forth in Section 17.1 or 17.2(a), the Company shall have the right to immediately terminate this Agreement upon written notice to the Distributor and without opportunity to cure:
(i)
if the Minimum Purchase Requirements set out or referred to in this Agreement are not met by the Distributor as set forth under Section 5.9; or
(ii)
if the Company determines, as set forth under Section 8.6, that a Competing Product is detrimental to the sale of Products in the Territory; or
(iii)
if the performance of a Party’s obligation under this Agreement (other than an obligation to pay money) is delayed due to Force Majeure for a continuous period of more than thirty (30) days from the date on which such Party gives notice to the other Party under Section 19.1(a).
18. | Consequences of Termination |
18.1 | Obligation on Termination |
Upon the expiration or termination of this Agreement for any reason, the Distributor must promptly:
(a)
pay all amounts owing under this Agreement, which become due on termination;
(b)
subject to Section 18.1(e), all rights granted to the Distributor will terminate and all rights in and to the Trademarks will revert to the Company without further action or notification by the Company to the Distributor
(c)
to the extent permitted by law in the Territory, immediately take all action to transfer the registration for the Products with the relevant Health Authority to a party so indicated by the Company, at cost to the Company;
(d)
deliver to the Company or erase or destroy, or procure the delivery, erasure or destruction (as applicable), of all materials containing the Company’s Confidential Information;
(e)
if the Distributor has any remaining stock of the Products or any part or other materials pertaining to the Products:
(i)
if the Company so elects, the Distributor shall sell them to the Company at the Company’s original invoiced cost; or
(ii)
if the Company communicates its intention not to buy back the stock, (a) the Distributor may, for [***] following termination, sell them in the Territory, provided the Distributor identifies, in writing, its proposed customers (including all pertinent contact information) and the goods it intends to sell to each customer, and the Company consents to such sale(s) in writing, within an agreed period, with the Company’s prior written consent, which consent shall not be unreasonably withheld, and (b) the Distributor shall destroy (meaning that the products shall be rendered unable to be resold or used) any unsold stock at the conclusion of the sell-off period identified herein, and said destruction shall be certified in writing by the Distributor; and
(f)
upon request from a Party, the other Party shall deliver to the requesting Party a statutory declaration made by an authorized officer of the other Party declaring that to the best of that person’s knowledge and belief (after having made proper inquiries) none of its officers, employees, agents, contractors or advisers have retained any Confidential Information except to the extent as may be required for compliance with applicable law and that Party has fully complied with its obligations under this Agreement.
18.2 | Other Remedies |
Termination by any Party under Sections 17 or 18 is without prejudice to each Party’s right to sue for and recover any monies then due and in respect of any previous breach by the other Party of this Agreement.
18.3 | Survival |
(a)
Sections 6.2, 7, 9.3, 12.2, 13, 16, 18, 20 and 21.1 shall survive the termination of this Agreement.
(b)
All indemnities in this Agreement shall survive the expiry or termination of this Agreement.
19. | Force Majeure |
19.1 | Relief for Force Majeure |
If a Party is wholly or partly unable to carry out its obligations under this Agreement (other than an obligation to pay money) due to Force Majeure, the obligations of that Party will be suspended provided that: (a) within a reasonable time after the occurrence of Force Majeure, the Party gives the other Party a written notice specifying the Force Majeure; (b) the relevant obligations will be suspended only to the extent that the obligations are affected by Force Majeure; (c) the relevant obligations will be suspended during, but no longer than, the continuance of the Force Majeure, and such further period as is reasonable in the circumstances; and (d) the Party giving the notice uses its best efforts to promptly abate the Force Majeure.
19.2 | Other Party May Terminate |
If the performance of a Party’s obligation under this Agreement (other than an obligation to pay money) is delayed due to Force Majeure for a continuous period of more than thirty (30) days from the date on which such Party gives notice to the other Party under Section 19.1(a), the other Party may terminate this Agreement.
20. | Dispute Resolution and Jurisdiction |
20.1 | Dispute Process is Pre-condition to Arbitration |
A Party must not start arbitration about a dispute arising out of this Agreement (“Dispute”) unless it has first complied with this Section 20.
20.2 | Notice of Dispute |
A Party claiming that a Dispute has arisen must notify the other Party to the Dispute giving details of the Dispute (“Notification”).
20.3 | Informal Resolution |
On receipt of a Notification, prior to instituting any arbitration on account of such Dispute, the Parties shall attempt in good faith to resolve the Dispute by referring the Dispute to the Chief Executive Officers of the Parties (or other appropriate senior officers designated by the Chief Executive Officers). In the event the Parties’ Chief Executive Officers or other appropriate senior officers are unable to resolve the Dispute or agree upon a mechanism to resolve such Dispute within thirty (30) days of receipt of a Notification, then the Parties shall resolve such Dispute in accordance with Section 20.4.
20.4 | Arbitration |
Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Section 20.4 to arbitrate, shall be determined by arbitration in Los Angeles, California, before a single arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. Judgment on the award may be entered in any court having jurisdiction. This Section shall not preclude the Parties from seeking provisional remedies in aid of arbitration, including but not limited to temporary restraining orders, preliminary injunctions or other equitable relief, from a court of competent jurisdiction, and such application for such provisional remedies shall not breach this arbitration agreement nor abridge the powers of the arbitrator.
21. | Compliance with Law |
21.1 | Anti-Bribery |
In connection with this Agreement, neither the Distributor nor any of its Associated Person(s) has or will directly or indirectly give, offer, promise or authorize the giving of anything of value to any current or former Government Official or other party whether affiliated with a Government or Government Entity, or private entity with the corrupt intent to obtain or retain any business, or secure an unfair business advantage.
21.2 | No Public Officials or Relatives Thereof |
Neither the Distributor or its Associated Person(s) are, or during the period of the Agreement will become, (i) a Government Official, in any country where any aspect of the Agreement will take place; (ii) an immediate family member of such a Government Official (i.e. parent, child, spouse, sibling, or any of the foregoing through marriage); or (iii) a nominee for any Government Official. In the event that during the Term of the Agreement there is a change in the information contained in this Section, the Distributor and affected Associated Person(s) shall make immediate disclosure of same to the Company, who may then terminate the Agreement, in its discretion, in accordance with Section 17.1.
21.3 | Books and Records |
During the Term of this Agreement, the Distributor and its Associated Person(s) shall make and keep books, records, and accounts pertaining to the Agreement which, in reasonable detail, accurately and fairly reflect the transactions and expenditures of the Distributor or Associated Person(s) in connection with the Agreement and that allow the transactions and expenditures to be identified as having been incurred in relation to the Company. The term “reasonable detail” means such level of detail as would satisfy prudent officials in the conduct of their own affairs. Such books and records shall be retained for at least seven (7) years following the Agreement’s termination.
21.4 | Certification of Compliance |
The Distributor shall provide, and shall procure that any Associated Person(s) requested by the Company provide, a certification of compliance with the obligations under this Section 21 on an annual basis.
22. | General |
22.1 | Nature of obligations |
Any provision in this Agreement which binds more than one person binds all of those persons jointly and each of them severally. Each obligation imposed on a Party by this Agreement in favor of another is a separate obligation.
22.2 | Time of the Essence |
In this Agreement, time is of the essence unless otherwise stipulated.
22.3 | Entire Understanding |
This Agreement contains the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior communications between the Parties. Each Party acknowledges that by entering into this Agreement, it has not relied on any representation, warranty or undertaking of any kind made by or on behalf of the other Party in relation to the subject matter of this Agreement that is not expressly set out in this Agreement.
22.4 | No Adverse Construction |
In the interpretation of this Agreement, no rule of construction shall apply to the disadvantage of a Party on the basis that that Party was responsible for the preparation of this Agreement.
22.5 | Further Assurances |
At the Company’s request, the Distributor will within a reasonable time do all things and procure and execute all documents which are reasonably necessary to give full effect to this Agreement (including any assignments of the Improvements) and to assist the Company in applying for, registering, protecting, maintaining, defending and enforcing its applicable Intellectual Property Rights (including the Trademarks) and Health Registrations.
22.6 | No Waiver |
A failure, delay, relaxation or indulgence by a Party in exercising any power or right conferred on that Party by this Agreement does not operate as a waiver of the power or right. A single or partial exercise of the power or right does not preclude a further exercise of it or the exercise of any other power or right under this Agreement. A waiver of a breach does not operate as a waiver of any other breach.
22.7 | Severability |
In the event that any part (including any sub-clause or part thereof) of this Agreement shall be void or unenforceable by reason of any applicable law, it shall be deleted and the remaining parts of this Agreement shall continue in full force and effect and if necessary, the Parties shall use their best endeavors to agree any amendments to this Agreement necessary to give effect to the spirit of this Agreement.
22.8 | Successors and Assigns |
This Agreement binds and benefits the Parties and their respective successors and permitted assigns under Section 22.9.
22.9 | Assignment |
Distributor shall not assign or otherwise transfer its rights or obligations under this Agreement except with the prior written consent of the Company. Any attempted assignment without such consent shall be null and void. The Company (i) may assign or sell this Agreement or any part thereof to an Affiliate; or (ii) the Company shall assign or sell this Agreement if such assignment is in connection with the transfer or sale of substantially its entire business to which this Agreement pertains, whether by asset sale, merger or otherwise. Any permitted assignee shall resume all obligations of its assignor under the Agreement and the assignor shall guarantee the due performance of this Agreement.
22.10 | No Variation; Amendments |
This Agreement may not be amended or varied except in writing signed by or on behalf of the Parties. Any amendments must be executed in the same way as the original agreements and signed by the original signatories or their respective successors.
22.11 | Costs |
Each Party must pay its own legal costs of and incidental to the preparation and completion of this Agreement.
22.12 | Customs Duty |
Any customs duty or its equivalent (including related interest or penalties) payable in the Territory in respect of this Agreement or any instrument created in connection with it must be paid by the Distributor. The Distributor undertakes to keep the Company indemnified against all liability relating to any such customs duty or its equivalent and all applicable and associated fines and penalties, and the Distributor shall cover in full any costs imposed on the Company by any local tax or customs authority.
22.13 | Governing Law and Jurisdiction |
This Agreement shall be governed by and construed in accordance with the internal laws (excluding all conflict of laws rules) of the State of Delaware.
22.14 | Notices |
Any notice or other communication to or by a Party to this Agreement: (a) may be given by personal service, post, facsimile or email; (b) must be in writing, legible and in English addressed to the Party’s address specified in Schedule 1 or to any other address last notified by that Party to the sender by notice given in accordance with this Section; (c) in the case of a corporation, must be signed by an officer or authorized representative of the sender; and (d) is deemed to be given by the sender and received by the addressee:
(i)
if delivered in person, when delivered to the addressee;
(ii)
if posted, four (4) Business Days after the date of posting to the addressee whether delivered or not;
(iii)
if sent by facsimile transmission, on the date and time shown on the transmission report by the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety and in legible form to the facsimile number of the addressee notified for the purposes of this Section; or
(iv)
if sent by email, on the date and time at which it enters the addressee’s information system (as shown in a confirmation of delivery report from the sender’s information system, which indicates that the email was sent to the email address of the addressee notified for the purposes of this Section.
22.15 | Counterparts |
This Agreement may be executed in any number of counterparts and by the different Parties on separate counterparts, each of which when executed and delivered shall constitute an original, but all the counterparts shall together constitute but one and the same instrument.
22.16 | Conflicting Provisions |
If there is any conflict between the main body of this Agreement and any schedules or annexes comprising it, then the provisions of the main body of this Agreement shall prevail.
22.17 | Relationship of Parties |
Nothing in this Agreement may be construed as creating a relationship of partnership, of principal and agent or of trustee and beneficiary.
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized officers in two original copies as of the date written below.
Signed for and on behalf of | Signed for and on behalf of |
Obagi Cosmeceuticals LLC | Gevie, Inc. |
/s/ Jaime Castle
|
/s/ Ha Kim
|
Name: Jaime Castle | Name: Ha Kim |
Title: President and General Manager | Title: |
Date: 4/18/2019 | Date: |
Schedule 1 – Agreement Details
Notices:
All notices to the Company must be provided to:
Obagi Cosmeceuticals LLC
3760 Kilroy Airport Way # 500
Long Beach, CA 90806
Attention: Jaime Castle
with a copy (which shall not constitute notice) to:
Obagi Cosmeceuticals LLC
3760 Kilroy Airport Way # 500
Long Beach, CA 90806
Attention: General Counsel
All notices to the Distributor must be provided to:
Gevie, Inc.
5825 Lincoln Ave Suite D-429
Buena Park, CA 90620
Attention: Ha Kim
Commencement Date: October 19, 2018
End Date: December 31, 2021
Territory:
The Distributor’s Territory is comprised of Customers that sell in Vietnam and South Korea, including, without limitation, any territories or possessions of the foregoing countries, and any other geographic area designated by the Company and agreed to by Distributor for the exercise of Distributor’s rights and obligations in the Distribution Agreement. The Distributor may not sell to Amazon. Sales to any parties on the Company’s List of Unauthorized Sellers (the “List”), or any parties operating at the same address as those identified on the List, are expressly excluded from the Distributor’s Territory under this Agreement. The Company shall provide the Distributor with the List concurrent with the execution of this Agreement. The Distributor acknowledges and agrees that Company may revise the List from time to time, in its discretion, by sending an updated copy to the Distributor. Upon receipt of the revised List, Distributor shall ensure that it makes no further sales to any parties identified on the List.
Trademarks:
Mark Name | Country |
ELASTIDERM | Vietnam |
OBAGI | Vietnam |
OBAGI BLENDFX | Vietnam |
OBAGI CLEARFX | Vietnam |
OBAGI NU-DERM | Vietnam |
OBAGI-C | Vietnam |
ROSACLEAR | Vietnam |
BLUE PEEL | Republic of Korea |
ELASTIDERM | Republic of Korea |
NU-DERM | Republic of Korea |
OBAGI | Republic of Korea |
OBAGI (Stylized) | Republic of Korea |
OBAGI FOR LIFE | Republic of Korea |
OBAGI HYDRATE | Republic of Korea |
OBAGI MEDICAL & Design (Bars) | Republic of Korea |
OBAGI PROTOCOLS & Design (Bars) | Republic of Korea |
OBAGI SKIN HEALTH INSTITUTE | Republic of Korea |
OBAGI SKIN HEALTH | Republic of Korea |
OTHERS PROMISE. OBAGI DELIVERS. | Republic of Korea |
ROSACLEAR | Republic of Korea |
Schedule 2 – Minimum Purchase Requirements and Prices
Minimum Purchase Requirement
2018 | 2019 | 2020* | 2021* |
[***] | [***] |
Not less than [***] |
Not less than
[***] |
*2020 and 2021 to be negotiated based on volume from South Korea
Maximum Quantity on Back Bar
The Distributor may purchase up to a maximum quantity of [***] per quarter in starting in 2019.
Invoice Price
The Distributor will be invoiced at the prices listed in the table below. These invoice prices are exclusive of VAT, or any other applicable taxes, which may be charged in addition to the prices listed. The listed prices represent the compensation for the goods supplied by the Company to the Distributor, and these listed prices form the taxable basis for VAT purposes.
Per the table below, Obagi products will be invoiced at [***] and the Suzan Obagi, MD products will be invoiced at [***].
In 2019, the Distributor agrees to purchase [***] each quarter in Q1, Q2, and Q3, and will be invoiced at [***]. In Q4 of 2019 the Distributor agrees to purchase [***] and will be invoiced at [***]. Suzan Obagi products are always priced at [***].
After the Distributor purchases $3,000,000 of Products each year of the Term beginning in 2019, based on invoiced price, the Distributor will be invoiced at [***] for all Obagi Products except the Suzan Obagi, MD products for the remainder of the year. The Suzan Obagi, MD products will still be invoiced at the prices listed below.
Obagi Products |
Invoice Price
[***] |
Case
Pack |
|
Blue Peel Professional Kit | $ | [***] | [***] |
Blue Peel Radiance Professional Kit | $ | [***] | [***] |
CLENZlderm M.D. Daily Care Foaming Cleanser 1.0 L | $ | [***] | [***] |
CLENZIderm M.D. Daily Care Foaming Cleanser 4.0 fl oz (118 ml) | $ | [***] | [***] |
CLENZIderm M.D. Pore Therapy 4.0 fl oz (118 ml) | $ | [***] | [***] |
CLENZIderm M.D. System Kit | $ | [***] | [***] |
CLENZlderm M.D. Therapeutic Lotion 5% BPO 1.6 fl oz (47 ml) | $ | [***] | [***] |
CLENZlderm M.D. Therapeutic Moisturizer (50 ml) | $ | [***] | [***] |
ELASTlderm Eye Complete Complex Serum 0.47 fl oz (14 ml) | $ | [***] | [***] |
ELASTlderm Eye Cream 0.5 oz (15 g) | $ | [***] | [***] |
Gentle Rejuvenation Advanced Night Repair 1.7 oz (50 g) | $ | [***] | [***] |
Gentle Rejuvenation Skin Calming Cream 2.8 oz (80 g) | $ | [***] | [***] |
Gentle Rejuvenation Skin Rejuvenation Serum 1.0 fl oz (30 ml) | $ | [***] | [***] |
Gentle Rejuvenation Soothing Cleanser 6.7 fl oz (200 ml) | $ | [***] | [***] |
Gentle Rejuvenation Ultra-Rich Eye Hydrating Cream 0.5 oz (15 g) | $ | [***] | [***] |
Obagi Hydrate 0.5 L | $ | [***] | [***] |
Obagi Hydrate 50 ml | $ | [***] | [***] |
Obagi Hydrate Luxe 1.7 oz (48 g) | $ | [***] | [***] |
Obagi KeraPhine Body Lotion 6.7 oz | $ | [***] | [***] |
Obagi Nu-Derm Blend Fx 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Blender 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Clear 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Clear Fx 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Exfoderm 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Exfoderm Forte 0.5 L | $ | [***] | [***] |
Obagi Nu-Derm Exfoderm Forte 2.0 oz (57 g) | $ | [***] | [***] |
Obagi Nu-Derm Foaming Gel 1.0 L | $ | [***] | [***] |
Obagi Nu-Derm Foaming Gel 6.7 fl oz (198 ml) | $ | [***] | [***] |
Obagi Nu-Derm Fx Transformation Kit Normal-Oily | $ | [***] | [***] |
Obagi Nu-Derm Fx Transformation Trial Kit Normal-Dry | $ | [***] | [***] |
Obagi Nu-Derm Gentle Cleanser 1.0 L | $ | [***] | [***] |
Obagi Nu-Derm Gentle Cleanser 6.7OZ (198 ml) | $ | [***] | [***] |
Obagi-C Rx System Normal-Dry | $ | [***] | [***] |
Obagi-C Rx System Normal-Oily | $ | [***] | [***] |
Professional-C Eye Brightner 0.5 fl oz (15 ml) | $ | [***] | [***] |
Professional-C Peptide Comlex 1.0 fl oz (30 ml) | $ | [***] | [***] |
Professional-C Serum 10% 1.0 fl oz (30 ml) | $ | [***] | [***] |
Professional-C Serum 15% 1.0 fl oz (30 ml) | $ | [***] | [***] |
Professional-C Serum 20% 1.0 fl oz (30 ml) | $ | [***] | [***] |
Professional-C Suncare SPF 30 1.7 fl (48 g) | $ | [***] | [***] |
Tretinoin 0.025% Cream (20 g) | $ | [***] | [***] |
Tretinoin 0.05% Cream (20 g) | $ | [***] | [***] |
Tretinoin 0.05% Gel (20 g) | $ | [***] | [***] |
Tretinoin 0.1% Cream (20 g) | $ | [***] | [***] |
Suzan Obagi MD Products | Invoice Price |
Case
Pack |
|
SuzanObagiMD Retivance® Skin Rejuvenating Complex 1.0 oz (30g) | $ | [***] | [***] |
SuzanObagiMD IDR Exfoliating and Hydrating Lotion 2oz (60g) | $ | [***] | [***] |
SuzanObagiMD Soothing Complex Calming Lotion SPF25 1.6oz (47g) | $ | [***] | [***] |
SuzanObagiMD Foaming Cleanser 6.7 fl oz (200ml) | $ | [***] | [***] |
SuzanObagiMD. Balancing Toner 6.7 fl oz (200ml) | $ | [***] | [***] |
SuzanObagiMD Cleansing and Makeup Removing Wipes 25’s | $ | [***] | [***] |
SuzanObagiMD Cleansing Wipes for Oily or Acne Prone Skin 25’s | $ | [***] | [***] |
Schedule 3 – Product Complaint Process
Please provide the following information to your Obagi contact in writing via email:
● | Product name |
● | Item number |
● | Lot number |
● | Date of purchase |
● | Indicate whether the product is Rx (prescribed) or OTC (non-prescribed) |
● | Full name, address, and phone number of the complainant |
● | Description of the complaint including how/if product was used by complainant |
● | Indicate whether the product is being returned |
Obagi has no obligation to respond directly to any patient or Customer following a complaint, this is the responsibility of the Distributor.
The Distributor must follow all local laws regarding reporting adverse events to local health authorities.
36
1. |
Definitions. Section 1.1 of the Original Agreement shall be amended to:
|
|
(a) |
delete the term “Customer” in its entirety and replace it with the following:
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|
(b) |
delete the term “Term” in its entirety and replace it with the following:
|
|
(c) |
add the following new terms:
|
2. |
Additional Grant of Rights. Section 2.1 of the Original Agreement shall be deleted in its entirety and replaced with the following:
|
|
(a) |
The Company hereby grants Distributor, which accepts the (i) exclusive right to import, market, promote, distribute and sell the Products to Customers (both Online Customers and Physical
Customers) in the [***] Countries within the Territory; (ii) non-exclusive right to import, market, promote, distribute and sell the Products to Online Customers in the [***] Countries within the
Territory; and (iii) non-exclusive right to import, market, promote, distribute and sell the Products to Physical Customers in the countries of [***] and [***].
|
3. |
Use of Trademarks for dba and Spa Affiliates.
|
|
(a) |
The first paragraph of Section 3.1 of the Original Agreement shall be deleted and replaced with the following:
|
|
(b) |
Section 3.2 of the Original Agreement shall be amended to add the following to the end of the section:
|
4. |
Termination of Additional Rights for Failure to meet Minimum Purchase Requirements. Section 5.9 of the Original Agreement shall be amended to add the following to the end of the section;
|
5. |
Payment Terms. Section 5.13(c) of the Original Agreement shall be deleted in its entirety and replaced with the following:
|
6. |
Indemnification. Section 16.2(b) of the Original Agreement shall be amended to add the following subparagraph:
|
7. |
Distributor’s Warranties. A new section, Section 15.3, shall be added to the Original Agreement (and the following sections renumbered), which shall state in full as follows:
|
8. |
Amendment to Territory. The Section of Schedule 1 entitled Territory shall be deleted in its entirety and replaced with the following:
|
9. |
Amendment to Minimum Purchase Requirement. The Section of Schedule 2 entitled Minimum Purchase Requirement shall be deleted in its entirety and replaced with the following:
|
10. |
Amendment to Invoice Price. The Section of Schedule 2 of the Original Agreement setting forth the prices for the Products, shall be amended to include the following language before the table of prices:
|
|
• |
Maintaining a staff dedicated exclusively to the marketing and promotion of the Products to Customers in the Territory
|
|
• |
Developing and launching marketing campaigns for the Products
|
|
• |
Developing and printing promotional collateral for the Products in the primary language used in the Territory
|
|
• |
Creating and implementing email, digital and print advertisements and communications relating to the Products
|
|
• |
Paying all fees required by Governmental Authorities to register the Products and maintain the registration of the Products in the Territory”
|
11. |
Miscellaneous. Capitalized terms used but not defined in this Amendment shall have the meanings given such terms in the Original Agreement. Except as modified herein, all other terms and conditions of the Original Agreement
shall remain in full force and effect. In the event of any inconsistency between the terms of the Original Agreement and this Amendment, the terms of this Amendment shall govern. This Amendment may be executed by the parties hereto in
counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. The Distributor Affiliate and Company agree that upon execution of this Amendment, the Affiliate Agreement
shall terminate and be replaced in full by the Agreement.
|
Gevie, Inc.
|
Obagi Cosmeceuticals LLC
|
||||
By:
|
/s/ Ha Nguyen | By: | /s/ Jaime Castle | ||
Print Name:
|
Ha Nguyen | Print Name: | Jaime Castle | ||
Title: |
Director
|
Title: | 1/27/2022 | ||
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|||||
LEMED, Inc.
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|||||
By: | /s/ Ha Nguyen | ||||
Print Name: | Ha Nguyen | ||||
Title: | Director |
Exhibit 10.32
09/01/15
Milk Makeup, LLC
450 West 15th St
New York, NY 10011
Dear Milk Makeup:
Sephora USA, Inc. (“Sephora”) is pleased to confirm the distribution of Milk Makeup_on 3/01/16
This letter and the accompanying Milk Makeup Terms Agreement constitute the terms of our agreement with Milk Makeup with respect to the sale of Milk Makeup merchandise in Sephora Americas stores and on the sephora.com (the “Agreement”). The Agreement cannot be changed except in writing signed by both of us. Please confirm your acceptance to the terms of the Agreement by signing and returning one copy of the Agreement.
Should you have any questions regarding this Agreement, please do not hesitate to call me.
We look forward to sharing in a profitable business relationship together.
Sincerely,
Artemis Patrick
Senior Vice President, Merchandising
CC: | VP, DMM |
VP, Inventory Management | |
Exec. Asst to Artemis Patrick |
Milk Makeup Terms Agreement
Milk Makeup Terms Agreement
Milk Makeup Terms Agreement
Exclusivity: | Milk Makeup will sell its products through Sephora’s “brick-and-mortar” retail store locations and online through the sephora.com website. Milk Makeup shall grant Sephora [***] exclusivity in the “brick-and-mortar” retail category (“Exclusivity”). Exclusivity will commence on [***] and will terminate on [***]. During Sephora’s Exclusivity, Milk Makeup may develop its own e-commerce website, brick-and-mortar retail store, pop-up stores; and sell to other e-commerce retailers. During Sephora’s Exclusivity, Milk Makeup may also sell to select prestige “brick-and-mortar” retailers, with Sephora’s prior approval, which shall not be unreasonably withheld. |
Account Termination: | Sephora reserves the right in its sole and absolute discretion to terminate this Agreement and the Milk Makeup’s account at any time. Upon termination, Milk Makeup is responsible for accepting return of all remaining product in Sephora’s possession and reimbursing Sephora at full cost value. Milk Makeup will also reimburse Sephora for the cost of all outstanding returns, testers and damaged or defective product. If for any reason Milk Makeup refuses or is unable to take delivery of such unsold, returned, tester or damaged product, Sephora reserves the right to begin immediately selling such product at whatever price, and using whatever promotional materials, Sephora determines, in its sole discretion, to be necessary to liquidate the product. Sephora’s right of exclusivity will terminate on the earlier to occur of either the date on which Milk Makeup takes delivery of all unsold, returned, tester and damaged product as required hereunder or the date on which Sephora has liquidated or destroyed all unsold, returned, tester and damaged product (with notice to Milk Makeup). |
Milk Makeup acknowledges that the costs incurred in complying with its requirements in this Agreement (including without limitation the costs of shelf inserts, seasonal updates and graphics on permanently branded fixturing and the cost reimbursement of product testers) are a cost of doing business at Sephora and are not under any circumstances refundable or reimbursable by Sephora. Therefore, in the event of a termination of this Agreement for any reason, whether terminated by Milk Makeup or Sephora, Milk Makeup agrees that it shall not look to Sephora to be reimbursed for any of Milk Makeup’s costs incurred during its business relationship with Sephora. |
IN WITNESS WHEREOF, the parties executed this Agreement through their duly authorized representatives effective as of the date below written.
Milk Makeup, LLC
By: |
|
09/01/15 | |
Name: Mazdack Rassi | Date | ||
Title: Partner |
Sephora USA, Inc.
Milk Makeup Terms Agreement
By: |
|
9/21/15 | |
Name: Artemis Patrick | Date | ||
Title: Senior Vice President, Merchandising |
Page 5 of 5
AMENDMENT to Vendor Terms Agreement
Milk Makeup, LLC
450 West 15th St
New York, NY 10011
Dear Milk Makeup,
This letter serves as an AMENDMENT to and forms part of the Vendor Terms Agreement between Milk Makeup, LLC and Sephora USA, Inc. (“Sephora”), effective September 1, 2015, hereinafter referred to as the “Agreement.” A copy of the Agreement has been included with this letter for your reference. To the extent that any of the terms and conditions contained in this AMENDMENT may contradict or conflict with any of the terms or conditions of the attached Agreement, it is expressly understood and agreed that the terms of this AMENDMENT shall take precedence and supersede the attached Agreement.
For good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) and effective July 1, 2017, the Parties agree to the following:
|
● | Exclusivity: Milk Makeup will not open any additional/new distribution channels in North America (brick and mortar, television or online) beyond their existing distribution in place as of the execution of this agreement (this includes Urban Outfitters, urbanoutfitters.com, Birchbox, birchbox.com and milkmakeup.com). Milk reserves the right to open freestanding pop up shops and shop-in shops, so long as they are not within other beauty retailers. Milk also reserves the right to create exclusive products to be sold on milkmakeup.com, and these will be discussed openly with Sephora prior to launch. This right of exclusivity in favor of Sephora will commence on the date indicated above and unless this Agreement is earlier terminated by Sephora in accordance with the Account Termination provision of the Agreement, will continue through [***] unless agreed to otherwise in writing. Any exceptions to this will be made at Sephora’s discretion on a case-by-case basis. |
|
● | Fees and Payment Terms: Vendor trade discount is suggested retail less: |
|
○ | [***] from July 1, 2017 - December 31, 2018 |
|
○ | [***] from January 1, 2019 - December 31, 2019 |
|
○ | [***] from January 1, 2020 onwards |
|
○ | There will be [***] discount for early payment |
|
● | Brand Support: Sephora agrees that Milk Makeup will remain an important brand in the Color department and commits to working collaboratively with the brand to develop strong brand and new item launch support strategies. This may include inclusion of Milk Makeup on the Sephora.com homepage and in emails, animation exposure in stores, inclusion in annual field conferences, and opportunities to participate in Sephora’s various sampling and marketing initiatives. |
By executing this AMENDMENT, Milk Makeup agrees to these terms and acknowledges that all other terms of the Agreement remain intact and in full force and effect. Please have a duly authorized representative sign where indicated and return a copy of this letter to our offices.
We look forward to partnering with you!
Best,
Artemis Patrick
Senior Vice President, Merchandising
Sephora USA, Inc.
|
CC: |
Averyl Andrews, Senior Merchant, Color
Chandani Patel Thompson, Corporate Counsel |
Enclosed: Vendor Terms Agreement
IN WITNESS WHEREOF, the parties executed this Agreement through their duly authorized representatives.
Milk Makeup, LLC
By: | Date: | ||||
Name: Mazdack Rassi |
|
||||
Title: Partner |
AMENDMENT No. 2 to Vendor Terms Agreement
January 9, 2019
Milk Makeup, LLC
450 West 15th Street
New York, NY 10011
Dear Milk Makeup:
This letter serves as the second AMENDMENT (“Amendment No. 2”) to and forms part of the Vendor Terms Agreement between Milk Makeup, LLC (“Vendor”) and Sephora USA, Inc. (“Sephora”), effective September 1, 2015 hereinafter referred to as the “Agreement” and the AMENDMENT dated July 1, 2017 hereinafter referred to as the “original AMENDMENT.” A copy of the Agreement and original AMENDMENT have been included with this letter for your reference. To the extent that any of the terms and conditions contained in this AMENDMENT No. 2 may contradict or conflict with any of the terms or conditions of the attached Agreement and/or original AMENDMENT, it is expressly understood and agreed that the terms of this AMENDMENT No. 2 shall take precedence and supersede such agreements.
Effective January 9, 2019 the Parties agree to the following:
|
● | In exchange for [***] USD in financial brand support (e.g. digital advertising plans, store fixtures / Animation co-op, marketing initiatives) (to be paid in 2019), the right of exclusivity in favor of Sephora agreed to by the Parties in the original AMENDMENT shall be amended and revised to continue through December 31, 2020 (the “Exclusivity Period”) unless earlier terminated by Sephora in accordance with the Account Termination provision of the Agreement or unless agreed to otherwise in writing. Any exceptions to this will be made at Sephora’s discretion. |
|
● | The Vendor Trade Discount shall be suggested retail less [***] throughout the duration of the Exclusivity Period defined herein. The parties agree to begin re-negotiating such Vendor Trade Discount in good faith at least sixty (60) days prior to the end of the Exclusivity Period. Should an agreement not be made before the Exclusivity Period ends, the Vendor Trade Discount shall revert to [***] on January 1, 2021 and remain at [***] until agreed upon by both parties in writing. |
By executing this AMENDMENT, Vendor agrees to these terms and acknowledges that all other terms of the Agreement remain intact and in full force and effect. Please have a duly authorized representative sign where indicated and return a copy of this letter to our offices.
We look forward to partnering with you!
Best,
Artemis Patrick
Senior Vice President, Merchandising
Sephora USA, Inc.
|
CC: | Averyl Andrews, Director of Merchandising, Color |
Enclosed: Vendor Terms Agreement; original AMENDMENT
IN WITNESS WHEREOF, the parties executed this Agreement through their duly authorized representatives.
Milk Makeup, LLC
By: |
|
Date: | 2.26.2019 | |
Name: Steve Nguyen | ||||
Title: CFO |
AMENDMENT No.3 to Vendor Terms Agreement
January 23rd, 2020
Milk Makeup, LLC
450 West 15th Street
New York, NY 10011
Dear Milk Makeup,
This letter serves as the third Amendment (the “Amendment No. 3”) to and forms part of the Vendor Terms Agreement between Milk Makeup (“Vendor”) and Sephora USA, Inc. (“Sephora”), effective September 1, 2015, as amended (the “Agreement”). A copy of the Agreement and Amendments No.1 and No. 2 have been included with this letter for your reference. To the extent any of the terms and conditions contained in this Amendment contradict or conflict with any of the terms or conditions of the Agreement, it is expressly understood and agreed that the terms of this Amendment shall take precedence and supersede the Agreement.
For good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) and effective January 1, 2020, the parties wish to amend the Agreement as follows:
|
1. | Co-op Marketing: In exchange for [***] in financial brand support (e.g. digital advertising plans, store fixtures / Animation co-op, marketing initiatives) in each calendar year 2020, 2021 and 2022, the right of exclusivity in favor of Sephora agreed to by the Parties in the Amendment No.2 shall be amended and revised to continue through [***] (the “Exclusivity Period”), unless earlier terminated by Sephora in accordance with the Account Termination provision of the Agreement or unless agreed to otherwise in writing. Any exceptions to this will be made at Sephora’s discretion. |
|
2. | The Vendor Trade Discount shall be suggested retail less [***] throughout the duration of the Exclusivity Period defined herein. The parties agree to begin re-negotiating such Vendor Trade Discount in good faith at least sixty (60) days prior to the end of the Exclusivity Period. Should an agreement not be made before the Exclusivity Period ends, the Vendor Trade Discount shall revert to [***] on January 1, 2023 and remain at [***] until agreed upon by both parties in writing. |
|
3. | Vendor Capital Investment: Vendor will invest in capital expenditures to reach the aligned door counts for brick & mortar stores; with a goal of [***] doors in the U.S. in 2020, in mutually aligned locations with Milk Makeup and Sephora to help achieve Sephora’s target of [***] in sales in 2020. Vendor will also continue to invest in capital expenditures in 2021 to convert the remaining fleet from [***] where necessary and in mutually aligned locations to help achieve Sephora’s target of [***] in sales in 2021. |
|
4. | Global Right of Negotiation: During the term of this Agreement, if at any time Vendor desires to launch any of its products in any other country anywhere else in the world (a “New Territory”), Sephora (either directly or through an affiliated company) shall have a right to negotiate with Vendor to exclusively market and sell the products in the New Territory at retail. Vendor shall provide Sephora with written notice setting forth its plans to launch the products in the New Territory. If Sephora decides to enter into negotiations with Vendor, Sephora will submit a proposal to Vendor within sixty (60) days of receiving Vendor’s written notice. |
By executing this Amendment, Vendor agrees to these terms and acknowledges that all other terms of the Agreement remain intact and in full force and effect. Please have a duly authorized representative sign where indicated and return a copy of this letter to our offices.
We look forward to our continued partnership!
Best,
Artemis Patrick
Chief Merchandising Officer
Sephora USA, Inc.
cc: ________________, Merchant
Enclosed: Vendor Terms Agreement and Amendments
IN WITNESS WHEREOF, the parties executed this Amendment through their duly authorized representatives.
Milk Makeup
By: |
|
Date: | 1.25.2020 | ||
Name: Steve Nguyen | |||||
Title: CFO |
2
AMENDMENT No.4 to Vendor Terms Agreement
February 22st, 2021
Milk Makeup, LLC
568 Broadway Avenue, Suite 700
New York, NY 10012
Dear Milk Makeup,
This letter serves as the fourth Amendment (“Amendment No. 4”) to and forms part of the Vendor Terms Agreement between Milk Makeup, LLC (“Vendor”) and Sephora USA, Inc. (“Sephora”), effective September 1, 2015, as amended (the “Agreement”). A copy of the Agreement and Amendments No. 1, No. 2, and No. 3 have been included with this letter for your reference. To the extent any of the terms and conditions contained in this Amendment contradict or conflict with any of the terms or conditions of the Agreement, it is expressly understood and agreed that the terms of this Amendment shall take precedence and supersede the Agreement.
For good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) and effective January 1, 2021, the parties wish to amend the Agreement as follows:
|
1. | Co-op Marketing: In exchange for [***] in financial brand support (e.g. digital advertising plans, store fixtures / Animation co-op, marketing initiatives) in calendar year 2021 and a minimum of [***] in 2022 and a minimum of [***] in 2023 (should the exclusivity period be extended). |
|
2. | Right of Exclusivity: The exclusivity in favor of Sephora as agreed to by the Parties in the Amendment No. 3 shall be consistent and continued through [***] (the “Exclusivity Period”), unless earlier terminated by Sephora in accordance with the Account Termination provision of the Agreement or unless agreed to otherwise in writing. A [***] extension to the exclusivity can be achieved if mutually agreed sales targets are on-track to be achieved at time of negotiation. Milk Makeup’s target with Sephora in North America (including Sephora at Kohl’s but excluding Sephora in JC Penny) is a minimum of [***] in retail sales in 2022. |
|
3. | [***] Net Retail Sales” shall mean Sephora’s gross retail sales online and in store of Vendor’s products, less client returns and sales tax. |
By executing this Amendment, Vendor agrees to these terms and acknowledges that all other terms of the Agreement remain intact and in full force and effect. Please have a duly authorized representative sign where indicated and return a copy of this letter to our offices.
We look forward to our continued partnership!
Best,
Artemis Patrick
Chief Merchandising Officer
Sephora USA, Inc.
cc: ________________, Merchant
Enclosed: Vendor Terms Agreement and Amendments
IN WITNESS WHEREOF, the parties executed this Amendment through their duly authorized representatives.
Milk Makeup
By: |
|
Date: | 2/26/2021 | ||
Name: | Steve Nguyen | ||||
Title: | CFO |
2
Exhibit 10.33
April 16, 2019
Milk Makeup, LLC
450 West 15th
st
New York, NY 10011
Dear Milk Makeup,
Sephora Beauty Canada, Inc. (“Sephora”) is pleased to confirm the distribution of Milk Makeup, LLC (“Vendor” on August 1, 2019, (the “Launch Date”).
This letter and the accompanying general terms and conditions (the “Agreement”) constitute the entire agreement between Sephora and the Vendor with respect to the sale of the Products in Sephora stores in Canada and on the sephora.ca website. The Agreement cannot be changed except in writing signed by both parties. Please confirm your acceptance to the terms of the Agreement by signing and returning one copy of the terms and conditions.
Should you have any questions regarding this Agreement, please do not hesitate to call me.
We look forward to sharing in a profitable business relationship together.
Sincerely,
Jane Nugent, VP Merchandising Canada
CC: | Kavitha Thomas, Sr. Director Sephora |
Jennifer Tavone, Sr. Merchant
Milk Makeup Vendor Agreement
1. | Fees and Payment Terms: |
a. | Vendor shall sell Products to Sephora at a trade discount of [***] off suggested retail price plus applicable sales taxes from [***] through the initial exclusivity period which ends [***] as set forth in Section 7(h) of this Agreement. The parties agree to begin the re-negotiation of the vendor trade discount in good faith at least sixty (60) days prior to the end of the initial exclusivity period. Should an agreement not be made before the initial exclusivity period ends, the vendor trade discount shall automatically revert to [***] on [***] and shall remain at [***] until a different vendor trade discount is agreed upon by both parties in writing. Vendor will be responsible for all export and import clearances to ship Products to Canada, including freight, duty, taxes, excise and other associated costs and levies from and subsequent to Vendor’s distribution center to the point of delivery at Sephora’s warehouse (Delivery Duty Paid Destination). Risk of loss to remain with Vendor until Products are accepted by Sephora. |
b. | Net 30 days subject to [***] in Sephora’s sole discretion (F.O.B. Destination). |
c. | Currency: All payments required to be made pursuant to this Agreement and all currency referred to herein shall be in Canadian dollars (CAD) unless otherwise specified in writing by the parties. |
2. | Promotions: Vendor agrees to participate in Sephora Beauty Insider promotions. |
3. | Retail Sales: Sephora provides monthly sales results of Vendor thru EDI report 852 (Sales and Inventory Reporting). |
4. | Orders and Invoices: Vendor is required to use, at its own cost and responsibility, EDI for both Purchase Orders (850), Invoices (810), Electronic Packing List/Advanced Ship Notices (856), and corresponding Barcoded Carton Labels (GS1-128). Sephora encourages the use of one of its preferred third-party EDI transmission partners, a list of which may be provided upon request. |
5. | In addition to the above, Vendor will be solely responsible for the following: |
a. | Returns: Full reimbursement to Sephora for all discontinued, homeless, or recalled Product(s) is required within thirty (30) days from the return of such Product(s) by Sephora. Reimbursement for discontinued, homeless, and recalled Product shall mean the full cost of the Product paid by Sephora, including any shipping, store, and distribution center fees associated with the return of such Product. Sephora reserves the right to delay new Product launches until such time as the reimbursement is received. |
b. | Testers: Sephora is entitled to create testers from Product inventory as needed by store personnel and Vendor will reimburse Sephora, on a monthly basis, for the full amount paid by Sephora of such testers. In the case of termination, Sephora has no obligation to return any testers and all testers will be destroyed in field. The foregoing provision (Section 5(b)) is not applicable to Vendor’s Product(s) if such products are sold only on the sephora.com and/or sephora.ca websites. |
c. | Damages: Vendor will reimburse Sephora, on a monthly basis, for any defective or damaged Products, including returns by Sephora customers which cannot be re-sold. Reimbursements will be at full cost of the Product paid by Sephora. Such defective or damaged Product that has already arrived at Sephora “brick-and-mortar” retail stores (“Sephora Store(s)”) cannot be returned and will instead be destroyed and properly disposed of at Sephora Stores. |
d. | [***] |
e. | Disputes: If Vendor disputes, in good faith, the amount of any chargeback described herein, Vendor must notify Sephora in writing of its objection within one (1) year of the date of such chargeback. |
f. | In-Store Collateral: In the event that Vendor’s Products are sold in Sephora Store locations, the cost of shelf inserts, seasonal updates, graphics, customer glorifiers, or any permanently branded fixtures or space in the store, including new stores will be the responsibility of Vendor, but all physical items associated with such costs constitute the property of Sephora. All costs of in-store collateral incurred by Vendor are non-refundable and non-reimbursable. The foregoing provision (Section 5(e)) is not applicable to Vendor’s Products if such products are sold only on the sephora.com and/or sephora.ca websites. |
g. | Animations: In the event that Vendor’s Products are sold in Sephora Store locations, opportunities for enhanced products exposure in our stores for specific temporary promotions, and the costs associated with creating the special display collateral, can be mutually agreed to on a case-by-case basis. The foregoing provision (Section 5(f)) is not applicable to Vendor’s Products if such products are sold only on the sephora.com and/or sephora.ca websites. |
Milk Makeup Vendor Agreement
h. | Set-off Costs: Sephora is entitled at all times to set-off any amount owing from Vendor to Sephora against amounts payable to Vendor hereunder. |
i. | Training: As and when requested by Sephora, Vendor will provide necessary training and support in applicable Sephora stores. The educational materials and presentations provided by Vendor will be based on the training guidelines provided by Sephora Education and provided in advance to Vendor. |
j. | Co-op: Co-op contribution for Product exposure in Sephora catalogues and other printed and digital marketing vehicles will be negotiated by the parties on a case-by case basis; however, Sephora does not guarantee any level of Product exposure. Sephora agrees that Vendor will remain an important brand in the colour department and commits to work collaboratively with Vendor to develop strong brand and new product launch support strategies. This may include the inclusion of Vendor on Sephora.ca emails, animation exposure in store and opportunities to participate in Sephora’s various sampling and marketing initiatives. |
k. | Sampling Programs: Vendor agrees to participate in Sephora sampling programs, including but not limited to Beauty Insider sampling. |
6. | Code of Conduct. Vendor and Vendor’s personnel shall comply with Sephora’s Brand Relations Handbook at all times, which includes but is not limited to Sephora’s Supplier’s Code of Conduct and Trouble Lane Guidelines at all times. |
7. | Vendor and Sephora further agree as follows: |
a. | Compliance with Laws: The Vendor will perform this Agreement in accordance with all applicable federal and provincial laws and regulations, including maintaining all applicable permits, licenses, consents, authorizations and approvals necessary to perform its obligations under this Agreement. |
b. | Intellectual Property: Vendor hereby grants Sephora a fully-paid, royalty-free, non-exclusive and non-assignable license to reproduce, distribute, display, perform and otherwise use Vendor’s name, logo, trademarks, Product information, and/or other intellectual property (“Vendor IP”) for purposes of advertising, promotion and trade of Vendor Products during the term of this Agreement, throughout the world. Vendor shall not use Sephora’s name, logo, trademarks, or other intellectual property (“Sephora IP”) without Sephora’s prior written consent. All intellectual property (“IP”) supplied to the other party under this Agreement shall belong to and remain the sole property of the owner and neither party shall have the right to acquire any right to copy, reproduce or use the other party’s IP except in connection with and in accordance with this Agreement. |
c. | Content Usage Rights: Vendor may also provide to Sephora photographs, videos, text, and/or other materials for purposes of advertising, promotion and trade (collectively, “Content”) for Sephora’s consideration. Vendor hereby grants to the Licensed Parties a nonexclusive license to reproduce, distribute, exhibit, display, perform and otherwise use the Content, edited or altered as the Licensed Parties see fit, during the term of this Agreement, throughout the world, as follows (collectively, the “Permitted Media/Uses”): (a) on any website owned or controlled by any of the Licensed Parties (including, without limitation, www.sephora.com and www.sephora.ca), (b) on or through any social media channel/platform that is owned, controlled, or managed by any of the Licensed Parties (e.g. Facebook page(s), Snapchat story(ies), lnstagram page(s), Twitter feed(s), Tumblr post(s)/blog(s), You Tube channel(s), etc.), (c) in Sephora-branded retail stores (d) on any mobile application owned or controlled by any of the Licensed Parties (including, without limitation, Sephora’s Android, iPhone, or iPad applications), (e) in email/mobile marketing materials, (f) in press and publicity materials, and (g) at sales meetings and for intracompany, research, file, reference, publicity and award purposes. Vendor shall have no right to inspect or approve the manner in which the Licensed Parties use the Content as permitted hereunder. The Licensed Parties shall be under no obligation to actually make any use of the Content, and the Licensed Parties reserve the right to remove and cease using any Content at any time, for any reason whatsoever or for no reason. The Licensed Parties shall have the right, but not the obligation, to credit the Content to Vendor in a manner to be determined by the Licensed Parties. |
Notwithstanding the foregoing, any Vendor IP or Content placed during the term of the Agreement may remain on display/exhibition or in circulation following termination (including without limitation on any website and/or social media platform) for purposes of liquidating Vendor product as described in Section 8 or as part of a historical feed, or archival purposes and shall not give rise to a claim against Sephora nor impose upon Sephora the obligation to request or require removal or cessation of any such display, exhibition, or circulation.
d. | Representations and Warranties: Vendor represents and warrants that (a) Vendor has the full right and authority to enter into this Agreement and to grant the rights granted herein and shall provide Sephora with relevant documentation evidencing the same upon request; (b) all statements, descriptions, claims, demonstrations, illustrations and endorsements about any Products or services provided by Vendor and included in any Content are true, accurate and not misleading; (c) Vendor’s Products, services, and the Content comply with all applicable laws, regulations and industry guidelines; and (d) Vendor’s Products, services and the Content, and the Licensed Parties’ use of the products, services and Content as set forth in this Agreement, will not violate or infringe upon the rights of any third party. |
Milk Makeup Vendor Agreement
e. | Indemnification: Vendor agrees to indemnify, hold harmless and defend, at its expense, damages, losses, judgments, amounts agreed upon in settlement, costs and expenses (including reasonable attorney fees) that Sephora and its parent companies, each of the officers, directors, employees, representatives, agents, successors and assigns may suffer or incur that may arise out of or relate to (i) any actual or alleged infringement or misappropriation by Vendor of any patent, copyright, trademark, service mark, trade name, trade secret, right of publicity or privacy or any other proprietary or intellectual property right of any third party; (ii) any Product liability, personal injury or property damage claim of any kind relating to any Vendor Product and related packaging, promotional or advertising materials; (iii) any negligence or misconduct on the part of Vendor; (iv) any failure by Vendor to comply with or the breach of any governmental or regulatory law, rule, regulation, decision, ruling or ordinance of any kind to which Vendor may be subject; (v) any claim that the statements, descriptions, claims, demonstrations, illustrations and endorsements about any Products or services provided by brand are untrue, inaccurate or misleading; (vi) an actual or claimed breach of any of Vendor’s representations, warranties, or agreements hereunder. This Section 7(e) shall survive termination of this Agreement. |
f. | Confidentiality: Vendor and Sephora understand and acknowledge that in the course of Vendor’s dealings with Sephora, both parties may be exposed to certain proprietary information or materials of the other, which constitute and/or contain extremely important proprietary and Confidential Information of that party. For purposes of this Agreement, “Confidential Information” means any and all information disclosed to, or otherwise acquired or observed by, a party, including its directors, officers and employees, from the disclosing party, relating to the business of the disclosing party, whether communicated in writing, orally, electronically, photographically, or in recorded or any other form, including, but not limited to, all sales and operating information, customer lists and customer information, existing and potential business and marketing plans and strategies, Vendor information, financial information, cost and pricing information, data, media, know-how, designs, drawings, specifications, source codes, object codes, technical information, concepts, reports, methods, processes, techniques, operations, devices, and the like, whether or not the foregoing information is patented, tested, reduced to practice, or subject to copyright. Confidential Information shall not include information that (i) is or becomes generally available to the public without breach of any obligation to the disclosing party; (ii) was available to the recipient on a non-confidential basis as shown in written records prior to its disclosure to recipient by the disclosing party; (iii) becomes available to recipient on a non-confidential basis from a source other than the disclosing party; provided that such source is not bound by a confidentiality agreement with the disclosing party or is not otherwise prohibited from transferring the information to recipient by a contractual, legal or fiduciary obligation; or (iv) is independently developed by recipient without any use of or benefit from the Confidential Information and such independent development can be documented by recipient with written records. Vendor and Sephora shall each keep all such Confidential Information in confidence and protect that Confidential Information with the same degree of care it uses to keep its own similar information confidential, but in no event may it use less than a reasonable degree of care, and neither party may disclose the Confidential Information to any third party without the prior written consent of the disclosing party, unless compelled by law. If a party discloses (or threatens to disclose) any Confidential Information of the other in breach of this Agreement, the disclosing party shall have the right, in addition to any other remedies available to it, to seek injunctive relief to enjoin such acts, it being acknowledged by the parties that any other available remedies may be inadequate. |
g. | Insurance: Vendor will maintain insurance, at its expense, with a reputable insurance carrier, to cover Vendor’s obligations hereunder, including without limitation, commercial general liability insurance with limits of at least $2,000,000 per occurrence and $5,000,000 in the aggregate and provide Sephora with a certificate of insurance evidencing such coverage upon Sephora’s request. Vendor shall include Sephora as an additional insured on all such policies as applicable. All insurance maintained by Vendor shall be primary and noncontributory with respect to any insurance maintained by Sephora. |
h. | Exclusivity: Vendor will sell all of its Products exclusively through Sephora Store locations or online through the sephora.com and/or sephora.ca websites. Notwithstanding the foregoing, Vendor may develop its own e-commerce website for retail sales. Vendor will not permit its Products to be sold through any other distribution channel. This right of exclusivity in favor of Sephora will commence on the Launch Date indicated above and (unless this Agreement is earlier terminated by Sephora as provided below) will continue for an initial period of [***] If this Agreement has not been terminated by Sephora as provided below on the third anniversary of Launch Date, this right of exclusivity will then renew automatically for additional consecutive one (1) year periods. This right of exclusivity will expire on termination of the Agreement to the extent provided below. |
Milk Makeup Vendor Agreement
8. | Account Termination: Sephora reserves the right in its sole and absolute discretion to terminate this Agreement and the Vendor’s account at any time. Upon termination, Vendor is responsible for accepting return of all remaining Product in Sephora’s possession and reimbursing Sephora at full cost paid by Sephora. Vendor will also reimburse Sephora for the amount paid for any and all outstanding returns, testers and damaged or defective Product. If any suit or action is instituted to enforce payment for reimbursement, Vendor agrees to pay all costs of collection incurred by Sephora in exercising or preserving any rights or remedies in connection with the enforcement and administration of this payment or following a default by Vendor, including but not limited to, reasonable attorneys fees. Notwithstanding the foregoing, Sephora reserves the right to begin immediately liquidating such Product at whatever price, and using whatever promotional materials, Sephora determines, in its sole discretion, to be necessary, including but not limited to the donation or resell of product to third parties, including liquidators, distributors, and resellers. Any right of exclusivity will terminate on the earlier to occur of either the date on which Vendor takes delivery of all unsold, returned, tester and damaged Product as required hereunder or the date on which Sephora has liquidated or destroyed all unsold, returned, tester and damaged Product (with notice to Vendor). Vendor acknowledges that the costs incurred in complying with its requirements in this Agreement (including without limitation the costs of shelf inserts, seasonal updates and graphics on permanently branded fixturing and the cost reimbursement of Product returns, damages, and testers) are a cost of doing business at Sephora and are not under any circumstances refundable or reimbursable by Sephora. Therefore, in the event of a termination of this Agreement for any reason, whether terminated by Vendor or Sephora, Vendor agrees that it shall not look to Sephora to be reimbursed for any of Vendor’s costs incurred during its business relationship with Sephora. |
9. | Miscellaneous: This Agreement is governed by and construed in accordance with the laws of the province of Ontario and the federal laws of Canada applicable therein. This Agreement may not be assigned by the Vendor without the prior written consent of Sephora. The relationship of the Vendor to Sephora under this Agreement is that of an independent contractor. The parties agree neither party hereto constitutes to the other party hereto as its agent, joint venture or franchisee and neither party has the express or implied authority to bind the other party. No terms, provisions, or conditions of any purchase order will have any effect on the obligations of the parties under or otherwise modify this Agreement. |
IN WITNESS WHEREOF, the parties executed this Agreement through their duly authorized representatives, effective as of the first date below written (“Effective Date”).
SEPHORA BEAUTY CANADA, INC. | ||||
By: | ||||
Name: Jane Nugent | Date | |||
Title: VP Merchandising, Canada | ||||
Milk Makeup | ||||
By: | May 16, 2019 | |||
Name: JP Mcarry | Date | |||
Title: General Manager, International |
GST/HST Registration (if applicable): |
QST Registration (if applicable): |
Page 5 of 5
AMENDMENT to Vendor Terms Agreement
Tim Coolican
President
Milk Makeup, LLC
450 West 15th Street
New York, NY 10011
Dear Tim,
This letter serves as an AMENDMENT to and forms part of the Vendor Terms Agreement between Milk Makeup and Sephora Beauty Canada, Inc. (“Sephora”), effective May 6, 2019, hereinafter referred to as the “Agreement.” A copy of the Agreement has been included with this letter for your reference. This amendment is meant to replace and supersede the amendment entered into between Vendor and Sephora on January 24, 2020. To the extent that any of the terms and conditions contained in this AMENDMENT may contradict or conflict with any of the terms or conditions of the attached Agreement, it is expressly understood and agreed that the terms of this AMENDMENT shall take precedence and supersede the attached Agreement.
For good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) and effective March 1, 2021, the parties wish to amend the Agreement as follows:
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1. | Section 1(a) in the “Fees and Payment Terms” Section is deleted and replaced with the following: |
Vendor trade discount is suggested retail less [***] Sephora will be responsible for freight and all export and import clearances to ship Products to Canada. Vendor will be responsible for duty, taxes, excise and other associated costs and levies and subsequent to Vendor’s distribution center to the point of delivery at Sephora’s warehouse. Risk of loss to remain with Vendor until Products are accepted by Sephora. Vendor is responsible for the cost of freight and duty for all return-to- vendor (RTV) shipments of Vendor’s Products.
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2. | Exclusivity, as outlined in Section 7(h) of the Agreement, is hereby extended [***] |
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3. | Section 5(d) Testers and Damages [***] section is hereby deleted in its entirety and replaced with the following: |
The reimbursement by Vendor to Sephora with respect to testers and damages (see clauses above for explanation of such costs) shall be [***] of Vendor’s product from that month. “Net Retail Sales” shall mean Sephora’s gross retail sales online and in store of Vendor’s products, less client returns and sales tax.
By executing this AMENDMENT, Milk Makeup agrees to these terms and acknowledges that all other terms of the Agreement remain intact and in full force and effect. Please have a duly authorized representative sign where indicated and return a copy of this letter to our offices
We look forward to continuing to partner with you!
Best,
Jane Nugent
SVP Merchandising, Sephora Beauty Canada, Inc.
CC:
Rosie Pouzar, VP Finance
Martin St Pierre, VP Supply Chain
Kavitha Thomas, Sr Director Makeup
Enclosed: Vendor Terms Agreement
IN WITNESS WHEREOF, the parties executed this Agreement through their duly authorized representatives, effective as of the date below.
Milk Makeup, LLC:
By: |
|
Date: | 3/25/2021 |
Name: | Steve Nguyen |
Title: | CFO |
Sephora Beauty Canada, Inc.:
By: | Date: |
Name: Gregory Bruyer
Title: GM Sephora Canada
2
Exhibit 10.34
EXCLUSIVE DISTRIBUTION AGREEMENT
SEPHORA MIDDLE EAST FZE
(SEPHORA)
AND
MILK MAKEUP
(SUPPLIER)
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This agreement (the “Agreement”) is made on 1st of July, 2020 between “Sephora” and the “Supplier”.
Sephora | Supplier | |
Company Name | Sephora Middle East FZE. | Milk Makeup, LLC |
Principal Place of Business | PO Box 18536 | 568 Broadway, Suite 700, New |
Trade License Number | 7427 | York, NY 10012 |
State of Incorporation | Dubai, United Arab Emirates | Delaware, USA |
Represented by | Bruno Leproux | Steve Nguyen |
Title | General Manager | CFO |
Hereinafter referred to as individually the “Party” or collectively the “Parties”.
It is beforehand reminded that the Supplier, owner of the brand [MILK MAKEUP] (the “Brand”), is the manufacturer of the Products bearing the Brand (as defined below in Article 4)
The Supplier has signed the contractual documents “Supplier’s Code of Conduct” and “Guarantee Letter”. These contractual documents are part of the present agreement collectively (the “Agreement”). The Supplier undertakes to comply with the obligations detailed in these documents.
In the framework of the distribution by Sephora of the Products, the Supplier also undertakes to comply with the following terms:
Article 1 – Definitions
1.1. | For the purposes of this Agreement, the following capitalized terms shall have the following meanings specified below: |
“Affiliate” means any legal entity which is controlled by, controls, or is under common control with Sephora or its permitted assignees (as applicable). For the purpose of this definition, “control” means: (i) the ability to cast at least fifty per cent (50%) of the votes in any resolution of such entity through the beneficial ownership (whether direct or indirect) of the issued and outstanding share capital of such entity; and/or (ii) the power to direct or cause the direction of the management of such entity;
“Ageing” means leaving of the Product from thirty six (36) months and up to sixty (60) months;
“Incoterms” means Incoterms 2010 as at the Effective Date or subsequent variations to them as may be issued from time to time by the International Chamber of Commerce;
“Intellectual Property Rights” or “IP Rights” means any and all copyrights, registered and unregistered designs, database rights, logos, design, formula, methods, rights to domain names, goodwill, trademarks, trade names, insignia, service marks, patents, know- how, rights in get-up, rights to sue for passing off and unfair competition, rights in confidential information (including know-how and trade secrets) and all other legal and beneficial intellectual and industrial property rights (whether registered or not) throughout the world no matter what such rights may be known as in any particular country in the world, and all applications, and rights to apply, for the same, in each case which subsist now and in the future, used in connection with or embodied in the Products;
“Products” means the products as defined in Article 4 of this Agreement;
“Range” means all the products bearing the Supplier’s trademark including the Products and any other future products developed by the Supplier and bearing the Supplier’s trademark;
“Regulatory Requirements” means any laws, statutes, regulations, directives, orders, judgments, treaties, licenses, consents, permissions, approvals, authorizations, directives, requests, guidance, voluntary codes, standards (including but not limited to GSO standards), rules and local requirements, trade sanctions, embargoes or restrictions applicable to the activities contemplated under this Agreement;
“SME Perimeter” means any one or more of the following countries: Egypt, Jordan, Oman, Lebanon, Yemen, Syria, Iraq and Iran as more detailed in Article 3 of this Agreement;
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“Territory” means the entire geographical confines of the following countries: United Arab Emirates, Qatar, Kingdom of Saudi Arabia, Bahrain, Kuwait.
1.2. In this Agreement, unless the context otherwise requires:
(a) | the singular includes the plural and vice versa; |
(b) | the words “including” or “includes” or similar shall be construed as illustrative and without limitation to the generality of the related general words; |
(c) | references to articles and Schedules are, unless otherwise provided, references to the articles of and Schedules to this Agreement. |
Article 2 – Distribution Rights of the Products
Exclusive Distribution
The Supplier hereby grants Sephora and any of its Affiliates which accept the right to purchase, import, distribute and resell the Products within the Territory through Sephora and/or its appointed authorized retailer on an exclusive basis as applied to third-party “brick and mortar” & E-com distributors
Consequently, Supplier shall refrain from appointing any additional third party as distributor, retailer or agent for the sale of the Products in a physical retail location within the Territory. Supplier may distribute the Products directly in the territory through its own stand-alone retail stores, e-commerce, travel retail, subscription boxes, TV retailing (e.g. HSN or QVC), and pop-up stores.
Sephora may decide, at its own discretion, in which channels the Products it will distribute in each country of the Territory. Sephora may sell the Products in Sephora group’s stores, Sephora corners, shop in the shop, any website operated by Sephora or any of its Sephora-branded Affiliates, Internet, print catalogue, TV shopping, it being agreed that this list is not exhaustive.
Article 3 – Right of priority
In case the Supplier decides to distribute the Products in the SME Perimeter, the Supplier shall propose in writing to Sephora and/or any authorized retailer appointed by Sephora, to be its exclusive distributor for this country included in the SME Perimeter.
If Sephora is interested by the exclusive distribution rights of the Products in the new country proposed by Supplier, Sephora shall provide its written approval to Supplier within a 60-day period following the receipt of notice from Supplier and the Parties will add the relevant country to the Territory by a written amendment to this Agreement, to be signed by both Parties.
After exercising this right of priority, Sephora shall have sixty (60) days to propose its timing and its execution strategy within the newly added country.
Article 4 – Products
The exclusivity granted by the Supplier covers the Range in particular the current selected products (listed in Schedule 1) and future products and/or product ranges developed by the Supplier (hereinafter the “Products” ). Sephora may, at its sole discretion, choose to distribute or not these future products. If necessary, such new products will be added to the list of Products in Schedule 1.
Article 5 – Duration
Subject to earlier termination in accordance with Article 15, this Agreement shall commence on [***] (hereinafter referred to as the “Effective Date”) and shall continue in full force and effect for a period of [***] (the “Initial Term”), after which it shall be automatically extended for successive periods of one [***] term (“Renewal Term”), unless either Party notifies the other Party of the non-renewal of this Agreement in writing at least six (6) months prior to the end of the Initial Term or the end of any Renewal Term.
If the Products cannot be launched by Sephora in one or several countries of the Territory from the Effective Date due to the non-compliance of the Products and/or its packaging with local regulations, or where both Parties mutually decide to delay the launch of the Products, it is agreed that the exclusivity period stated in this clause shall then be accordingly extended in respect of these countries.
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Article 6 – Compliance with Regulatory Requirements
6.1. At all times, the Supplier shall comply with all applicable Regulatory Requirements in the Territory in which it operates in relation to the Products and to the performance of this Agreement, including, without limitation, all Regulatory Requirements relating to (i) taxes; (ii) social and environmental requirements; (iii) consumer protection & commercial laws; (iv) import procedures; (v) packaging label requirements and standards. Supplier shall not do or permit to be done anything that would cause Sephora and its Affiliates to be in violation of any applicable Regulatory Requirements or that could damage the reputation of Sephora or its Affiliates or any products.
6.2. In particular, the Supplier shall ensure that the Products sold to Sephora are compliant with all regulations related to formula, labelling and packaging of the Products applicable in the Territory.
6.3. The Supplier represents and warrants that any and all statements made or any information provided by the Supplier in respect of the Products are true and correct (including but not limited to any information displayed on the packaging of the Products or in any promotional/advertising material and related to safety, product description, ingredient list, it being agreed that this list is not exhaustive).
6.4. Any Product which is not compliant with these regulations may be rejected by Sephora and returned to Supplier, it being agreed that the Supplier shall accept such returns and that subsequent carriage costs shall be incurred by the Supplier.
6.5. In the event that the Products are non-compliant with the Regulatory and quality Requirements, all additional expenses resulting from the non-compliancy of the Products shall be borne and paid by the Supplier; in particular, in case of withdrawal or recall of the Products. For the avoidance of any doubt, the Supplier shall be solely responsible for financial consequences and all costs incurred as a result of such non-compliancy shall be paid by the Supplier. More generally, the Supplier shall hold Sephora harmless and indemnified Sephora from and against any consequences and any claim which might be filed by any third party against Sephora based on an infringement of the requirements set forth in the present article.
6.6. Supplier shall keep Sephora apprised of all Regulatory and quality Requirements applicable to or affecting the import of Products into the Territory.
Article 7 – Product Liability
7.1. The Supplier shall indemnify Sephora against any liability incurred by Sephora in respect of damage to property, death or personal injury arising from any fault or defect in the materials or workmanship of the Products and any reasonable costs, claims, demands and expenses arising out of, or in connection with that liability (“Relevant Claim”), except to the extent the liability arises as a result of the direct and proven action of Sephora.
7.2. Sephora shall, as soon as it becomes aware of a matter which may result in a Relevant Claim:
(a) | give the Supplier written notice of the details of the matter; |
(b) | allow the Supplier the exclusive conduct of any proceedings and take any action that the Supplier requires, at its sole costs, to defend or resist the matter, including using professional advisers nominated by the Supplier; and |
(c) | not admit liability or settle the matter without the Supplier’s written consent. |
7.3. Sephora will, at the Supplier’s cost, give any assistance that the Supplier shall reasonably require to recall, as a matter of urgency, Products from the retail or wholesale market.
Article 8 – Social and environmental requirements
Supplier undertakes to comply with the social and environmental requirements set out in the Supplier’s Code of Conduct, and sign the document attached hereto in Schedule 4.
Article 9 – Order and Delivery - Transfer of Risk of Loss and Title - Price
9.1. Order and Delivery. Ordering shall be made in accordance with the provisions set out in the Sephora’s General Purchase Conditions, attached hereto in Schedule 3. All Products shall be delivered by Supplier to Sephora on ExWorks at the address appearing on the purchase order, in accordance with the Incoterms. All Products shall be delivered by Supplier within a maximum period of fourteen (14) days from the reception by Supplier of the purchase order, unless otherwise determined by Sephora in the relevant purchase order.
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9.2. Transfer of Risk of Loss and Title. The risk of loss or damage to and title to the Products sold by the Supplier to Sephora under this Agreement are specified in Sephora’s General Purchase Conditions, attached hereto in Schedule 3.
9.3. Price of Products. Sephora shall purchase the Products at the purchase price agreed upon by the Parties in writing and as set out in Schedule 2.
Unless otherwise agreed by the Parties in writing, prices are firm and non-revisable. The purchase prices of the Products can be revised only once a year after mutual agreement is reached between the Parties. The Supplier shall communicate to Sephora the proposition of new pricing before the first of December of the previous year for application, subject to the prior approval of these new prices by Sephora, on the first March of the following year.
Sephora shall purchase the Products in [USD] Unless otherwise agreed, any payment by Sephora to Supplier for the Products sold under this Agreement shall be made by bank transfer as instructed by the Supplier in writing and in advance. The payment will be made on 60 (sixty) days end of month, date of invoice.
Sephora is entitled to set-off the sums owed by Sephora against those owed by Supplier, without any requirement for a formal notification.
Sephora shall determine the retail price of the Products, in accordance with all applicable laws, regulations, decrees, ministerial decisions in force in the countries of the Territory.
Article 10 – Annual commercial terms
The Parties shall discuss and negotiate in good faith the annual commercial terms and conditions of their collaboration and shall recapitulate them in writing in a separate document (the “Annual Commercial Terms”), by a date to be mutually agreed between the Parties. The Annual Commercial Terms shall incorporate, inter alia, the price agreed upon for the Products.
Article 11 – Intellectual Property
11.1. The Supplier hereby grants Sephora the right, in the Territory, to use the trademarks (the “Trademarks”) and other IP Rights owned by the Supplier in the promotion, advertisement and sale of the Products, subject to, and for the duration of, this Agreement. Sephora acknowledges and agrees that all rights in the Trademarks and other IP Rights shall remain the exclusive property of the Supplier, and that Sephora has and will acquire no right in them by virtue of the discharge of its obligations under this Agreement, except for the right to use the Trademarks and other IP Rights as expressly provided in this Agreement.
11.2. The Supplier represents and warrants that it is the owner of the IP Rights and/or the Range and that it has neither granted to any third-party any license nor procured the right to use the IP Rights and/or the Range for products similar or identical to the Products in the Territory.
11.3. The Supplier warrants and covenants that no part of the Products will violate or infringe upon the IP Rights or other statutory rights of any third party.
11.4. The Supplier represents and warrants that names of the Products and the Range, any distinctive and original part of the Products and the Range are duly registered or will be registered, with the appropriate registers or authorities throughout the Territory, at the date of the first delivery of the Products to Sephora in the Territory, at the latest, and that it will timely proceed to any renewal of registration of IP Rights throughout the duration of this Agreement.
Notwithstanding any other rights or remedies under this Agreement, any breach of this clause 11.4 by the Supplier shall constitute a material breach of the Agreement.
11.5. The Supplier shall immediately notify Sephora in writing giving full particulars if it becomes aware of any claim made or threatened that the Products and/or the Range and part of promotional materials infringes the rights of any third party. In respect of any such matters Sephora may in its absolute discretion decide to suspend or stop the distribution and sale of the Products in the Territory, it being understood that the Supplier shall take back the stock of Products, at its own cost, upon Sephora’s request.
11.6. The Supplier represents and warrants that no part of the materials provided as part of promotional and advertising activities, as set out in Article 12, will violate or infringe upon the intellectual property rights or other statutory rights of any third party. In this respect, the Supplier undertakes to obtain all necessary authorizations, licenses, assignments of rights for any third- party rights embodied in the promotional and advertising material as the case may be (including but not limited to rights of authors, photographers, designers, models) and to procure to Sephora the grant of such third-party rights toward the use of such promotional and advertising material in the Territory on all supports and by all means (POS, Internet/ extranet, advertisement in press, radio and TV).
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Article 12 – Animations, Promotions, Advertising, Commercial Support
12.1. Role and Responsibilities of the Parties: The Supplier and Sephora shall annually agree upon in writing the Marketing Plan (including all the animations plan, and / or promotion campaign, and / or PR events, advertisements and commercial support and the marketing budget and contribution towards the preceding items), in order to promote the sale of the Products in the Territory and which will be conducted by both Parties, in accordance with the following roles and responsibilities:
- | Specific in-store animations / promotions (corners, mini-corners, mono-brand windows, beauty bar, internet campaigns, premium sales, direct marketing actions / CRM actions) shall be paid by the Supplier. |
- | In case of a media communication, Sephora shall submit to the Supplier the corresponding budget including the breakdown per country of the Territory and per media support (print, radio, TV, internet, etc.). |
- | The promotion calendar and the implementing of the animations, (boutiques, end caps, cashwrap, windows, etc.) will be managed by Sephora. |
- | Each advertisement shall mention that the Products are sold exclusively in the Sephora network. |
- | Sephora will create (alone or with a third party) the advertising material (the “Creations”) and will submit the Creations to the Supplier. |
- | The cost of the realisation of the advertising (shootings, production costs, etc. ) excluding copyrights assignment, will be included in the budget submitted to the Supplier. |
- | All intellectual property rights related to the Creation, excluding the IP Rights pertaining to Supplier, will remain the sole property of Sephora, unless a written copyright assignment is concluded between the Parties. The Supplier is consequently not allowed to use the Creation without Sephora’s prior written consent. |
- | The Supplier shall approve in writing the budget and the Creations prior to the booking of the media space. |
- | Sephora will select, book and buy all the media space for the mutually agreed upon advertising, in compliance with the annual Marketing Plan and budget/contribution agreed by the Parties. |
- | Sephora may organize and finance multi-brand launch presentations at least [2] per year in the countries of the Territory. The Supplier undertakes to provide gifts for the journalists during the presentations, the Supplier’s brand and Product briefs for the press kits; and guarantees its presence during these PR events. As specified above, to the extent applicable, specific mono-brand PR events or launches shall be paid for by the Supplier and included in the budget. |
- | The Supplier is responsible to provide Sephora, free of charge, with all supports for the Supplier’s brand guidelines (“Brand Guidelines”). All materials must be finalized and given to Sephora no later than three (3) months before launch of the Supplier’s brand in the first country of the Territory. The Products data sheets, logos, among others, must be in English and in Arabic. The Supplier shall be responsible for ensuring that all these materials for the Products, provided by the Supplier to Sephora, contain no fraudulent, misleading or deceptive elements and the Supplier shall be solely liable for the contents of such material. |
- | As specified above, a global budget of marketing contribution including the media plan and/or the animations and/or PR events will be agreed upon each year by the Parties, either as an absolute value, or as a % of the Products sales achieved by Sephora, or as a % of the Products purchased by Sephora to the Supplier. |
- | The marketing contribution shall be paid as follows: Sephora shall invoice the Supplier all the expenses it has incurred towards the media plan and/or the animations and/or the PR events at actual. Payment of the marketing contribution shall be made by the Supplier within thirty (30) days upon receipt of each invoice of marketing activity concerned. |
- | Sephora shall not sell in any country within the Territory and/or the SME Perimeter upon notice from Supplier that, in Supplier’s good faith belief, it is unable to use its marketing materials or otherwise its branding will be negatively affected by selling in such country or countries. In the event Supplier gives such notice, Sephora may request the return of applicable merchandise per Section 14.3 below. |
12.2. Samples, gifts, POS material training support: Supplier will deliver, carriage paid by the Supplier at the logistic solution indicated by Sephora, free testers, samples, gifts and training support for all Sephora points of sales in the Territory. Supplier shall provide credit for samples only as invoiced by Sephora on a monthly basis, and in no event shall such invoice for tester units exceed three percent (3%) of the retail value of the number of units sold at Sephora retail locations. Sephora shall provide a monthly report detailing retail sales per Supplier SKU for each of its locations.
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Article 13 – Fixtures
13.1. Permanent fixtures: All the Supplier’s fixtures (hereinafter the “Fixtures”) shall be and shall remain the Supplier’s property.
The Fixtures must be developed in accordance with Sephora’s requirements in terms of merchandising policy and shall be at the Supplier’s cost.
The Supplier shall provide every new Sephora point of sale opening with the Fixtures within six (6) weeks after Sephora has placed the order for Fixtures.
13.2. Updates Collection (Spring, summer, Fall, Holiday): Supplier shall bear all the expenses related to the Fixtures’ updates including but not limited to development, production, installation, removal, destruction and / or maintenance. Sephora shall send the invoice to the Supplier and the Supplier shall pay the invoice within thirty (30) days from the date of receipt of the invoice.
13.3. Delivery: All delivery of Fixtures or updates will be EX-Works from Supplier’s warehouse directly to the Sephora’s point of sales or at any logistic solution indicated by Sephora.
Article 14 – Stock
14.1 Sephora will conduct stock inventory twice a year, at which point the Supplier may be required to take back stock exceeding 180 days (based on sell-out in the Territory), which is the maximum number of days allowed for exclusive brand inventory.
Supplier undertakes to use reasonable effort to maintain a 100% service level on order fulfilment.
14.2 In the event that Products have an expiration date, the Supplier shall ensure that the Products delivered at the logistic solution indicated by Sephora, do not have an expiration date inferior of twenty (20) months. If the expiry date is not mentioned on the Products, the Supplier to ensure that the Products has a remaining shelf life not less than twenty (20) months. The Supplier will provide Sephora with shelf life per product and their batch codification rules. The Supplier agrees that the Products which do not comply with this clause shall be returned to the Supplier at Supplier’s own cost and expense.
14.3. Supplier shall:
(a) | take back, carriage paid, any customer returns or any Return to Vendor (RTVs of discontinued, damaged, expired, Ageing or non-compliant Products); |
(b) | provide (i) Return Authorizations (RAs) for RTVs of discontinued, damaged, expired or non-compliant Products or for customer returns and (ii) the coordination and payment of shipping of these Products if they are not Destroy in Field (DIF). In case of DIF, the Supplier shall have to pay the costs of destruction. |
All customer returns concerning issues with quality of the Products will be automatically returned to Sephora Middle East Dubai Warehouse or to the brand or destroyed upon prior confirmation from the brand or at the logistic solution indicated by Sephora, all returns concerning issues with quality of the Products will be treated as Products mentioned in paragraphs (a) and (b) above.
Upon agreement between the Parties concerning stock returns, the Supplier is responsible to organize the return of the Products and to pay any costs associated with this return within thirty (30) days.
14.4. Upon expiry or termination of this Agreement in accordance with the terms of this Agreement, Sephora reserves the right to either:
- | continue to sell the stock of the Products during a determined period, and/or |
- | stop selling the Products and the Supplier commits to take back the remaining stock of the Products at their initial price. |
Article 15 – Termination
15.1. Termination by either Party: Either Party may by written notice given to the other Party terminate this Agreement with immediate effect (or on such later date as is specified in the notice), or at any time after the other Party becomes insolvent; or any procedure is commenced with a view to (i) its administration, winding-up, liquidation, bankruptcy, dissolution whether compulsory or voluntarily, or (ii) the appointment of a receiver, liquidator, trustee or similar officer over all or any part of its assets or undertaking; or all or any part of its assets are subject to attachment, execution or similar process; or it enters or is considering entering into a composition or arrangement with its creditors generally.
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15.2. Termination by Sephora: Sephora may by written notice to the Supplier terminate this Agreement with immediate effect (or on such later date as is specified in the notice), or at any time after any of the following events:
(a) | a violation of any applicable Regulatory Requirements by the Supplier as provided in Article 6, or any of its employees, agents, directors or officers, which, in Sephora’s sole but reasonable discretion, will or might adversely affect Sephora’s business, reputation, goodwill or image; |
(b) | the Supplier for any reason whatsoever fails to operate in the normal course of business; |
(c) | the Supplier is in material breach of this Agreement and such breach, if capable of remedy, has not been remedied within fifteen (15) days after receipt by the defaulting Party of notice from the other Party requiring such remedy; |
(d) | the Supplier or any of its Products, employees, agents, directors or officers in the reasonable opinion of Sephora bring Sephora or any of its brands into disrepute. |
Article 16 – Indemnification
The Supplier agrees to indemnify, defend and hold Sephora, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (the “Indemnified parties”) harmless from and against all claims, demands, losses, liabilities, costs and expenses, including legal fees (the “Claims”), or threatened Claims, incurred by the Indemnified parties as a result of the use and/or sale of the Products and/or in connection with, arising out of or in relation to, without limitation:
(i) any fault or defect in the materials or workmanship of the Products;
(ii) any breach by the Supplier of any of its obligation, representation and warranty under this Agreement;
(iii) any actual or alleged infringement of any Regulatory Requirement relating in particular those applying to the manufacturing, packaging and labelling of the Products as described in Article 6;
(iv) any actual or alleged infringement of any third-party IP rights and/or based on unfair competition relating to the Supplier’s Products;
(v) any advertising and promotion of the Products which contain information provided by the Supplier.
Article 17 – Confidentiality
Each Party will hold in strictest confidence the content of the present Agreement as well as any and all confidential information received from the other Party and its Affiliates in the course of the present Agreement and shall not (a) disclose such information to any person other than its employees who need to know such information in order to discharge their duties or enjoy the benefits of this Agreement, or (b) use such information other than for the purpose of performing its obligations under this Agreement and shall (c) procure that any person to whom any such information is disclosed by it pursuant to this clause complies with the restrictions contained herein as if such person were a Party.
This clause does not prevent either Party from disclosing information which (a) is or becomes generally available to the public otherwise than through a breach of this clause by the Party seeking to disclose the information or (b) was known to the Party seeking to disclose the information prior to this Agreement or, in the case of information provided by a third party to the disclosing Party which it was known prior to its provision by that third party, and can be shown by the disclosing Party to have been so known or (c) is or becomes required by law or in order to enforce rights under this Agreement.
Article 18 – Governing Law and Jurisdiction
The Agreement shall be governed by the laws of the United Arab Emirates. Any and all disputes shall be settled by the Dubai courts notwithstanding any clauses to the contrary or in case of introduction of a third party or plurality of defendants.
Article 19 – Assignment
Sephora may at any time assign all or part of the benefits of, or its rights or benefits under this Agreement to any of its Sephora-branded Affiliates.
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Article 20 – Schedules
The following schedules, as may from time to time be amended, are attached to this Agreement and made a part of this Agreement:
Schedule 1: List of Products
Schedule 2: List of Prices
Schedule 3: Sephora’s General Purchase Conditions
Schedule 4: Supplier’s Code of Conduct
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate by their duly authorized representatives.
For and on behalf of
Sephora Middle East FZE |
For and on behalf of
Milk Makeup, LLC |
||
|
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Name of authorized signatory: Bruno Leproux | Name of authorized signatory: Steve Nguyen | ||
Title: | General Manager | Title: CFO |
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SCHEDULE 1
LIST OF PRODUCTS
PRODUCT FAMILY | SKU DESCRIPTION | |
COOLING WATER | COOLING WATER | |
GEL BROW | GEL BROW-PILSNER | |
GEL BROW | GEL BROW-DARK BREW | |
GEL BROW | GEL BROW-PALE ALE | |
HIGHLIGHTER | HIGHLIGHTER-LIT | |
HYDRATING OIL | HYDRATING OIL | |
LIP & CHEEK | LIP + CHEEK-PERK | |
LIP & CHEEK | LIP + CHEEK-RALLY | |
LIP & CHEEK | LIP + CHEEK-QUICKIE | |
MATTE BRONZER | MATTE BRONZER-BAKED | |
TATTOO STAMP | TATTOO STAMP -BLACK HEART | |
TATTOO STAMP | TATTOO STAMP -BLACK STAR | |
BLUR STICK | BLUR STICK | |
MATTE BRONZER | MATTE BRONZER - BLAZE | |
FLEX CONCEALER | FLEX CONCEALER - FAIR | |
FLEX CONCEALER | FLEX CONCEALER - LIGHT | |
FLEX CONCEALER | FLEX CONCEALER - LIGHT MEDIUM | |
FLEX CONCEALER | FLEX CONCEALER - MEDIUM | |
FLEX CONCEALER | FLEX CONCEALER - MEDIUM TAN | |
FLEX CONCEALER | FLEX CONCEALER - TAN | |
FLEX CONCEALER | FLEX CONCEALER - WARM DEEP | |
FLEX CONCEALER | FLEX CONCEALER - DEEP | |
MATCHA CLEANSER | MATCHA CLEANSER | |
MATCHA TONER | MATCHA TONER | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - IVORY | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION -FAIR | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - LIGHT | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN LIGHT | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM LIGHT | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - WARM MEDIUM | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN SAND | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - HONEY | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM TAN | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CARAMEL | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - TAN | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - TOFFEE | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN DEEP |
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BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - WARM DEEP | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - DEEP | |
LUMINOUS BLUR STICK | LUMINOUS BLUR STICK | |
MINI COOLING WATER | MINI COOLING WATER | |
TATTOO STAMP | TATTOO STAMP X | |
TATTOO STAMP | TATTOO STAMP MOON | |
WATERMELON BRIGHTENING SERUM | WATERMELON BRIGHTENING SERUM | |
KUSH MASCARA | KUSH MASCARA | |
LIP & CHEEK | LIP + CHEEK - WERK | |
MINI KUSH MASCARA | MINI KUSH MASCARA | |
KUSH BROW | KUSH BROW HYDRO | |
KUSH BROW | KUSH BROW HAZE | |
KUSH BROW | KUSH BROW DUTCH | |
KUSH BROW | KUSH BROW GRIND | |
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER LIGHT | |
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER MEDIUM | |
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER DEEP | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - PORCELAIN | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CREME | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN HONEY | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - BISQUE | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CINNAMON | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MOCHA | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - COCOA | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - ESPRESSO | |
FLEX CONCEALER | FLEX CONCEALER - PORCELAIN | |
FLEX CONCEALER | FLEX CONCEALER - CREME | |
FLEX CONCEALER | FLEX CONCEALER - VANILLA | |
FLEX CONCEALER | FLEX CONCEALER - MEDIUM BEIGE | |
FLEX CONCEALER | FLEX CONCEALER - CARAMEL | |
FLEX CONCEALER | FLEX CONCEALER - CINNAMON | |
FLEX CONCEALER | FLEX CONCEALER - COCOA | |
FLEX CONCEALER | FLEX CONCEALER - ESPRESSO | |
MINI LIP & CHEEK | MINI LIP & CHEEK WERK | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BOSS | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER CEO | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BONUS | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BIZ | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER PTO | |
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BCC | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP CAPRICORN |
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ASTROLOGY TATTOO STAMP | TATTOO STAMP AQUARIUS | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP PISCES | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP ARIES | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP TAURUS | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP GEMINI | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP CANCER | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP LEO | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP VIRGO | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP LIBRA | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP SCORPIO | |
ASTROLOGY TATTOO STAMP | TATTOO STAMP SAGITTARIUS | |
KUSH LIP BALM | KUSH LIP BALM GREEN DRAGON | |
KUSH LIP GLAZE | KUSH LIP GLAZE CHRONIC | |
COOLING WATER UNDEREYE PATCHES | COOLING WATER UNDEREYE PATCHES | |
MATCHA DETOXIFYING FACE MASK | MATCHA DETOXIFYING FACE MASK | |
WATERMELON BRIGHTENING FACE MASK | WATERMELON BRIGHTENING FACE MASK | |
LIP COLOR RELAUNCH | LIP COLOR WIFEY | |
LIP COLOR RELAUNCH | LIP COLOR SKILLZ | |
LIP COLOR RELAUNCH | LIP COLOR DEUCES | |
LIP COLOR RELAUNCH | LIP COLOR HYPE | |
LIP COLOR RELAUNCH | LIP COLOR C.R.E.A.M. | |
LIP COLOR RELAUNCH | LIP COLOR LOW KEY | |
LIP COLOR RELAUNCH | LIP COLOR NAME DROP | |
LIP COLOR RELAUNCH | LIP COLOR O.G. RED | |
LIP COLOR RELAUNCH | LIP COLOR WAVY | |
LIP COLOR RELAUNCH | LIP COLOR NEW WHIP | |
KUSH LIP BALM | KUSH LIP BALM BUBBLE | |
KUSH LIP BALM | KUSH LIP BALM NUG | |
KUSH LIP BALM | KUSH LIP BALM CANNATONIC | |
KUSH LIP BALM | KUSH LIP BALM PLUSHBERRY | |
HYDRO GRIP PRIMER | HYDRO GRIP PRIMER | |
CANNABIS HYDRATING FACE MASK | CANNABIS HYDRATING FACE MASK | |
KUSH BROW | KUSH BROW HERB | |
KUSH BROW | KUSH BROW MJ | |
KUSH BROW | KUSH BROW DIESEL | |
KUSH BROW | KUSH BROW CYPHER | |
KUSH BROW | KUSH BROW DUB | |
KUSH LASH PRIMER | KUSH LASH PRIMER | |
KUSH WATERPROOF MASCARA | KUSH WATERPROOF MASCARA | |
MINI KUSH WATERPROOF MASCARA | MINI KUSH WATERPROOF MASCARA | |
GLOW OIL LIP + CHEEK | GLOW OIL SOLAR | |
GLOW OIL LIP + CHEEK | GLOW OIL GLIMMER | |
GLOW OIL LIP + CHEEK | GLOW OIL FLARE | |
GLOW OIL LIP + CHEEK | GLOW OIL HALO |
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GLOW OIL LIP + CHEEK | GLOW OIL ASTRO | |
MINI KUSH LASH PRIMER | MINI KUSH LASH PRIMER | |
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM BEIGE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT | |
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM | |
FLEX FOUNDATION STICK | FLEX FOUNDATION HONEY | |
FLEX FOUNDATION STICK | FLEX FOUNDATION SAND | |
FLEX FOUNDATION STICK | FLEX FOUNDATION CARAMEL | |
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT MEDIUM | |
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT BEIGE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION CINNAMON | |
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN TAN | |
FLEX FOUNDATION STICK | FLEX FOUNDATION BUFF | |
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM TAN | |
FLEX FOUNDATION STICK | FLEX FOUNDATION ALMOND | |
FLEX FOUNDATION STICK | FLEX FOUNDATION CASHMERE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION CRÈME | |
FLEX FOUNDATION STICK | FLEX FOUNDATION NUDE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION PORCELAIN | |
FLEX FOUNDATION STICK | FLEX FOUNDATION DEEP | |
FLEX FOUNDATION STICK | FLEX FOUNDATION SHELL | |
FLEX FOUNDATION STICK | FLEX FOUNDATION TAN | |
FLEX FOUNDATION STICK | FLEX FOUNDATION FAIR | |
FLEX FOUNDATION STICK | FLEX FOUNDATION AMBER | |
FLEX FOUNDATION STICK | FLEX FOUNDATION HAZELNUT | |
FLEX FOUNDATION STICK | FLEX FOUNDATION VANILLA | |
FLEX FOUNDATION STICK | FLEX FOUNDATION SNOW | |
FLEX FOUNDATION STICK | FLEX FOUNDATION WARM DEEP | |
FLEX FOUNDATION STICK | FLEX FOUNDATION RICH | |
FLEX FOUNDATION STICK | FLEX FOUNDATION MAPLE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION ESPRESSO | |
FLEX FOUNDATION STICK | FLEX FOUNDATION COCOA | |
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT SAND | |
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN NUDE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN SAND | |
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN HONEY | |
FLEX FOUNDATION STICK | FLEX FOUNDATION PRALINE | |
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN DEEP | |
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER LIT | |
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER ICED | |
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER BLITZED | |
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER GLAZED | |
MINI LIP & CHEEK | MINI LIP & CHEEK PERK | |
TATTOO STAMP | TATTOO STAMP - LIGHTENING BOLT |
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MINI VEGAN MILK MOISTURIZER | MINI VEGAN MILK MOISTURIZER | |
VEGAN MILK MOISTURIZER | VEGAN MILK MOISTURIZER | |
VEGAN MILK CLEANSER | VEGAN MILK CLEANSER | |
FLEX CONCEALER | FLEX CONCEALER - BUFF | |
FLEX CONCEALER | FLEX CONCEALER - LIGHT SAND | |
FLEX CONCEALER | FLEX CONCEALER - GOLDEN NUDE | |
FLEX CONCEALER | FLEX CONCEALER - GOLDEN SAND | |
FLEX CONCEALER | FLEX CONCEALER - GOLDEN HONEY | |
FLEX CONCEALER | FLEX CONCEALER - GOLDEN TAN | |
FLEX CONCEALER | FLEX CONCEALER - GOLDEN DEEP | |
FLEX CONCEALER | FLEX CONCEALER - RICH | |
KUSH LIP SCRUB | KUSH LIP SCRUB -SNOWCAP | |
MINI LIP & CHEEK | MINI LIP & CHEEK - FLIP | |
MINI LIP & CHEEK | MINI LIP & CHEEK - QUIRK | |
MINI LIP & CHEEK | MINI LIP & CHEEK - RALLY | |
MINI LIP & CHEEK | MINI LIP & CHEEK - QUICKIE | |
MELATONIN LIP MASK | MELATONIN OVERNIGHT LIP MASK | |
MELATONIN SERUM STICK | MELATONIN SERUM STICK | |
KUSH LIP GLAZE | KUSH LIP GLAZE - NOVA | |
KUSH LIP GLAZE | KUSH LIP GLAZE - ROSE BUD | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - HAZE | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - MJ | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DUB | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - HERB | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DUTCH | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - GRIND | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - CYPHER | |
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DIESEL | |
KUSH LIQUID EYELINER | KUSH LIQUID EYELINER | |
HYDRO GRIP MAKEUP SETTING SPRAY | HYDRO GRIP MAKEUP SETTING SPRAY | |
HERE FOR THE PARTY SET | MULTI-PIECE SET | |
VEGAN MILK MOISTURIZER | VEGAN MILK MOISTURIZER REFILL POUCH | |
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - SUPERNOVA | |
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - STARDUST | |
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - MARS | |
LIP & CHEEK | LIP + CHEEK-SWISH |
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SCHEDULE 2
LIST OF PURCHASE PRICE
ME PP | |||
PRODUCT FAMILY | SKU DESCRIPTION | (USD) | |
COOLING WATER | COOLING WATER | [***] | |
GEL BROW | GEL BROW-PILSNER | [***] | |
GEL BROW | GEL BROW-DARK BREW |
[***]
|
|
GEL BROW | GEL BROW-PALE ALE | [***] | |
HIGHLIGHTER | HIGHLIGHTER-LIT | [***] | |
HYDRATING OIL | HYDRATING OIL | [***] | |
LIP & CHEEK | LIP + CHEEK-PERK | [***] | |
LIP & CHEEK | LIP + CHEEK-RALLY | [***] | |
LIP & CHEEK | LIP + CHEEK-QUICKIE | [***] | |
MATTE BRONZER | MATTE BRONZER-BAKED | [***] | |
TATTOO STAMP | TATTOO STAMP -BLACK HEART | [***] | |
TATTOO STAMP | TATTOO STAMP -BLACK STAR | [***] | |
BLUR STICK | BLUR STICK | [***] | |
MATTE BRONZER | MATTE BRONZER - BLAZE | [***] | |
FLEX CONCEALER | FLEX CONCEALER - FAIR | [***] | |
FLEX CONCEALER | FLEX CONCEALER - LIGHT | [***] | |
FLEX CONCEALER | FLEX CONCEALER - LIGHT MEDIUM | [***] | |
FLEX CONCEALER | FLEX CONCEALER - MEDIUM | [***] | |
FLEX CONCEALER | FLEX CONCEALER - MEDIUM TAN | [***] | |
FLEX CONCEALER | FLEX CONCEALER - TAN | [***] | |
FLEX CONCEALER | FLEX CONCEALER - WARM DEEP | [***] | |
FLEX CONCEALER | FLEX CONCEALER -DEEP | [***] | |
MATCHA CLEANSER | MATCHA CLEANSER | [***] | |
MATCHA TONER | MATCHA TONER | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION -IVORY | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - FAIR | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - LIGHT | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION -GOLDEN LIGHT | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM LIGHT | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - WARM MEDIUM |
[***]
|
|
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN SAND | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - HONEY | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MEDIUM TAN | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CARAMEL | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - TAN | [***] | |
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - TOFFEE | [***] |
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BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN DEEP | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - WARM DEEP | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - DEEP | ||
LUMINOUS BLUR STICK | LUMINOUS BLUR STICK | ||
MINI COOLING WATER | MINI COOLING WATER | ||
TATTOO STAMP | TATTOO STAMP X | ||
TATTOO STAMP | TATTOO STAMP MOON | ||
WATERMELON BRIGHTENING SERUM | WATERMELON BRIGHTENING SERUM | ||
KUSH MASCARA | KUSH MASCARA | ||
LIP & CHEEK | LIP + CHEEK - WERK | ||
MINI KUSH MASCARA | MINI KUSH MASCARA | ||
KUSH BROW | KUSH BROW HYDRO | ||
KUSH BROW | KUSH BROW HAZE | ||
KUSH BROW | KUSH BROW DUTCH | ||
KUSH BROW | KUSH BROW GRIND | ||
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER LIGHT | ||
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER MEDIUM | ||
BLUR + SET MATTE LOOSE SETTING POWDER | BLUR+SET POWDER DEEP | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - PORCELAIN | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CREME | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - GOLDEN HONEY | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - BISQUE | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - CINNAMON | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - MOCHA | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - COCOA | ||
BLUR LIQUID MATTE FOUNDATION | BLUR LIQUID MATTE FOUNDATION - ESPRESSO | ||
FLEX CONCEALER | FLEX CONCEALER - PORCELAIN | ||
FLEX CONCEALER | FLEX CONCEALER - CREME | ||
FLEX CONCEALER | FLEX CONCEALER - VANILLA | ||
FLEX CONCEALER | FLEX CONCEALER - MEDIUM BEIGE | ||
FLEX CONCEALER | FLEX CONCEALER - CARAMEL | ||
FLEX CONCEALER | FLEX CONCEALER - CINNAMON | ||
FLEX CONCEALER | FLEX CONCEALER - COCOA | ||
FLEX CONCEALER | FLEX CONCEALER - ESPRESSO | ||
MINI LIP & CHEEK | MINI LIP & CHEEK WERK | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BOSS | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER CEO | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BONUS | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BIZ | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER PTO | ||
LONG WEAR GEL EYELINER | LONGWEAR GEL EYELINER BCC |
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ASTROLOGY TATTOO STAMP | TATTOO STAMP CAPRICORN | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP AQUARIUS | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP PISCES | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP ARIES | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP TAURUS | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP GEMINI | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP CANCER | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP LEO | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP VIRGO | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP LIBRA | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP SCORPIO | ||
ASTROLOGY TATTOO STAMP | TATTOO STAMP SAGITTARIUS | ||
KUSH LIP BALM | KUSH LIP BALM GREEN DRAGON | ||
KUSH LIP GLAZE | KUSH LIP GLAZE CHRONIC | ||
COOLING WATER UNDEREYE PATCHES | COOLING WATER UNDEREYE PATCHES | ||
MATCHA DETOXIFYING FACE MASK | MATCHA DETOXIFYING FACE MASK | ||
WATERMELON BRIGHTENING FACE MASK | WATERMELON BRIGHTENING FACE MASK | ||
LIP COLOR RELAUNCH | LIP COLOR WIFEY | ||
LIP COLOR RELAUNCH | LIP COLOR SKILLZ | ||
LIP COLOR RELAUNCH | LIP COLOR DEUCES | ||
LIP COLOR RELAUNCH | LIP COLOR HYPE | ||
LIP COLOR RELAUNCH | LIP COLOR C.R.E.A.M. | ||
LIP COLOR RELAUNCH | LIP COLOR LOW KEY | ||
LIP COLOR RELAUNCH | LIP COLOR NAME DROP | ||
LIP COLOR RELAUNCH | LIP COLOR O.G. RED | ||
LIP COLOR RELAUNCH | LIP COLOR WAVY | ||
LIP COLOR RELAUNCH | LIP COLOR NEW WHIP | ||
KUSH LIP BALM | KUSH LIP BALM BUBBLE | ||
KUSH LIP BALM | KUSH LIP BALM NUG | ||
KUSH LIP BALM | KUSH LIP BALM CANNATONIC | ||
KUSH LIP BALM | KUSH LIP BALM PLUSHBERRY | ||
HYDRO GRIP PRIMER | HYDRO GRIP PRIMER | ||
CANNABIS HYDRATING FACE MASK | CANNABIS HYDRATING FACE MASK | ||
KUSH BROW | KUSH BROW HERB | ||
KUSH BROW | KUSH BROW MJ | ||
KUSH BROW | KUSH BROW DIESEL | ||
KUSH BROW | KUSH BROW CYPHER | ||
KUSH BROW | KUSH BROW DUB | ||
KUSH LASH PRIMER | KUSH LASH PRIMER | ||
KUSH WATERPROOF MASCARA | KUSH WATERPROOF MASCARA | ||
MINI KUSH WATERPROOF MASCARA | MINI KUSH WATERPROOF MASCARA | $ - | |
GLOW OIL LIP + CHEEK | GLOW OIL SOLAR | ||
GLOW OIL LIP + CHEEK | GLOW OIL GLIMMER | ||
GLOW OIL LIP + CHEEK | GLOW OIL FLARE |
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GLOW OIL LIP + CHEEK | GLOW OIL HALO | ||
GLOW OIL LIP + CHEEK | GLOW OIL ASTRO | ||
MINI KUSH LASH PRIMER | MINI KUSH LASH PRIMER | #N/A | |
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM BEIGE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION HONEY | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION SAND | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION CARAMEL | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT MEDIUM | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT BEIGE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION CINNAMON | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN TAN | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION BUFF | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION MEDIUM TAN | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION ALMOND | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION CASHMERE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION CRÈME | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION NUDE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION PORCELAIN | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION DEEP | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION SHELL | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION TAN | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION FAIR | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION AMBER | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION HAZELNUT | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION VANILLA | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION SNOW | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION WARM DEEP | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION RICH | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION MAPLE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION ESPRESSO | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION COCOA | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION LIGHT SAND | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN NUDE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN SAND | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN HONEY | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION PRALINE | ||
FLEX FOUNDATION STICK | FLEX FOUNDATION GOLDEN DEEP | ||
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER LIT | ||
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER ICED | ||
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER BLITZED | ||
FLEX HIGHLIGHTER | FLEX HIGHLIGHTER GLAZED | ||
MINI LIP & CHEEK | MINI LIP & CHEEK PERK |
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TATTOO STAMP | TATTOO STAMP - LIGHTENING BOLT | ||
MINI VEGAN MILK MOISTURIZER | MINI VEGAN MILK MOISTURIZER | ||
VEGAN MILK MOISTURIZER | VEGAN MILK MOISTURIZER | ||
VEGAN MILK CLEANSER | VEGAN MILK CLEANSER | ||
FLEX CONCEALER | FLEX CONCEALER - BUFF | ||
FLEX CONCEALER | FLEX CONCEALER - LIGHT SAND | ||
FLEX CONCEALER | FLEX CONCEALER - GOLDEN NUDE | ||
FLEX CONCEALER | FLEX CONCEALER - GOLDEN SAND | ||
FLEX CONCEALER | FLEX CONCEALER - GOLDEN HONEY | ||
FLEX CONCEALER | FLEX CONCEALER - GOLDEN TAN | ||
FLEX CONCEALER | FLEX CONCEALER - GOLDEN DEEP | ||
FLEX CONCEALER | FLEX CONCEALER - RICH | ||
KUSH LIP SCRUB | KUSH LIP SCRUB -SNOWCAP | ||
MINI LIP & CHEEK | MINI LIP & CHEEK - FLIP | ||
MINI LIP & CHEEK | MINI LIP & CHEEK - QUIRK | ||
MINI LIP & CHEEK | MINI LIP & CHEEK - RALLY | ||
MINI LIP & CHEEK | MINI LIP & CHEEK - QUICKIE | ||
MELATONIN LIP MASK | MELATONIN OVERNIGHT LIP MASK | ||
MELATONIN SERUM STICK | MELATONIN SERUM STICK | ||
KUSH LIP GLAZE | KUSH LIP GLAZE - NOVA | ||
KUSH LIP GLAZE | KUSH LIP GLAZE - ROSE BUD | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - HAZE | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - MJ | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DUB | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - HERB | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DUTCH | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - GRIND | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - CYPHER | ||
KUSH TRIPLE BROW PEN | KUSH TRIPLE BROW PEN - DIESEL | ||
KUSH LIQUID EYELINER | KUSH LIQUID EYELINER | ||
HYDRO GRIP MAKEUP SETTING SPRAY | HYDRO GRIP MAKEUP SETTING SPRAY | ||
HERE FOR THE PARTY SET | MULTI-PIECE SET | ||
VEGAN MILK MOISTURIZER | VEGAN MILK MOISTURIZER REFILL POUCH | ||
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - SUPERNOVA | ||
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - STARDUST | ||
HOLOGRAPHIC STICK | HOLOGRAPHIC STICK - MARS | ||
LIP & CHEEK | LIP + CHEEK-SWISH |
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SCHEDULE 3
SEPHORA’S GENERAL PURCHASE CONDITIONS
1. Scope
These general purchase conditions apply to all purchases by SEPHORA to the express exclusion of the Supplier’s general sale conditions and any other document issued by the Supplier relating to SEPHORA’s order.
2. Purchase order
The purchase order stipulates the technical, commercial and administrative terms as well as the deadlines requested from the Supplier. Price, quantity, quality and performance deadlines are fundamental terms for the parties. No modification to these terms and to these deadlines can be taken into account unless previously agreed in writing by both parties.
3. Acceptance of the purchase order
The Supplier must acknowledge receipt of the SEPHORA purchase order within eight (8) calendar days from the date of the purchase order by returning a document mentioning the number of the SEPHORA purchase order by letter, fax or email. In the absence of this acknowledgement of receipt, the start of the performance of the purchase order will be automatically considered to be an implicit acceptance of the terms of the purchase order.
4. Packaging – Packing
The Products will be protected by packaging which is appropriate for resistance to the transport method used. All deliveries must be made in packaging stipulated by SEPHORA and, in the absence of a stipulation, in accordance with the norms and standards in force. Unless the packaging is supplied by SEPHORA, the Supplier will pay for any damage which occurs up until the goods arrive at the place of delivery and/or any shortage which is attributable to inadequate or defective packaging, and the Supplier will replace the damaged and/or missing products at its own cost under the terms of the purchase order, as soon as possible.
5. Delivery
The deliveries will be made to the delivery address on the purchase order. Deliveries are made EX-Works to the delivery address, in accordance with the Incoterms definition, and the risks are transferred at the time and place of delivery. The Supplier will insure the products at its own cost against loss, theft, breakage, damage, and any other risk during the transport to the place of delivery.
The fact of taking delivery of the order does not constitute a presumption of acceptance of the order with regards to its conformity with the specifications.
The Supplier must enclose a detailed slip reiterating the packing list and the type of packaging and the information appearing on the order enabling the products and their quantitative control to be identified.
A copy of this slip will be sent simultaneously with the shipment by fax or letter, to SEPHORA’s Purchase Department.
6. Deadlines
The delivery deadlines and the possible deadlines for performing the services stipulated in SEPHORA’s order are mandatory.
SEPHORA reserves the right to terminate any purchase order or part of the purchase order which is not delivered and/or executed within the contractual deadlines, except for a case of force majeure. SEPHORA must be informed of cases of force majeure within eight days of the event, failing which the Supplier cannot invoke it. Withdrawal by the Supplier’s sub-contractor or supplier will not be considered to be a case of force majeure.
7. Delays – Liquidated Damages
The Supplier undertakes to immediately inform SEPHORA of any event which is likely to result in a delay in delivering the products and/or in performing the services in relation to the deadline mentioned in the purchase order.
The Supplier undertakes to implement any means to makeup for this delay, at its own cost, being agreed that SEPHORA can demand an express shipment at the Supplier’s own cost.
In the event of a delay in delivery of Products, Supplier agrees to pay to Sephora liquidated damages in the amount of 5 USD per reference item ordered and delayed, plus 0.2 % per day of delay calculated on the total amount of the purchase order. The amount of such liquidated damages is agreed by the Parties as a reasonable amount to compensate Sephora for losses to be incurred in the event of late delivery, without prejudice to all other remedies available under this contract and/or at law.
8. Termination or reducing the purchase order
SEPHORA reserves the right to terminate or to reduce the purchase order(s) if the Supplier refuses or is unable to fulfill its obligations in accordance with the terms of the said order. Any extra costs will be paid for by the Supplier, without prejudice to the delay penalties and/or damages which SEPHORA may claim from the Supplier.
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9. Early delivery – Surplus delivery
SEPHORA reserves the right to return deliveries which are delivered more than five days before the planned date, at the Supplier’s costs and risks, as well as to refuse quantities which are above or below 5% of the quantities ordered and/or refuse services which are performed in advance, as well as those which are not stipulated in the purchase order.
10. Transfer of title
SEPHORA is the owner of the ordered products as soon as they are delivered at the address set forth in the purchase order. Therefore, any title retention clause is invalid against SEPHORA.
11. Liability and Insurance
The Supplier must take out an insurance contract with sufficient coverage of its professional risks (physical damage, bodily injury, consequential loss, and civil liability), both concerning the cover offered and the subscribed capital. It undertakes to prove having taken out the insurance as well as the payment of the premiums on SEPHORA’s first request.
12. Essential clauses – Maintaining obligations
If any one of the stipulations in these general purchase conditions is invalid, this will not make the whole of the general purchase conditions invalid. In the event of cancellation, the parties will in all circumstances endeavor to renegotiate an economically equivalent clause, in good faith.
If one of the parties does not invoke right it has under these general purchase conditions, this cannot be interpreted in any way as being an express or tacit waiver by this party to exercise the said right in the future.
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SCHEDULE 4
SUPPLIER’S CODE OF CONDUCT
“SEPHORA MIDDLE EAST” has agreed to abide by moral and ethical values in the management of the company. We expect our third party suppliers to respect and adhere to the same philosophy in the management of their own companies.
We require strict compliance with these standards on the part of all our suppliers, their factories, subcontractors, as well as their own suppliers.
Please note that where national and other applicable laws and the Supplier’s code of conduct address the same issue, the provision that is the highest workplace standard will apply.
Further, where the Supplier’s code of conduct is in contradiction with the applicable law, the applicable law shall apply.
We seek to work with suppliers that agree to comply with the requirements of this code of conduct which also abides by the principles stipulated in the Conventions of the International Labor Organization, the Universal Declaration on Human Rights, the guiding principles of the OECD and the principles of the Global Compact.
Any breach of conduct or any violation of this code of conduct by our suppliers or their subcontractors will result in a review and possible termination of the business relationship.
EMPLOYMENT REQUIREMENTS AND RESPONSIBILITIES
● | Forced Labor: The use of forced labor by our suppliers, whether obtained under the threat of punishment, withholding identity papers, requiring workers to deposit a bond or any other constraint is strictly prohibited. |
● | Child Labor: Work by children under the age of 15 is strictly prohibited. In countries where local laws set a higher age for child labor or impose mandatory education beyond the age of 15, this higher age will apply. |
● | Clandestine Labor: The choice of our suppliers and the determination of the purchase conditions must be based only on objective assessments of quality, price and capacity to supply and guarantee, services of adequate level. We expect our suppliers to take adequate measures in order to respect legal provisions as regards tax and social matters, in particular those aimed at fighting against illegal and/or clandestine labor. |
● | Harassment and Abuse: We expect our suppliers to treat their employees with respect and dignity. Our suppliers may not allow or engage in any kind of corporal punishment, psychological or physical harassment or any other kind of abuse. |
● | Discrimination: We expect our suppliers to treat all employees equally and fairly. Our suppliers may not practice any kind of discrimination in relation to hiring, access to training, promotion, or dismissal based on gender, race, religion, age, disability, sexual orientation, political opinions, nationality, or social or ethnic origin. |
● | Wages and Benefits: As a minimum, our suppliers shall pay regular wages and pay for overtime at the legal rate imposed by the country of original manufacture and provide their workers with the benefits the law currently requires. If there is no legal minimum wage or overtime pay in the country of origin, the supplier shall ensure that the wages are at least equal to the average minimum in the industrial sector in question and that overtime pay is at least the same as the usual rate of pay. |
● | Working Hours: In relation to working hours and overtime, our suppliers shall comply with the limits set by the laws of the country of manufacture. Our suppliers may not impose excessive overtime. The total number of hours worked per week may not exceed 60 hours, including all overtime, and at least one day off in every seven-day period, or in both cases, the maximum established by the laws in effect in the country. |
● | Health and Safety: Based on the specific risks present in their industrial sector, our suppliers shall provide a safe and healthy workplace to avoid accidents or bodily injuries which may be caused by, associated with, or result from the work or from handling the equipment. They shall set up systems to detect, avoid or neutralize any threat to their employees’ health and safety and comply with local and international regulations and laws currently in effect. The same principles will apply to suppliers who provide housing to employees. |
ENVIRONMENTAL REQUIREMENTS AND RESPONSIBILITIES
We expect our suppliers to share our commitment to a clean and safe environment. We encourage initiatives to reduce the impact on the environment, particularly through the use of environmentally-friendly technologies. Our suppliers shall agree to respect local and international environmental regulations and standards. Our suppliers shall be able to prove the effective implementation of the following requirements:
- | The existence of an environmental management system, possibly ISO 14001 or EMAS certified. |
- | Proper waste management, with special attention to hazardous waste and emissions which may not be dumped or discharged in an unlawful manner. |
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- | Employees whose work has a direct impact on the environment shall be trained, competent and have the necessary resources to do their jobs. |
WORKING METHODS
● | Legal Requirements: We expect our suppliers to act in full compliance with the law. Our suppliers shall abide by all national, local and international laws relating to the management of their businesses. |
● | Customs and Security Authorities: Our suppliers shall comply with applicable customs laws, including those relating to imports and the ban on the transshipment of merchandise into the country of import. |
● | Subcontractors: Our suppliers shall receive “SEPHORA MIDDLE EAST” approval before subcontracting any part of the manufacturing process. Our approval is subject to acceptance by the subcontractors of this code of conduct and all other applicable conditions. |
● | Anti-Corruption: Our suppliers shall agree to condemn and act against corruption in all its forms, including extortion and kickbacks. |
INSPECTION AND AUDIT
Inspection: We reserve the right to check adherence to these principles and to conduct compliance audits at any time without notice. Our suppliers shall supply the necessary information and grant access to “SEPHORA MIDDLE EAST” representatives who seek to verify compliance with the requirements of this code. They shall agree to improve and correct any deficiency discovered.
Access to information: The supplier shall keep proper records to prove compliance with this code of conduct. Our suppliers shall provide access to complete, original, and accurate files to our representatives.
Supplier Agreement , name of the supplier | Milk Makeup, LLC | ||
Date: | ______________________, | ||
Name of the supplier representative: | Steve Nguyen |
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|
Title: | CFO | ||
Company Stamp: | ______________________. |
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Exhibit 10.35
EXCLUSIVE DISTRIBUTION AGREEMENT
This agreement (the “Agreement”) is made on 20-JAN-2021 between “Sephora” and the “Supplier”.
Sephora | Supplier | ||
Company Name: | SEPHORA AUSTRALIA PTY LTD | MILK MAKEUP LLC | |
Principal Place of Business: | Level 11, 32 Martin Place, Sydney NSW 2000 | 568 Broadway, Suite 700 New York, NY 10012 | |
State of Incorporation: | Australia | New York, USA | |
Represented by: | Angeline Ho | Tim Coolican | |
Title: | Interim General Manager, Sephora ANZ | CEO |
The above are individually referred to as the “Party” and collectively referred to as the “Parties”.
The Supplier has signed the ‘‘Supplier’s Code of Conduct” dated 22-DEC-2020 which shall form part of this Agreement.
In the framework of the distribution by Sephora of the Supplier’s Products (defined below in Article 2), the Supplier undertakes also as follows:
Article 1 - Distribution
1.1. | The Supplier grants Sephora, and the companies of the Sephora group as defined in Article 15 below, who accepts the exclusive right to import and distribute the Products within the territory as specified in the table below: |
Online Distribution Retail Distribution | ||
Territories | Australia | Australia |
New Zealand | New Zealand |
each referred to as a “Territory”.
Consequently, the Supplier agrees to refrain from appointing any additional third party as distributor or agent for the Products in each Territory and to refrain from making direct sales of the Products in the Territory, with the exception that the Supplier may continue to make direct sales of its Products throughout each Territory via the following channels:
(a) Milk Makeup standalone boutiques;
(b) Travel retail (ecomm and B+M);
(c) www.milkmakeup.com; and
(d) Subscription boxes and TV retailing (e.g. HSN/QVC).
For the avoidance of doubt, the Supplier may not sell Products to Mecca or allow Mecca to sell the Products in the Territory during the Exclusivity period (as defined below).
Sephora may decide in which channels the Products will be distributed in each Territory. In particular, Sephora can sell the Products in the Sephora group’s stores, Sephora corners, shop in the shop, Internet via Sephora’s websites, Sephora’s Mobile App, print catalogue, TV shopping, etc.
1.2. |
The exclusivity is given (“Exclusivity”) from the date of launch of the Products in the Territory until [***]
|
1.3. | The exclusivity will be automatically renewed for a further [***] upon the completion of the Exclusivity, on the condition that the sales target, which shall be agreed between the parties, is met. |
Article 2 - Products
2.1. | The exclusivity granted by the Supplier covers the entire range of Milk Makeup including the current selected products (listed in Appendix 1) and future products and/or product ranges developed by the Supplier (hereinafter the “Products”). Sephora can choose to or not to distribute these future Products. If necessary, they will be added in Appendix 1. |
Article 3 - Products compliancy
3.1. | The Supplier undertakes to respect its commitments in the “Supplier’s Code of Conduct”. |
3.2. | In addition to the Supplier’s warranties under Article 11, the Supplier makes the Products compliant with all industry standards and codes, regulations and legislation applicable to the Products (hereinafter the “Regulations”) in the Territory, performs the necessary local procedures, and works to draft the packaging label and advertising in compliance with the market of the Territory. |
3.3. | Any of the Products which are not compliant with the Regulations applicable to the Products in the Territory or undertakings or requirements provided for here above, may be rejected and with return carriage paid for by the Supplier, and the Supplier is compelled to take it back. |
3.4. | Sephora and its group of companies as defined in Article 15, will undertake to administrate the Products’ registration with the relevant local authorities. The Supplier is responsible for furnishing accurate documents and information for the registration. Cost of registration (including government charges and any local administration fees) to be borne by the Supplier. |
3.5. | Sephora will fund the cost of any Product overlabelling required to meet regulatory obligations related to the use of CBD-derived ingredients applicable in Australia until December 31, 2021, after which the Supplier will then be required to fund any overlabelling from January 1, 2022 onwards and shall ensure such labelling requirements are met. |
Article 4 – Social and environmental requirements
4.1. | A social audit may be performed, specifically as per SA 8000 standard on the Products’ production site(s) by an independent body appointed by Sephora. The cost for this service shall be covered by the Supplier in the agreed conditions between the Parties. |
4.2. | In the event that critical issues or non-compliance with the “Supplier’s Code of Conduct” are uncovered, Sephora is entitled to suspend this Agreement and/or refuse the Supplier listing, until the Supplier is compliant with the requirements. |
Article 5 - Purchase Price
5.1. | Sephora will purchase the Products at the purchase price defined and listed in writing between the Parties in Appendix 1. Unless otherwise agreed by the Parties in writing, prices are firm and non-revisable and deliveries of Products are made Free On Board (“FOB”) at New Jersey, in accordance with the INCOTERMS 2010 definition of the International Chamber of Commerce (as amended from time to time). |
5.2. | The purchase prices of the Products can be revised [***] after mutual agreement is reached between the Parties, The Supplier shall communicate to Sephora the proposition of the new pricing three (3) months prior to the proposed effective date of the new pricing and there must be a minimum of six (6 months) between pricing changes. |
5.3. | Sephora shall purchase all the Products in USD and will pay in USD. |
5.4. | The payment will be made within thirty (30) days of the date the invoice is issued. The invoice shall only be issued once the Products have been delivered FOB at New Jersey. |
5.5. | The Supplier authorizes Sephora to set-off any sums owed by Sephora against any amounts owed by the Supplier. |
5.6. | Sephora will determine the retail price of the Products in its absolute discretion. |
Article 6 - Duration - Termination of the Agreement
6.1. | This Agreement shall commence on 20-JAN-2021 and continue until terminated in accordance with this clause. |
6.2. | After the completion of the initial Exclusivity (as defined in Article 1.2), each Party may terminate this Agreement by giving a six (6) months prior notice of its intention not to renew this Agreement by registered letter with acknowledgement of receipt to the other Party, unless otherwise agreed by both Parties. |
6.3. | Each Party is entitled to terminate this Agreement by registered letter with acknowledgement of receipt if the other Party defaults under any provision of this Agreement and such default is not remedied within thirty (30) days after notice thereof is sent to the breaching Party by the other Party. |
Article 7 - Intellectual Property
7.1. | The Supplier hereby grants to Sephora and its parents, subsidiaries, affiliates, successors, licensees, and assigns (collectively, the “Licensed Parties”) a non-exclusive license to reproduce, distribute, display, perform and otherwise use the Supplier’s name, logo, trademarks, product information, and/or other intellectual property for purposes of advertising, promotion and trade of the Products during the term of this Agreement. Upon Sephora’s request, the Supplier shall provide Licensed Parties the relevant documentation/releases evidencing its ownership rights. |
7.2. | The Supplier shall not use Sephora’s name, logo, trademarks, or other intellectual property without Sephora’s prior written consent. All intellectual property (“IP’’) supplied to the other Party under this Agreement shall belong to and remain the sole property of the owner and neither Party shall have the right to acquire any right to copy, reproduce or use the other Party’s IP except in connection with and in accordance with this Agreement. |
7.3. | The Supplier represents and warrants that: |
(a) | it has the full right and authority to enter into this Agreement and to grant the rights granted herein; |
(b) | all statements, descriptions, claims, demonstrations, illustrations and endorsements about the Products are true, accurate and not misleading; and |
(c) | the Products nor the materials provided relating to the Products will not violate or infringe upon the rights of any third party or cause Sephora to incur any fees. |
Article 8 - Animations, Promotions, Advertising, Commercial Support
8.1. | Brand specific campaigns: The animation plan (Store & Online) and / or promotion campaign and / or PR events shall be decided each year by the Parties. Brand specific in-store animations production / promotions /online Campaign & support (endcaps, launch pads, pop-up areas, beauty bars, internet campaigns, CRM actions, etc.) will be paid by the Supplier unless otherwise agreed by Sephora. |
8.2. | Sephora campaigns: The promotion calendar, the implementing of the animations (boutiques, endcaps, cash wrap, windows) and execution of digital campaigns will be managed by Sephora. |
8.3. |
Testers, samples, gifts and training: The Supplier will deliver, carriage paid by the Supplier at the logistic solution indicated by Sephora, free testers (via DIF arrangeent), samples, gifts and training support for all Sephora points of sales in the Territory. [***] of net retail sales per annum. For the avoidance of doubt, this cap does not apply to or prejudice: |
(a) Sephora’s right to make Product returns pursuant to any other provision of this Agreement; or
(b) Sephora’s right to return any Product that is a customer return and meets one or more other criteria which makes it eligible to be returned to the Supplier pursuant to this Agreement.
8.4. | Media communication: As indicated above, the Parties may both decide to launch specific media communication on the Products in the Territory. In the event of such a decision: |
(a) | each advertisement will state that the Products are sold exclusively in Sephora; |
(b) | Sephora will create (alone or with a third party) the advertising material (hereinafter the “Creation”) or modify the Supplier’s existing brand assets/creatives and will submit the Creation to the Supplier; |
(c) | the cost of the realisation of the advertising (shootings, production costs, etc.) excluding copyrights assignment, will be included in the budget submitted to the Supplier and mutually agreed by Sephora and the Supplier; |
(d) | all intellectual property rights on the Creation, excluding the Supplier’s IP, will remain the sole property of Sephora, unless a written copyright assignment is concluded between the Parties; and |
(e) | the Supplier is consequently not allowed to use the Creation without Sephora’s prior written consent. |
8.5. | The budget and the Creation will be approved by the Supplier in writing prior to the reservation of media space. Sephora will prepare and buy all the media space for the mutually agreed upon advertising in compliance with the global budget agreed each year by the Parties. |
8.6. | Multi-brand campaigns: Sephora may organize and finance multi-brand launch presentations in the Territory. The Supplier undertakes to provide gifts for the journalists during the presentations, Supplier brand and Products’ briefs for the press kits; and Supplier presence during these PR events. As specified in Article 8.1, specific mono-brand PR events or launches shall be paid for by the Supplier unless otherwise agreed by Sephora. |
Article 9 – Fixtures
9.1. | Permanent fixtures: |
(a)
|
All Supplier fixtures (hereinafter the “Fixtures”) shall be and shall remain the Supplier’s property, from the Supplier’s warehouse to the Sephora’s point of sales and while the Fixtures are in Sephora’s point of sales. The Supplier is responsible for the development and production of the Fixtures. Production costs and installation costs of the Fixtures will be co-funded equally by Sephora and the Supplier, subject to Sephora’s contribution being capped at USD$6,750 per C2 gondola, this amount to be reviewed annually. |
(b)
|
The Fixtures shall be developed and produced in accordance with the requirements of Sephora merchandising policy, at the Supplier’s cost. |
(c)
|
The Supplier shall provide every new point of sale opening with Fixtures within twelve (12) weeks after Sephora has placed the order for the Fixtures. |
9.2.
|
Updates collection: All costs for Fixtures’ updates (including development, production, costs and installation) are charged to the Supplier. |
9.3.
|
All delivery of Fixtures or Fixtures’ updates shall be made “Delivered Duty Paid” (“DDP”) from the Supplier’s warehouse to Sephora’s point of sales at the logistic solution as indicated by Sephora. |
9.4. | If the Fixtures do not meet Sephora’s expectations, the Supplier has to fabricate a new set within the given timeframe of six (6) months from the date of notification. |
Article 10 - Stock
10.1. | Sephora will conduct stock assessments at least twice a year at which time the Supplier, upon mutual agreement, may be required to take back stock exceeding one hundred and twenty (120) days (based on sell-out in the Territory) which is the maximum number of days allowed for exclusive brand inventory. |
10.2. | The Supplier will target to maintain a minimum service level on order fulfilment Should the fulfilment rate drop below the applicable minimum service level for an order, a discount will be applied to Sephora, the amount of which will be equal to 5% of the value of the purchase order (excluding taxes – to be confirmed) that is unfulfilled. The applicable minimum service level are as follows: |
a. 85% in 2021
b. 90% in 2022
c. 95% in 2023 and beyond
10.3. | In the event that Products have an expiration date, the Supplier ensures that the Products delivered at the logistic solution indicated by Sephora, will not have an expiration date inferior of eighteen (18) months. |
10.4. | The Supplier shall: |
(a) | take back carriage paid any customer returns (subject to article 8.3) or any RTVs (Return to Vendor) of discontinued, damaged (upon arrival in the Territory), non-compliant Products, expired Products or Products which have less than six (6) months shelf life; |
(b) | provide (i) Return Authorizations (RAs) for RTVs of discontinued, damaged, or non- compliant Products or for customer returns (subject to article 8.3) and (ii) the coordination and payment of shipping of these Products if they are not Destroy in Field (DIF). In case of DIF, the Supplier shall have to pay the costs of destruction. |
All returns concerning issues with quality of the Products will be treated as Products mentioned above in sub-paragraphs (a) and (b).
Upon agreement between the Parties of the details concerning stock returns, the Supplier is responsible to provide Sephora with a RA number, organize the return of the Products and to pay any costs associated with this return within thirty (30) days. Sephora shall make the relevant products available for collection at the Sephora warehouse. Should the Supplier not comply with this provision, Sephora will destroy the Products at the Supplier’s expense.
Should the Supplier or Sephora decide to end this Agreement. Sephora may continue to sell the stock of Products until stock is fully depleted unless the Supplier has agreed to take back, carriage paid, the stock of the Products at their purchase price.
Article 11 - Supplier’s warranties
11.1. The Supplier represents and warrants that the Products:
(a) | comply with specification. In this clause “specification” includes any specification provided by Sephora, any specification or description provided by the Supplier to Sephora including on the Products themselves and/or in any promotional material; |
(b) | are sold free from all encumbrances; |
(c) | are of merchantable quality; |
(d) | are fit for the purpose for which products of the same kind are commonly supplied; |
(e) | are suitable for personal use and application to the human body; |
(f) | are free from defects in design, materials and workmanships; |
(g) | comply with all applicable industry standards, codes, laws and regulations applicable to the Products in the Territory; |
(h) | contain no irritants, toxins or chemicals that may cause harm or irritation to users or the environment; and |
(i) | for the duration of the Term after December 31, 2021, include product labels accurately recording the ingredients of the Products and in compliance with the labelling requirements applicable in the Territory . |
Article 12 - Supplier’s indemnity
12.1. | In respect of any claim by Sephora for breach of this Agreement and without limiting any other remedies Sephora may have, the Supplier will: |
(a) | at its own expense, replace, recondition or repair (as it reasonably sees fit) the relevant Products; or |
(b) | give Sephora a credit in respect of the relevant Products equivalent to the purchase price plus all associated packing and transport costs. |
12.2. | The Supplier indemnifies Sephora from and against all proceedings, actions, claims, demands, losses, liabilities, damages, costs and expenses which may be suffered, incurred made or brought against Sephora arising directly or indirectly out of or in connection with: |
(a) | any breach of this Agreement by the Supplier; |
(b) | infringement of the intellectual property rights of any third party; |
(c) | any product liability, personal injury or property damage claim relating to the Products; |
(d) | any product recall issued in relation to the Products in the Territory; |
(e) | negligence or misconduct by the Supplier; |
(f) | failure by the Supplier to comply with any standards, regulation, law, decision, ruling or ordinance which the Products or the Supplier may be subject to; or |
(g) | any misrepresentations of the Products by the Supplier. |
Article 13 - Confidentiality
13.1. | For the purposes of this Agreement, “Confidential Information” means any information communicated by either of the Parties, whether orally or in writing, under the terms and conditions of this Agreement including the ‘‘Supplier’s Code of Conduct” and, more generally, any information or documents which may be exchanged between them in connection with their contractual relationship. |
13.2. | The receiving Party shall protect the confidentiality of all Confidential Information with the same degree of care it uses to protect its own Confidential Information, which measures will be in accordance with generally accepted business standards, and use the Confidential Information only for the purposes of this Agreement. |
13.3. | The obligation of confidentiality shall not however apply to the extent the Confidential Information (i) was previously known to the receiving Party free of any obligation to keep it confidential or (ii) is or becomes generally known to the public, provided that such public knowledge is not the result of any acts attributable to the receiving Party or (iii) which the disclosing Party explicitly agrees in writing need not to be kept confidential, or (iv) is disclosed pursuant to any judicial or governmental requirement or order, provided that the receiving Party take reasonable steps to give the disclosing Party sufficient notice in order to contest such requirement or order, or (v) is independently developed by the receiving Party without breach of this article, or (vi) is rightfully received by the receiving Party from a third party and such third party has not breached any confidentiality restrictions with respect thereto. |
13.4. | Notwithstanding the termination or expiration of this Agreement, the obligation of confidentiality shall remain in force for a period of three (3) years from the date of termination or expiration of this Agreement. |
Article 14 - Governing Law and Jurisdiction
14.1. | This Agreement shall be governed by the laws of New South Wales. Any and all disputes shall be settled by the Courts of New South Wales notwithstanding any clauses to the contrary or in case of introduction of a third party or plurality of defendants. |
Article 15 - Other commitments
15.1. | The Supplier recognizes expressly that the rights granted to Sephora and the commitments taken by the Supplier in accordance with this Agreement benefit any of the companies of the Sephora group located in the Territory. Companies of the Sephora group shall mean all subsidiary/affiliate and distributor, retailer, franchisee of Sephora, which commercializes, in any way whatsoever, the Products and who are parties to this Agreement. |
15.2. | The Supplier accepts and undertakes to comply with Sephora’s General Purchase Conditions in Appendix 2. The “Supplier’s Code of Conduct” and the General Purchase Conditions form an integral part of this Agreement, and is binding upon the Parties. |
The Parties hereto have executed this Agreement in two original copies on the date of this Agreement.
For and on behalf of | For and on behalf of | |
|
||
SEPHORA AUSTRALIA PTY LTD | MILK MAKEUP LLC | |
Name: Angeline Ho | Name: Tim Coolican | |
Title: Interim General Manager, Sephora ANZ | Title: CEO |
APPENDIX 1
LIST OF PRODUCTS & PURCHASE PRICE
Sephora shall pay the Supplier the Purchase Price of the Products as specified in the table below.
57% structural discount off USD RRP ex GST.
UPS | FRANCHIS | VARIANT |
SIZE
|
PURCHASE PRICE IN USD
|
814333027555 | COLOR CHALKS | CHAMPAGNE | 2.5 g |
[***]
|
814333027548 | COLOR CHALKS | CREAMY BEIGE | 2.5 g |
[***]
|
814333027616 | COLOR CHALKS | LILAC TAUPE |
2.5 g
|
[***] |
814333027623 | COLOR CHALKS | ROSY LIGHT PINK | 2.5 g | [***] |
814333027524 | COLOR CHALKS | PEWTER | 2.5 g | [***] |
814333027517 | COLOR CHALKS | BLACK | 2.5 g | [***] |
814333027562 | COLOR CHALKS | BRONZE | 25 g |
[***]
|
814333027586 | COLOR CHALKS | BROWN | 2.5 g | [***] |
814333027579 | COLOR CHALKS | COPPER | 2.5 g | [***] |
814333027630 | COLOR CHALKS | PINK | 2.5 g | [***] |
814333027647 | COLOR CHALKS | PLUM | 2.5 g |
[***]
|
814333027531 | COLOR CHALKS | SILVER | 2.5 g | [***] |
814333027920 | ELECTRIC GLOSSY LIP PLUMPER | CLEAR | 9ml |
[***]
|
814333027944 | ELECTRIC GLOSSY UP PLUMPER | ROSY MAUVE | 9m 1 | [***] |
814333027937 | ELECTRIC GLOSSY LIP PLUMPER | NUDE | 9ml |
[***]
|
814333027968 | ELECTRIC GLOSSY LIP PLUMPER | WARM PINK | 9ml | [***] |
814333027975 | ELECTRIC GLOSSY LIP PLUMPER | PLUM | 9ml | [***] |
814333027951 | ELECTRIC GLOSSY LIP PLUMPER | CORAL | 9m1 |
[***]
|
814333025353 | FLEX CONCEALER | FAIR | 5.9 ML | [***] |
814333025360 | FLEX CONCEALER | LIGHT | 5.9 ML | [***] |
814333025377 | FLEX CONCEALER | LIGHT MEDIUM | 5.9 ML | [***] |
814333027296 | FLEX CONCEALER | BUFF | 5.9 ML | [***] |
814333026589 | FLEX CONCEALER | VANILLA | 5.9 ML | [***] |
814333025384 | FLEX CONCEALER | MEDIUM | 5.9 ML | [***] |
814333026565 | FLEX CONCEALER | PORCELAIN | 5.9 ML | [***] |
814333026572 | FLEX CONCEALER | CRÈME | 5.9 ML | [***] |
814333027302 | FLEX CONCEALER | LIGHT SAND | 5.9 ML | [***] |
814333026084 | FLEX CONCEALER | MEDIUM BEIGE | 5.9 ML | [***] |
814333027319 | FLEX CONCEALER | GOLDEN NUDE | 5.9 ML | [***] |
814333027326 | FLEX CONCEALER | GOLDEN SAND | 5 9 ML | [***] |
814333027333 | FLEX CONCEALER | GOLDEN HONEY | 59 ML | [***] |
814333026091 | FLEX CONCEALER | CARAMEL | 5.9 ML | [***] |
814333025391 | FLEX CONCEALER | MEDIUM TAN | 5.9 ML | [***] |
814333027340 | FLEX CONCEALER | GOLDEN TAN | 5.9 ML | [***] |
814333026107 | FLEX CONCEALER - CINNAMON | 5.9 ML | [***] | |
814333025414 | FLEX CONCEALER - WARM DEEP | 5.9 ML | [***] | |
814333025421 | FLEX CONCEALER - DEEP | 5.9 ML | [***] | |
814333027357 | FLEX CONCEALER - GOLDEN DEEP | 5.9 ML | [***] | |
814333026114 | FLEX CONCEALER - COCOA | 5.9 ML | [***] | |
814333026121 | FLEX CONCEALER - ESPRESSO | 5.9 ML | [***] | |
814333024127 | FLEX FOUNDATION DUFF | 10 g | [***] | |
814333025025 | FLEX FOUNDATION GOLDEN NUDE | 10 g | [***] | |
814333024202 | FLEX FOUNDATION MEDIUM | 10 g | [***] | |
814333024103 | FLEX FOUNDATION FAIR | 10 g | [***] | |
814333024172 | FLEX FOUNDATION SAND | 10 g | [***] | |
814333025018 | FLEX FOUNDATION LIGHT SAND | 10 g | [***] | |
814333024097 | FLEX FOUNDATION CRJÈME | 10 g | [***] | |
814333024189 | FLEX FOUNDATION LIGHT MEDIUM | 10 g | [***] | |
814333024141 | FLEX FOUNDATION LIGHT BEIGE | 10 g | [***] | |
814333024219 | FLEX FOUNDATION MEDIUM BEIGE | 10 g | [***] | |
814333025032 | FLEX FOUNDATION GOLDEN SAND | 10 g | [***] | |
814333024158 | FLEX FOUNDATION LIGHT | 10 g |
[***]
|
APPENDIX 2
SEPHORA’S GENERAL PURCHASE CONDITIONS
1. Scope
These general purchase conditions apply to all purchases by Sephora to the express exclusion of the Supplier’s general sale conditions and any other document issued by the Supplier relating to Sephora’s order.
2. Purchase order
The purchase order stipulates the technical, commercial and administrative terms as well as the deadlines requested from the Supplier. Price, quantity, quality and performance deadlines are fundamental terms for the parties. No modification to these terms and to these deadlines can be taken into account unless previously agreed in writing by both parties.
3. Acceptance of the purchase order
The Supplier must acknowledge receipt of the Sephora purchase order within eight calendar days from the dale of the purchase order by returning a document mentioning the number of the Sephora purchase order by letter, fax or email. In the absence of this acknowledgement of receipt, the start of the performance of the purchase order will be automatically considered to be an implicit acceptance of the terms of the purchase order.
4. Packaging – Packing
The products will be protected by packaging which is appropriate for resistance to the transport method used. All deliveries must be made in packaging stipulated by Sephora and, in the absence of a stipulation, in accordance with the norms and standards in force. Unless the packaging is supplied by Sephora, the Supplier will pay for any damage which occurs up until the goods arrive at the place of delivery and/or any shortage which is attributable to inadequate or defective packaging, and the Supplier will replace the damaged and/or missing products at its own cost under the terms of the purchase order, as soon as possible.
5. Delivery
5.1 The deliveries will be made to the delivery address on the purchase order Unless otherwise agreed in writing between Sephora and the Supplier, deliveries are made to the destination as specified in the purchase order or Free On Board (“FOB”) at New Jersey, in accordance with the INCOTERMS 2010 definition of the International Chamber of Commerce (as amended from time to time) and the risks are transferred at the time and place of delivery. Sephora shall insure the products at its own cost against loss, theft, breakage, damage, and any other risk during the transport to the place of delivery. The fact of taking delivery of the order does not constitute a presumption of acceptance of the order with regards to its conformity with the specifications.
5.2 Notice of Shipment
For each purchase order, before any shipment of the Products, the Supplier shall inform Sephora’s Purchase Department by email.
The email shall contain the following information:-
- Copy of the packing list, including batch numbers and date of expiry of products in excel format;
- Commercial invoice; and
- A Safety Data Sheet for Dangerous Goods (if applicable).
Delivery to Sephora freight forwarder at the port agreed between the Parties will only be made after validation by Sephora of quantities and batches of the delivery and overall documentation. Sephora does not accept backorders, if the Supplier delivers a quantity less than the purchase order quantity on one shipment, Supplier has to apply for a new purchase order from Sephora to deliver the remaining Products.
The Supplier must re-attach the packing list to the Products when shipped.
6. Deadlines
The delivery deadlines and the possible deadlines for performing the services stipulated in Sephora’s order are mandatory.
Sephora reserves the right to terminate any purchase order or part of the purchase order which is not delivered and/or executed within the contractual deadlines, except for a case of force majeure. Sephora must be informed of cases of force majeure within eight days of the event, failing which the Supplier cannot invoke it. Withdrawal by the Supplier’s sub-contractor or supplier will not be considered to be a case of force majeure.
7. Delays – Penalties
The Supplier undertakes to immediately inform Sephora of any event which is likely to result in a delay in delivering the products and/or in performing the services in relation to the deadline mentioned in the purchase order.
The Supplier undertakes to implement any means to make up for this delay, at its own cost, being agreed that Sephora can demand an express shipment at the Supplier’s own cost.
In the event of a delay in delivery, Sephora reserves the right to apply a penalty of USD100 per reference item ordered plus 0.2% per day of delay calculated on the total amount of the purchase order excluding VAT, without prejudice to any damages which Sephora may claim from the Supplier.
8. Termination or reducing the purchase order
Sephora reserves the right to terminate or to reduce the purchase order(s) if the Supplier refuses or is unable to fulfill its obligations in accordance with the terms of the said order. Any extra costs will be paid for by the Supplier, without prejudice to the delay penalties and/or damages which Sephora may claim from the Supplier.
9. Early delivery – Surplus delivery
Sephora reserves the right to refuse deliveries which are delivered more than five days before the planned date, at the Supplier’s costs and risks, as well as to refuse quantities which are above 5% of the quantities ordered and/or refuse services which are performed in advance, as well as those which are not stipulated in the purchase order.
10. Transfer of title
Sephora is the owner of the ordered products as soon as they are delivered at the address set forth in the purchase order and this clause shall take precedence over any retention of title clause contained in Supplier terms or documentation.
11. Liability and Insurance
The Supplier must take out an insurance contract with sufficient coverage of its professional risks (physical damage, bodily injury, consequential loss, and civil liability), both concerning the cover offered and the subscribed capital. It undertakes to prove having taken out the insurance as well as the payment of the premiums on Sephora’s first request.
12. Essential clause – Maintaining obligations
If any one of the stipulations in these general purchase conditions is invalid, this will not make the whole of the general purchase conditions invalid. In the event of cancellation, the Parties shall in all circumstances endeavor to renegotiate an economically equivalent clause, in good faith.
If either Party does not invoke any right it has under these general purchase conditions, this cannot be interpreted in any way as being an express or tacit waiver by such party to exercise the said right in the future.
1
Exhibit 10.36
EXCLUSIVE DISTRIBUTION AGREEMENT |
This agreement (the “Agreement”) is made on June, 19 2019 (the “Effective Date”) between “Sephora” and the “Supplier”.
Sephora | Supplier | |
Company Name | Sephora S.A.S | MILK MAKEUP, LLC |
Principal Place of Business | 41 Rue Ybry | 450 W 15th Street |
92200 Neuilly-sur-Seine | New York, NY 10011 | |
State of Incorporation | France | United States |
Represented by | Jerome Ougier Labergere | Mazdack Rassi |
Title | VP Buying EME | Co-Founder |
Hereinafter referred to as individually the “Party” or collectively the “Parties”.
It is beforehand reminded that the Supplier shall sign the contractual documents “Regulatory Requirements Letter”, “Quality Requirements Letter”, “Guarantee”, “Supplier’s Code of Conduct” and “Logistics Specifications”. These contractual documents are part of the Agreement. The Supplier undertakes to comply with the obligations detailed in these documents.
In the framework of the distribution by Sephora of the Supplier’s Products (defined below in Article 2), the Supplier undertakes also to:
Article 1 - Exclusive distribution
1.1. The Supplier hereby grants Sephora, which accepts, the exclusive right to import and distribute the Products within the territory described below:
France, Luxembourg, Monaco, Italy, Spain, Portugal, Turkey, Greece, Switzerland, Romania, Serbia, Bulgaria, Poland, Czech Republic and Germany.
hereinafter the “Territory”.
Consequently, the Supplier shall refrain from appointing any third party as distributor or agent for the Products in the Territory and shall refrain from making direct sales of the Products in the Territory.
However, the Supplier reserves the right to sell the Products through its own Milk stores and Milk website.
Sephora may decide in which channels the Products shall be distributed in each country of the Territory. Sephora may sell the Products in Sephora group’s stores, Sephora corners, shop-in-the-shop, Internet, print catalogue....
1.2. The exclusivity is given until [***]
1.3. Right of Priority:
In case the Supplier decides to distribute the Products in a country which is not listed under the definition of Territory in Europe, the Supplier shall propose in writing to Sephora to be its exclusive distributor in this country.
If Sephora is interested by the exclusive distribution rights of the Products in the new country proposed by the Supplier, Sephora shall provide its written approval to the Supplier within a sixty (60) day period following the receipt of notice from the Supplier and the Parties shall add the relevant country to the Territory by a written amendment to this Agreement, signed by both Parties.
Confidential | 1 | SEPHORA – MILK MAKEUP |
After exercising this right of priority, Sephora shall have sixty (60) days to propose its timing and its execution strategy within the newly added country.
Article 2 - Products
The exclusive distribution right granted by the Supplier covers the range MILK in particular the current selected products (listed in Appendix 1) and future products and/or product ranges developed by the Supplier (the “Products”). Sephora may choose to distribute or not these future Products. Such new Products shall be added to the list of Products in Appendix 1.
Article 3 – Compliancy / Product information
3.1 Regulatory
3.1.1. Any Product which is not compliant with the regulations applicable to the Products in the Territory may be rejected by Sephora and returned to the Supplier, it being agreed that the Supplier shall accept such returns and that subsequent carriage costs shall be incurred by the Supplier.
3.1.2. The process shall be the following:
- For European Economic Area (EEA) countries:
- For cosmetics Products:
■ According to Regulation N°1223/2009 (hereinafter the “Regulation”) only cosmetic products for which a legal or natural person is designated within the EEA as “Responsible Person” shall be placed on the market. This Responsible Person shall ensure compliance of the Products with the relevant provisions of the Regulation.
Pursuant to Article 4 of the Regulation, Sephora wishes to appoint a representative as the Responsible Person by signing a mandate and service agreement. The Supplier hereby undertakes to introduce a Responsible Person to Sephora and to have the mandate and service agreement which is attached in Appendix 4 signed by this company designated as the Responsible Person.
The Supplier which will be a party to this mandate and services agreement undertakes to fully perform its obligations under this mandate and service agreement. In case of termination of the mandate and services agreement for any reasons, the Supplier undertakes to introduce a new Responsible Person.
■ The Supplier undertakes to sell and to deliver to Sephora only Products which are fully compliant with the requirements of the Regulation and in particular with the requirements listed in Appendix 5.
In order for Sephora to fulfill its obligations pursuant to article 23 of the Regulation regarding the market surveillance system, and to ensure coordination between the Supplier and Sephora, the Supplier undertakes to fully cooperate with Sephora and to answer without delay to any request from Sephora enabling Sephora to make the notification of any serious undesirable effect to the competent authority under the mandatory delay of twenty (20) calendar days from the date of knowledge of the severity criterion. To perform its commitment, the Supplier shall appoint in its team a main “Post-Marketing contact” and a substitute that shall be available in the absence of the main contact (their respective name, first name, address, email and direct phone number are indicated in Appendix 6).
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- For other Products:
The Supplier undertakes to sale and deliver to Sephora Products which are fully compliant with the standards, laws and regulations in force and linked to the nature of the Product.
- For non-European countries of the Territory:
■ The Supplier makes the Products compliant with regulations applicable to the Products in the concerned countries, performs the necessary local procedures, and works to draft the packaging label complying with the market of non-European countries market of the Territory.
3.2 Quality
As a distributor, Sephora must ensure that:
- distributed Products are manufactured under satisfactory conditions in terms of hygiene, safety and quality;
- distributed Products comply with the applicable obligations relating to consumer protection. In this context, Sephora as distributor reserves the right to implement additional controls if required by the characteristics of the Products or their origin.
Product controls will be carried out by an independent laboratory services provider designated by Sephora.
In the event that the results are non-compliant during the control steps, a systematic check of each batch and each listed Product will be re-implemented for subsequent replenishment orders.
Any additional charges incurred due to Product non-compliance (ex: withdrawal of non-compliant Products form Sephora’s Network, sorting in warehouse, destruction of non- compliant Products...) will be the responsibility of the Supplier and shall be paid to SEPHORA.
3.3 Withdrawal recall process
Regarding the conformity of the Products, if the Supplier does not comply with the undertakings and requirements provided in this article, the Supplier shall take back the Products at its own expenses. Consequently, if the Products are non-compliant to the Regulations standards and laws in force or to Sephora Quality Standards, all additional expenses resulting from the Products’ non-compliance shall be borne and paid by the Supplier; in particular in case of withdrawal or recall of the Products, the Supplier shall be solely responsible for financial consequences and the entire costs involved shall be paid by the Supplier. More generally, the Supplier shall hold Sephora harmless and indemnify Sephora from and against any consequences and any claim which might be filed by any third party against Sephora based on an infringement of the requirements set forth in the present Article.
3.4 Products information
In order for Sephora to fulfill its obligations regarding pre-contractual information provided in particular under Article 6 of the Consumer Rights Directive 2011/83 EU, the Supplier undertakes to provide its full cooperation and to transmit to Sephora the essential characteristics for all Products prior to their sale through Sephora’s website(s) or its partners website(s) (hereinafter the “Sites”). In particular for cosmetic products, the Supplier undertakes to communicate to Sephora the list of ingredients that corresponds to the information appearing on the labeling of the Product marketed and which must comply with the regulations in force. The Supplier commits itself to the veracity of the information transmitted to Sephora. In case of modification of the Product, the Supplier undertakes to inform Sephora as soon as possible in order for Sephora to update the information relayed on the Sites.
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Article 4 - Purchase Price
Sephora shall purchase the Products at the purchase price agreed upon between the Parties in writing in the Agreement Letter signed every year between the Parties.
Unless otherwise agreed upon between the Parties in writing, prices are firm and non-revisable and are exclusive of Customs duties, VAT and any other taxes and duties levied at the time of the importation in accordance with FCA incoterm. Prices include Customs clearance costs at the time of export and the insurance to the address set forth on the purchase order (Santa Cristina, Italy, Saran, France or any other warehouse specified on the delivery note). The obligations of each Party are set out in Appendix 6.
Sephora shall purchase all Products in Euros and will pay in Euros. The payment will be made within forty five (45), date of invoice.
The Supplier authorizes Sephora to set off the amounts payable by Sephora against any amounts payable by the Supplier, for any reason whatsoever.
In accordance with the European regulations, Sephora shall determine the retail price of the Products.
Article 5 - Annual commercial terms and conditions
Every year, according to the French law, the Parties shall discuss and negotiate the annual commercial terms and conditions of their collaboration and shall recapitulate them in writing in a separate document, the annual letter “Commercial terms and conditions” (hereinafter, the “Letter”).
The Letter shall incorporate, inter alia, the obligations taken by the Parties in order to establish the price agreed at the end of the commercial negotiation (in particular, if applicable, commercial End-of-year Bonus, the commercial cooperation services and any other obligations as the case may be).
Article 6 - Confidentiality
For the purposes of the Agreement, “Confidential Information” means any information communicated by either of the Parties, whether orally or in writing, under the terms and conditions of the Agreement including the contractual documents “Regulatory Requirements Letter”, “Quality Requirements Letter”, “Guarantee”, “Supplier’s Code of Conduct” and “Logistics Specifications” and, more generally, any information or documents which may be exchanged between them in connection with their contractual relationship.
The receiving Party shall protect the confidentiality of all Confidential Information with the same degree of care it uses to protect its own Confidential Information, which measures shall be in accordance with generally accepted business standards, and use the Confidential Information only for the purposes of the Agreement.
The obligation of confidentiality shall not however apply to the extent the Confidential Information (i) was previously known to the receiving Party free of any obligation to keep it confidential or (ii) is or becomes generally known to the public, provided that such public knowledge is not the result of any acts attributable to the receiving Party or (iii) which the disclosing Party explicitly agrees in writing need not to be kept confidential, or (iv) is disclosed pursuant to any judicial or governmental requirement or order, provided that the receiving Party take reasonable steps to give the disclosing Party sufficient notice in order to contest such requirement or order, or (v) is independently developed by the receiving Party without breach of this Article, or (vi) is rightfully received by the receiving Party from a third party and such third party has not breached any confidentiality restrictions with respect thereto.
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Notwithstanding the termination or expiration of this Agreement, the obligation of confidentiality shall remain in force for a period of three (3) years from the date of termination or expiration of this Agreement.
Article 7 - Intellectual Property
The Supplier represents and guarantees to Sephora that it holds regularly all the intellectual property rights related to the Products, that it does not harm any third party’s right in this respect and that it may validly grant a license to Sephora allowing Sephora to exploit these rights, in order to distribute the Products.
The Supplier grants to Sephora, for the duration of the Agreement or, where applicable, until the end of the selling period of the Products agreed upon by the Parties, a free license for all intellectual property rights related to the Products, to the strict extent necessary for the marketing and promotion of these Products.
Thus, Sephora shall be entitled to inform the public that it is the exclusive authorized distributor in the Territory, to advertise the Products and, more generally, to make directly and personally use of all intellectual property rights related to the Products, in particular all trademarks and all other distinctive signs, in order to promote and market the Products.
Sephora shall inform the Supplier immediately of any counterfeit of the Products, of any attempt to benefit unlawfully from them, any unfair trading/competition or any other unlawful practice likely to attempt to the Products and/or the granted exclusiveness, of which he would become aware in the Territory. The Supplier will ensure the defence of its Products and of its related intellectual property rights at its own expenses and will take all appropriate measures to quickly put a stop to such attempts to the Products and to the exclusiveness.
In case of an action against the Supplier and/or Sephora relating to the Products, Sephora retains the right to suspend or stop immediately the distribution of the Products and to ask the Supplier to retake the stocks at its own expenses.
The Supplier guarantees in particular that it will hold Sephora harmless and indemnified Sephora against any claim for any damages which might be filed by any third party against Sephora, based notably on alleged infringement of any intellectual property rights in relation with the Products and all other direct consequences which may arise for Sephora (e.g. financial and/or operating losses, cost incurred in withdrawal of the Products out of the market, lawyer’s fees, etc.).
The Supplier also undertakes to sign the “Guarantee”.
Article 8 - Animations, Promotions, Advertising, Commercial Support
8.1. The animation plan and/or promotion campaign and/or PR events shall be decided each year by the Parties.
Specific in-store animations / promotions /online campaign & support (endcaps, launch pads, pop-up areas, beauty bars, internet campaigns, CRM actions, etc.) shall be paid by the Supplier.
Similarly, in case of a media communication, Sephora shall submit to the Supplier the corresponding budget including the breakdown per country of the Territory and per media support (print, radio, TV, internet, others...).
The global budget for “Marketing Contribution” pertaining to these animations, promotions, advertisements and commercial supports (hereinafter the “Marketing Event(s)”) shall be defined each year by the Parties, and paid pursuant to Article 8.6 below.
8.2. The promotion calendar, the implementing of the animations, (boutiques, end caps, cashwrap, windows...) and execution of digital campaigns shall be managed by Sephora.
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8.3. As indicated above, the Parties may both decide to launch specific media communication on the Products in a part of the Territory. Each advertisement shall specify that the Products are sold exclusively in the Sephora network.
Sephora shall create (alone or with a third party) the advertising material (hereinafter the “Creations”) and submit the Creations to the Supplier.
The cost of the realisation of the advertising (shootings, production costs, etc...), excluding copyrights assignment, shall be included in the budget submitted to the Supplier.
All intellectual property rights related to the Creations, excluding the Supplier’s intellectual property rights, shall remain the sole property of Sephora, unless a written copyright assignment is concluded between the Parties.
The Supplier is consequently not allowed to use the Creations without Sephora’s prior written consent.
The Supplier shall approve in writing the budget and the Creations prior to the booking of the media space.
Sephora shall select, book and buy all the media space for the mutually agreed upon advertising, in compliance with the annual marketing plan and budget/contribution agreed upon between the Parties.
As part of the communications on the Products performed by the Supplier within the Territory, the Supplier undertakes to use the # provided by Sephora and generally to associate Sephora with these communications.
In addition, as part of the communication actions carried out by the Supplier with its influencers on the Products, the Supplier undertakes to propose and encourage its influencers to use the # provided by Sephora in accordance with the laws and regulations in force.
8.4. Sephora may organize and finance multi-brand launch presentations in all countries of the Territory four (4) times a year in France, and at least two (2) times a year in other countries. The Supplier undertakes to provide gifts for the journalists during the presentations, the Supplier brand and Product briefs for the press kits and guarantees its presence during these PR events. As specified above, specific mono-brand PR events or launches shall be paid for by the Supplier and included in the budget.
8.5. The Supplier is responsible for providing Sephora, free of charge, with all supports for the Supplier’s Guidelines (“Brand book”). All materials must be finalized and given to Sephora no later than three (3) months before launch of the Supplier’s brand in the first country of the Territory. Product data sheets, logos, among others must be in English and in French. Sephora shall be responsible for the transmission of the Brand book approved by the Supplier to all countries.
8.6. As specified above, a global budget of “Marketing Contribution” including the media plan and / or the animations and / or PR events shall be agreed upon each year between the Parties, as a percentage of the Products sales achieved by Sephora.
The Marketing Contribution shall be paid as follows:
The Supplier shall pay in cash (Sephora does not accept free Products). Sephora will re-invoice the amount to the Supplier, payment will be made within forty five (45), date of invoice of marketing activity concerned.
8.7. Testers:
The Supplier authorizes SEPHORA to present in the points of sales located in the Territory Milk Products as testers.
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The Supplier agrees to:
- | provide Sephora with a free set of testers for the launch of the Products in the points of sale located in the Territory; |
- | grant a rebate amounting to 2% of the Milk yearly Sell Out for the use of Products as testers. The Sell Out considered is the turnover excluding taxes realized by SEPHORA from January 1st until December 31st of the current year in relation to the sales of Milk in the Territory. |
The remuneration to be paid for these obligations shall give rise to discounts in the form of credit notes issued on a quaterly basis by the Supplier.
The amount of the credit notes shall be calculated on the basis of the Milk Sell Out realized by SEPHORA the previous month.
At the end of the year, SEPHORA undertakes to send to the Supplier a written confirmation of the Milk Sell Out realized in from January 1st until December 31st, and shall draw up a corrective credit note request stating the total amount payable for this period, after deduction of any previously paid amounts. Such credit notes shall be payable 45 (forty-five) days date of the credit note.
In accordance with Article L441 -6 I 8° of the French Commercial Code, any payment delay shall give rise to penalties equal to three times the legal interest rate and to the payment of a fixed compensation of 40€ for recovery costs.
8.8. Samples
The Supplier shall provide at the logistic solution indicated by Sephora under ‘Delivered Duty Paid ’(DDP) incoterm samples for all Sephora points of sale in the territory. The Parties will agree on the quantity every year in the Agreement Letter.
Article 9 - Fixtures
9.1. Permanent fixtures
All of the Supplier’s fixtures (hereinafter the “Fixtures”) shall be and remain the Supplier’s property, from the Supplier’s warehouse to the Sephora’s point of sales and while the Fixtures are in Sephora’s point of sales.
The Fixtures shall be developed and produced in accordance with the requirements of Sephora’s merchandising policy, at the Supplier’s cost.
The Supplier shall provide every Sephora point of sale opening with Fixtures within six (6) weeks after Sephora has placed the order for the Fixtures.
9.2. Updates Collection (Spring, Summer, Fall, Holiday):
The Supplier shall bear all the expenses related to Fixtures’ updates (development, production, costs and installation).
11.3. All delivery of Fixtures or updates shall be “Duty delivery paid” (DDP) from the Supplier’s warehouse directly to the Sephora’s point of sales or Saran (France), Santa Cristina (Italia) or at the logistic solution indicated by Sephora. The obligations of each Party are set out in Appendix 6.
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Article 10 - Stock
10.1. The Supplier shall target to maintain a 100% service level on order fulfilment.
10.2. Should the Products have an expiration date, the Supplier guarantees that said Products shall have a shelf-life corresponding to a minimum of 75% of their total shelf-life as from the delivery of the Products in Saran (France) or at the logistic solution indicated by Sephora. It is specified that the expiration date shall not, in any event, be less than two (2) years as from the delivery of the Products. The Supplier agrees that the Products which do not comply with this provision shall be returned to the Supplier at the Supplier’s own cost and expense.
10.3. The Supplier shall:
a. | take back carriage paid any customer returns or any Return to Vendor (RTVs) of discontinued, damaged, expired, or non-compliant Products. |
b. | provide (i) Return Authorizations (RAs) for RTVs of discontinued, damaged, expired or non-compliant Products or for customer returns and (ii) the coordination and payment of shipping of these Products if they are not Destroy in Field (DIF). In case of DIF, the Supplier shall have to pay the costs of destruction. |
All customer returns concerning issues with quality of the Products shall be automatically returned to Saran France or at the logistic solution indicated by Sephora and treated as Products mentioned above in paragraphs (a) and (b) above.
Upon agreement between the Parties concerning stock returns, the Supplier shall organize the return of the Products and pay any costs associated with this return within forty five (45) days , date of invoice.
10.4. Should the Supplier or Sephora decide to end their commercial relationship, the Parties shall meet in order to define the modalities of possible Product returns and/or the exhaustion of stocks by Sephora.
Article 11 - Governing Law and Jurisdiction
The Agreement shall be governed by French Law. Any and all disputes shall be settled by the PARIS COURTS notwithstanding any clauses to the contrary or in case of introduction of a third party or plurality of defendants.
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Article 12 - Other commitments
The Supplier agrees that the rights granted to Sephora and the commitments taken by the Supplier in accordance with the Agreement benefit any of the Companies of the Sephora group located in the Territory. Companies of the Sephora group shall mean all subsidiary/affiliate and distributor, retailer, franchisee of Sephora, which commercializes, in any way whatsoever, the Products.
More generally, the will of both the Supplier and Sephora is to accept and to undertake to comply with Sephora’s General Purchase Conditions attached hereto. The Agreement, together with General Purchase Conditions (Appendix 3), which form an integral part thereof, is binding upon the Parties as from the date hereof and throughout its term.
The Parties hereto have executed the Agreement in two original copies on the Effective Date.
For and on behalf of____________ | For and on behalf of |
|
Sephora | Milk Makeup, LLC |
Name of authorized signatory:
|
Name of authorized signatory:
Mazdack Rassi
Title: Co-Founder
Date: June 20, 2019
|
|
[ILLEGIBLE] | ||
|
||
SEPHORA | ||
[ILLEGIBLE] | ||
92576 Neuilly sur Seine | ||
Cedex | ||
Tél.: 01.41.88.50.00
Fax: 01.41.88.50.01
Appendix 1: List of Products Appendix 2: Sephora’s General Purchase Conditions
Appendix 3: Mandate Agreement
Appendix 4: Labelling compulsory expressed in national language + labelling requirements
Appendix 5: Post-Marketing Surveillance Contacts |
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APPENDIX 1
LIST OF PRODUCTS
UPC Code | Product Description |
One-Shot
/ Catalogue |
814333026473 | BLUR STICK | CATALOGUE |
814333025476 | BLUR LIQUID MATTE FOUNDATION / IVORY | CATALOGUE |
814333025483 | BLUR LIQUID MATTE FOUNDATION / FAIR | CATALOGUE |
814333025490 | BLUR LIQUID MATTE FOUNDATION / LIGHT | CATALOGUE |
814333025506 | BLUR LIQUID MATTE FOUNDATION / GOLDEN LIGHT | CATALOGUE |
814333025513 | BLUR LIQUID MATTE FOUNDATION / MEDIUM LIGHT | CATALOGUE |
814333025520 | BLUR LIQUID MATTE FOUNDATION / MEDIUM | CATALOGUE |
814333025537 | BLUR LIQUID MATTE FOUNDATION / WARM MEDIUM | CATALOGUE |
814333025544 | BLUR LIQUID MATTE FOUNDATION / GOLDEN SAND | CATALOGUE |
814333025551 | BLUR LIQUID MATTE FOUNDATION / HONEY | CATALOGUE |
814333025568 | BLUR LIQUID MATTE FOUNDATION / MEDIUM TAN | CATALOGUE |
814333025575 | BLUR LIQUID MATTE FOUNDATION / CARAMEL | CATALOGUE |
814333025582 | BLUR LIQUID MATTE FOUNDATION / TAN | CATALOGUE |
814333025599 | BLUR LIQUID MATTE FOUNDATION / TOFFEE | CATALOGUE |
814333025605 | BLUR LIQUID MATTE FOUNDATION / GOLDEN DEEP | CATALOGUE |
814333025612 | BLUR LIQUID MATTE FOUNDATION / WARM DEEP | CATALOGUE |
814333025629 | BLUR LIQUID MATTE FOUNDATION / DEEP | CATALOGUE |
814333025971 | BLUR LIQUID MATTE FOUNDATION / PORCELAIN | CATALOGUE |
814333025988 | BLUR LIQUID MATTE FOUNDATION / CREME | CATALOGUE |
814333025995 | BLUR LIQUID MATTE FOUNDATION / GOLDEN HONEY | CATALOGUE |
814333026510 | BLUR LIQUID MATTE FOUNDATION / BISQUE | CATALOGUE |
814333026527 | BLUR LIQUID MATTE FOUNDATION / CINNAMON | CATALOGUE |
814333026534 | BLUR LIQUID MATTE FOUNDATION / MOCHA | CATALOGUE |
814333026541 | BLUR LIQUID MATTE FOUNDATION / COCOA | CATALOGUE |
814333026558 | BLUR LIQUID MATTE FOUNDATION / ESPRESSO | CATALOGUE |
814333025209 | COOLING WATER | CATALOGUE |
814333025322 | TATTOO STAMP / BLACK HEART | CATALOGUE |
814333025339 | TATTOO STAMP / BLACK STAR | CATALOGUE |
814333025797 | TATTOO STAMP/MOON | CATALOGUE |
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UPC Code | Product Description |
One-Shot
/ Catalogue |
814333023021 | TATTOO STAMP / LIGHTENING BOLT | CATALOGUE |
814333025353 | FLEX CONCEALER / FAIR | CATALOGUE |
814333025360 | FLEX CONCEALER / LIGHT | CATALOGUE |
814333025377 | FLEX CONCEALER / LIGHT MEDIUM | CATALOGUE |
814333025384 | FLEX CONCEALER / MEDIUM | CATALOGUE |
814333025391 | FLEX CONCEALER / MEDIUM TAN | CATALOGUE |
814333025407 | FLEX CONCEALER / TAN | CATALOGUE |
814333025414 | FLEX CONCEALER / WARM DEEP | CATALOGUE |
814333025421 | FLEX CONCEALER / DEEP | CATALOGUE |
814333026565 | FLEX CONCEALER / PORCELAIN | CATALOGUE |
814333026572 | FLEX CONCEALER / CREME | CATALOGUE |
814333026589 | FLEX CONCEALER / VANILLA | CATALOGUE |
814333026084 | FLEX CONCEALER / MEDIUM BEIGE | CATALOGUE |
814333026091 | FLEX CONCEALER/CARAMEL | CATALOGUE |
814333026107 | FLEX CONCEALER / CINNAMON | CATALOGUE |
814333026114 | FLEX CONCEALER / COCOA | CATALOGUE |
814333026121 | FLEX CONCEALER / ESPRESSO | CATALOGUE |
814333025117 | GEL BROW/PALE ALE | CATALOGUE |
814333025124 | GEL BROW/PILSNER | CATALOGUE |
814333025131 | GEL BROW / DARK BREW | CATALOGUE |
814333025186 | HIGHLIGHTER / LIT | CATALOGUE |
814333025315 | HOLOGRAPHIC STICK / SUPERNOVA | CATALOGUE |
814333025438 | HOLOGRAPHIC STICK / MARS | CATALOGUE |
814333025674 | HOLOGRAPHIC STICK / STARDUST | CATALOGUE |
814333025216 | HYDRATING OIL | CATALOGUE |
814333025148 | LIP & CHEEK/PERK | CATALOGUE |
814333025155 | LIP & CHEEK / RALLY | CATALOGUE |
814333025162 | LIP & CHEEK / SWISH | CATALOGUE |
814333025179 | LIP & CHEEK/QUICKIE | CATALOGUE |
814333025773 | LIP + CHEEK/WERK | CATALOGUE |
814333026213 | LIP COLOR / SKILLZ | CATALOGUE |
814333026220 | LIP COLOR/C.R.E.A.M. | CATALOGUE |
814333026237 | LIP COLOR/LOW KEY | CATALOGUE |
814333026244 | LIP COLOR/DEUCES | CATALOGUE |
814333026251 | LIP COLOR/WIFEY | CATALOGUE |
814333026268 | LIP COLOR/HYPE | CATALOGUE |
814333026275 | LIP COLOR / NAME DROP | CATALOGUE |
814333026282 | LIP COLOR / O.G. RED | CATALOGUE |
814333026299 | LIP COLOR / NEW WHIP | CATALOGUE |
814333026305 | LIP COLOR/WAVY | CATALOGUE |
814333025735 | KUSH MASCARA / BOOM | CATALOGUE |
814333025902 | KUSH CLEAR BROW GEL / HYDRO | CATALOGUE |
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814333025919 | KUSH FIBER BROW GEL / HAZE | CATALOGUE |
814333025926 | KUSH FIBER BROW GEL / DUTCH | CATALOGUE |
814333025933 | KUSH FIBER BROW GEL / GRIND | CATALOGUE |
814333026398 | KUSH FIBER BROW GEL / MJ | CATALOGUE |
814333026404 | KUSH FIBER BROW GEL / DUB | CATALOGUE |
814333026411 | KUSH FIBER BROW GEL / HERB | CATALOGUE |
814333026428 | KUSH FIBER BROW GEL / DIESEL | CATALOGUE |
814333026435 | KUSH FIBER BROW GEL / CYPHER | CATALOGUE |
814333025841 | LONG WEAR GEL EYELINER / BOSS | CATALOGUE |
814333025858 | LONG WEAR GEL EYELINER / CEO | CATALOGUE |
814333025865 | LONG WEAR GEL EYELINER / BONUS | CATALOGUE |
814333025872 | LONG WEAR GEL EYELINER / BIZ | CATALOGUE |
814333025889 | LONG WEAR GEL EYELINER / PTO | CATALOGUE |
814333025896 | LONG WEAR GEL EYELINER / BCC | CATALOGUE |
814333025940 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT LIGHT | CATALOGUE |
814333025957 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT MEDIUM | CATALOGUE |
814333025964 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT DEEP | CATALOGUE |
814333025193 | MATTE BRONZER/BAKED | CATALOGUE |
814333025346 | MATTE BRONZER / BLAZE | CATALOGUE |
814333026596 | WATERMELON BRIGHTENING SERUM | CATALOGUE |
814333025445 | MATCHA TONER | CATALOGUE |
814333025452 | MATCHA CLEANSER | CATALOGUE |
814333025650 | LUMINOUS BLUR STICK | CATALOGUE |
814333026183 | KUSH LIP BALM / GREEN DRAGON | CATALOGUE |
814333026312 | KUSH LIP BALM / NUG | CATALOGUE |
814333026329 | KUSH LIP BALM / BUBBLE | CATALOGUE |
814333026336 | KUSH LIP BALM / CANNATONIC | CATALOGUE |
814333026343 | KUSH LIP BALM / PLUSHBERRY | CATALOGUE |
814333026176 | KUSH LIP GLAZE / CHRONIC | CATALOGUE |
814333026169 | WATERMELON BRIGHTENING FACE MASK | CATALOGUE |
814333026152 | MATCHA DETOXIFYING FACE MASK | CATALOGUE |
814333026442 | CANNABIS HYDRATING FACE MASK | CATALOGUE |
814333026190 | COOLING WATER EYE PATCHES | CATALOGUE |
814333026350 | HYDRO GRIP PRIMER | CATALOGUE |
814333026367 | KUSH WATERPROOF MASCARA / ACES | CATALOGUE |
814333026374 | KUSH LASH PRIMER / WHITE WIDOW | CATALOGUE |
81433302490-5 | GLOW OIL LIP + CHEEK / GLIMMER | CATALOGUE |
81433302491-2 | GLOW OIL LIP + CHEEK / FLARE | CATALOGUE |
81433302492-9 | GLOW OIL LIP + CHEEK / HALO | CATALOGUE |
81433302493-6 | GLOW OIL LIP + CHEEK / ASTRO | CATALOGUE |
81433302448-6 | FLEX HIGHLIGHTER / LIT | CATALOGUE |
81433302449-3 | FLEX HIGHLIGHTER / ICED | CATALOGUE |
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81433302450-9 | FLEX HIGHLIGHTER / BLITZED | CATALOGUE |
81433302451-6 | FLEX HIGHLIGHTER / GLAZED | CATALOGUE |
81433302407-3 | FLEX FOUNDATION STICK / PORCELAIN | CATALOGUE |
81433302408-0 | FLEX FOUNDATION STICK / SNOW | CATALOGUE |
81433302409-7 | FLEX FOUNDATION STICK / CREME | CATALOGUE |
81433302410-3 | FLEX FOUNDATION STICK / FAIR | CATALOGUE |
81433302411-0 | FLEX FOUNDATION STICK / SHELL | CATALOGUE |
81433302412-7 | FLEX FOUNDATION STICK / BUFF | CATALOGUE |
81433302413-4 | FLEX FOUNDATION STICK / VANILLA | CATALOGUE |
81433302414-1 | FLEX FOUNDATION STICK / LIGHT BEIGE | CATALOGUE |
81433302501-8 | FLEX FOUNDATION STICK / LIGHT SAND | CATALOGUE |
81433302415-8 | FLEX FOUNDATION STICK / LIGHT | CATALOGUE |
81433302416-5 | FLEX FOUNDATION STICK / NUDE | CATALOGUE |
81433302417-2 | FLEX FOUNDATION STICK / SAND | CATALOGUE |
81433302418-9 | FLEX FOUNDATION STICK / LIGHT MEDIUM | CATALOGUE |
81433302502-5 | FLEX FOUNDATION STICK / GOLDEN NUDE | CATALOGUE |
81433302419-6 | FLEX FOUNDATION STICK / CASHMERE | CATALOGUE |
81433302420-2 | FLEX FOUNDATION STICK / MEDIUM | CATALOGUE |
81433302421-9 | FLEX FOUNDATION STICK / MEDIUM BEIGE | CATALOGUE |
81433302503-2 | FLEX FOUNDATION STICK / GOLDEN SAND | CATALOGUE |
81433302504-9 | FLEX FOUNDATION STICK / GOLDEN HONEY | CATALOGUE |
81433302422-6 | FLEX FOUNDATION STICK / ALMOND | CATALOGUE |
81433302423-3 | FLEX FOUNDATION STICK / HONEY | CATALOGUE |
81433302424-0 | FLEX FOUNDATION STICK / MEDIUM TAN | CATALOGUE |
81433302505-6 | FLEX FOUNDATION STICK / PRALINE | CATALOGUE |
81433302425-7 | FLEX FOUNDATION STICK / AMBER | CATALOGUE |
81433302426-4 | FLEX FOUNDATION STICK / GOLDEN TAN | CATALOGUE |
81433302427-1 | FLEX FOUNDATION STICK / CARAMEL | CATALOGUE |
81433302428-8 | FLEX FOUNDATION STICK / MAPLE | CATALOGUE |
81433302429-5 | FLEX FOUNDATION STICK / CINNAMON | CATALOGUE |
81433302430-1 | FLEX FOUNDATION STICK / TAN | CATALOGUE |
81433302506-3 | FLEX FOUNDATION STICK / GOLDEN DEEP | CATALOGUE |
81433302431-8 | FLEX FOUNDATION STICK / WARM DEEP | CATALOGUE |
81433302432-5 | FLEX FOUNDATION STICK / HAZELNUT | CATALOGUE |
81433302433-2 | FLEX FOUNDATION STICK / DEEP | CATALOGUE |
81433302435-6 | FLEX FOUNDATION STICK / COCOA | CATALOGUE |
81433302436-3 | FLEX FOUNDATION STICK / ESPRESSO | CATALOGUE |
81433302434-9 | FLEX FOUNDATION STICK / RICH | CATALOGUE |
81433302669-6 | MEET THE FAM 2.0 | CATALOGUE |
814333025810 | MINI HOLOGRAPHIC STICK / SUPERNOVA | CATALOGUE |
Confidential | 13 | SEPHORA – MILK MAKEUP |
UPC Code | Product Description |
One-Shot
/ Catalogue |
814333025834 | MINI BLUR STICK | CATALOGUE |
814333025681 | MINI COOLING WATER | CATALOGUE |
814333025711 | MINI HIGHLIGHTER / LIT | CATALOGUE |
814333025742 | MINI KUSH MASCARA / BOOM | CATALOGUE |
814333025728 | MINI WATERMELON BRIGHTENING SERUM | CATALOGUE |
814333026138 | MINI LIP + CHEEK / WERK | CATALOGUE |
814333026480 | MINI MATCHA TONER | CATALOGUE |
814333025827 | MINI HOLOGRAPHIC STICK / MARS | CATALOGUE |
814333025698 | MINI HOLOGRAPHIC STICK / STARDUST | CATALOGUE |
KIT 1 S3 | CATALOGUE | |
Kush trio set | OS |
Confidential | 14 | SEPHORA – MILK MAKEUP |
APPENDIX 2
SEPHORA’S GENERAL PURCHASE CONDITIONS
1. Scope
These general purchase conditions are applicable to all the purchases made by SEPHORA.
2. Purchase order
The purchase order stipulates the technical, commercial and administrative terms as well as the deadlines requested from the Supplier. Price, quantity, quality and performance deadlines are fundamental terms for the parties. No modification to these terms and to these deadlines can be taken into account unless previously agreed in writing by both parties.
3. Acceptance of the purchase order
The Supplier must acknowledge receipt of the SEPHORA purchase order within eight calendar days from the date of the purchase order by returning a document mentioning the number of the SEPHORA purchase order by letter or fax. In the absence of this acknowledgement of receipt, the start of the performance of the purchase order will be automatically considered to be an implicit acceptance of the terms of the purchase order.
4. Packaging – Packing
The products will be protected by packaging which is appropriate for resistance to the transport method used. All deliveries must be made in packaging stipulated by SEPHORA and, in the absence of a stipulation, in accordance with the norms and standards in force. Unless the packaging is supplied by SEPHORA, the Supplier will pay for any damage which occurs up until the goods arrive at the place of delivery and/or any shortage which is attributable to inadequate or defective packaging, and the Supplier will replace the damaged and/or missing products at its own cost under the terms of the purchase order, as soon as possible.
5. Delivery
The deliveries will be made to the delivery address on the purchase order. Unless otherwise agreed in writing between the parties, deliveries are made “delivered duty paid” (DDP) to the delivery address, in accordance with the definition of the Incoterms in effect at the time of the order, the transfer of risks occurring at the time and place of delivery . The Supplier will insure the products at its own cost against loss, theft, breakage, damage, and any other risk during the transport to the place of delivery.
The fact of taking delivery of the order does not constitute a presumption of acceptance of the order with regards to its conformity with the specifications.
The Supplier must enclose a detailed slip reiterating the packing list and the type of packaging and the information appearing on the order enabling the products and their quantitative control to be identified.
A copy of this slip will be sent simultaneously with the shipment by fax or letter, to SEPHORA’s Purchase Department.
6. Deadlines
The delivery deadlines and the possible deadlines for performing the services stipulated in SEPHORA’s order are mandatory.
SEPHORA reserves the right to terminate any purchase order or part of the purchase order which is not delivered and/or executed within the contractual deadlines, except for a case of force majeure. sephora must be informed of cases of force majeure within eight days of the event, failing which the Supplier cannot invoke it. Withdrawal by the Supplier’s sub-contractor or supplier will not be considered to be a case of force majeure.
7. Delays – Penalties
The Supplier undertakes to immediately inform SEPHORA of any event which is likely to result in a delay in delivering the products and/or in performing the services in relation to the deadline mentioned in the purchase order.
The Supplier undertakes to implement any means to make up for this delay, at its own cost, being agreed that SEPHORA can demand an express shipment at the Supplier’s own cost.
In the event of a delay in delivery, SEPHORA reserves the right to apply a penalty of 100 euros per reference item ordered plus 0.2 % per day of delay calculated on the total amount of the purchase order excluding VAT, without prejudice to any damages which SEPHORA may claim from the Supplier.
Confidential | 15 | SEPHORA – MILK MAKEUP |
8. Termination or reducing the purchase order
SEPHORA reserves the right to terminate or to reduce the purchase order(s) if the Supplier refuses or is unable to fulfill its obligations in accordance with the terms of the said order. Any extra costs will be paid for by the Supplier, without prejudice to the delay penalties and/or damages which SEPHORA may claim from the Supplier.
9. Early delivery – Surplus delivery
SEPHORA reserves the right to return deliveries which are delivered more than five days before the planned date, at the Supplier’s costs and risks, as well as to refuse quantities which are above or below 5% of the quantities ordered and/or refuse services which are performed in advance, as well as those which are not stipulated in the purchase order.
10. Transfer of title
SEPHORA is the owner of the ordered products as soon as they are delivered at the address set forth in the purchase order. Therefore, any title retention clause is invalid against SEPHORA.
11. Liability and Insurance
The Supplier shall be liable for any material and immaterial damages that it may cause, whether to SEPHORA or to third parties, as a result of the conduct of its business or due to the products or services provided for purposes of fulfilling the orders.
The Supplier must take out an insurance contract with sufficient coverage of its professional risks (physical damage, bodily injury, consequential loss, and civil liability), both concerning the cover offered and the subscribed capital. It undertakes to prove having taken out the insurance as well as the payment of the premiums on SEPHORA’s first request.
12. Essential clauses - Maintaining obligations
If any one of the stipulations in these general purchase conditions is invalid, this will not make the whole of the general purchase conditions invalid. In the event of cancellation, the parties will in all circumstances endeavor to renegotiate an economically equivalent clause, in good faith.
If one of the parties does not invoke right it has under these general purchase conditions, this cannot be interpreted in any way as being an express or tacit waiver by this party to exercise the said right in the future.
Confidential | 16 | SEPHORA – MILK MAKEUP |
APPENDIX 3
MANDATE AGREEMENT
MANDATE AND SERVICES AGREEMENT
BETWEEN THE UNDERSIGNED,
SEPHORA SAS, a Soctété par Actions Simpliffée, with registered office 41 Rue Ybry 92200 Neuilly-sur-Seine France, represented by Mr. Jérôme Ougier Labergère.
hereinafter referred to as “Sephora”
AND
MSL Solution Providers, a company under Irish and English laws, with registered offices in : Suite 5385, 27 Upper Pembroke St, Dublin, Eire and in Gollinrod, Walmersley, Bury, Lancashire, England, BL9 5NB, represented by Mr. Alex Fotheringham
hereinafter referred to as “the Company” |
|
20/06/2019 |
AND
MILK MAKEUP, LLC a company under United States law, with registered office in: 450 W 15th Street New York, NY 10011, represented by Mr. Mazdack Rassi hereinafter referred to as ” the Supplier
The above are collectively referred to as the “Parties’’.
WHEREAS
Sephora is a distributor of cosmetics products in particular in European Economic Area (EEA) countries. The Supplier is a manufacturer of cosmetics products marketed under the brand MILK (the “Products”).
Sephora and the Supplier entered into an agreement for the importation and distribution of the Suppliers’ Products in various countries comprising EEA countries (the “Exclusive Distribution Agreement”).
According to Regulation n°1223/2009 of 30 November 2009 on cosmetic products (the “Regulation”), only cosmetics products for which a legal or natural person is designated within the EEA as ‘Responsible Person” can be placed on the market.
Article 4 of the Regulation states that for a product imported in EEA, the importer is the “Responsible Person” for the cosmetics products it places on the market. This article however provides that the importer may, by written mandate, designate a person established in the EEA as the Responsible Person who shall accept in writing.
Confidential | 17 | SEPHORA – MILK MAKEUP |
According to Article 3 of this Exclusive Distribution Agreement, the Supplier undertakes to introduce to Sephora a company to be appointed as the Responsible Person and to have the present mandate and services agreement signed.
The Parties have therefore agreed herein to define the terms and conditions for their collaboration.
Definitions
- | “Agreement” means the present contract and its Appendixes. |
- | “Confidential information” shall comprise, without limitation, information, whatever its form, on the Products’ formulation, safety, design, sale. .. |
- | “Exclusive Distribution Agreement” means the contract signed between the Supplier and Sephora for the distribution of the Products. |
- | “Products” means the cosmetics products sold under the brand MILK as listed in the Exclusive Distribution Agreement and in Appendix 1. |
- | “Regulation” means Regulation n°1223/2009 of 30 November 2009 on cosmetic products |
IT IS HEREBY AGREED
Article 1. Appointment
Pursuant to Article 4 of the Regulation, Sephora hereby appoints the Company as its exclusive representative for the Products in EEA countries to act as the Responsible Person in charge of ensuring their compliance with the obligations set out in the Regulation.
Sephora hereby entrust the Company in consideration of its skills and its commercial relationship with the Supplier with the assignment of carrying out all the relevant obligations set out in the Regulation.
The Company hereby accepts to be appointed as the Responsible Person pursuant to Article 4 of the Regulation.
Article 2. Obligations and warranties of the Company
2.1 The Company shall ensure compliance of the Products with the obligations set out in the Regulation.
In particular, the Company shall:
- | ensure that the Products are safe for human health taking into account in particular, their presentation, labelling, instructions for use and disposal and any other indication where needed; |
- | ensure that the Products comply with good manufacturing practice; |
- | set up a safety report of the Products which complies with Annex I of the Regulation; |
- | set up a “Product Information File” containing all the information listed in Article 11 of the Regulation in a language easily understood by the competent authorities; |
- | keep and store the Product Information File and ensure that it is readily accessible at the address indicated on the label. A copy of the Product Information File will be sent to Sephora upon request. |
Confidential | 18 | SEPHORA – MILK MAKEUP |
- | ensure that sampling and analysis of the Products is performed in a reliable and reproducible manner; |
- | submit all information listed in Article 13 of the Regulation to the Commission; |
- | ensure that the Products comply with the restrictions for substances, substances classified as CMR, nanomaterials and trace of prohibited substances’ provisions provided in the Regulation; |
- | ensure that the Products comply with the provisions of the Regulation on animal testing; |
- | carry out the labelling of the Products in accordance with Article 19 of the Regulation and approve final artworks before printing; |
- | ensure that the claims on packaging comply with the Regulation; |
- | ensure access to information on the Products for the public; |
- | ensure communication of serious undesirable effects referred to in Article 23 of the Regulation and information requirements on substances to the relevant authorities. |
- | provide assistance in case of EU authorities request. |
The Company acknowledges and accepts that its name and address will be reproduced on the Products’ packaging in accordance with the Regulation.
2.2 The Company also warrants that:
- | it has and shall have all approvals and licenses necessary to comply with all obligations under this Agreement; |
- | it shall during the term of the Agreement comply with all applicable laws, regulations and regulatory requirements in carrying out its obligations under this Agreement and in all matters relating thereto; |
- | it shall carry out all obligations under this Agreement in a timely, competent and professional manner with all the necessary care and skill, using personnel with appropriate qualifications, expertise and experience. |
- | it has the full and complete right to enter into this Agreement and has not entered into any previous agreement which conflicts with or restricts any term of this Agreement. |
Article 3. Obligations and warranties of the Supplier
3.1 The Supplier undertakes to introduce the Company to Sephora and guarantees that the Company has all the necessary skills and experience to perform the Agreement.
3.2 The Supplier agrees to make the Products compliant with the Regulation and undertakes to collaborate with the Company in that respect.
The Supplier shall collaborate with the Company in order to allow the Company to perform the obligations set out in the present mandate.
The Supplier undertakes to provide the Company with all the documents needed in order to fulfill its obligations mentioned in Article 2 above.
In particular, the Supplier undertakes to collaborate with the Company in order to set up the Product Information File of the Products and finalize claims and labelling of the Products.
Confidential | 19 | SEPHORA – MILK MAKEUP |
The Supplier warrants that all information given to the Supplier is valid and accurate.
3.3. The Supplier undertakes to follow any written recommendation of the Company to make the Products compliant with the Regulation and undertakes to immediately inform the Company of any change and/or event that may affect the compliance of the Products with the Regulation and/or the performance of the Agreement.
For instance, the Supplier undertakes to immediately inform the Company of any change in the formulation of the Products.
3.4 The Company shall inform the Supplier in writing when a Product is ready to be launched in EEA countries. The Supplier undertakes to launch in EEA countries Products complying with the Regulation and only Products that have received the Company’s written approval.
3.5 If the Parties intend to launch new Products in EEA countries which are not listed in Appendix 1, the Parties shall sign an addendum to the Agreement.
3.6. The Supplier undertakes to pay the remuneration to the Company as described in Article 4 below.
Article 4. Obligations of Sephora
Subject to the terms of this Agreement, Sephora hereby undertakes to appoint the Company as the sole and exclusive responsible person for the Products pursuant to Article 4 of the Regulation.
Article 5. Remuneration
5.1 In consideration of the Company performing its obligations under this Agreement, the Supplier shall pay the Company the remuneration agreed upon between the Supplier and the Company.
Sephora shall not be liable if the amount required to be paid under this Agreement is not paid by the Supplier.
5.2 The Parties agree that any cost incurred by the performance of this Agreement shall be included in the remuneration and shall not be supported by Sephora.
5.3. It is agreed that in case of disagreement as to the remuneration, the Company may terminate the Agreement under the conditions set out in Article 7.2 below with a six month prior notice period.
Article 6. Reporting
The Company shall, at its own expense, keep full, proper and up-to-date records of its activities pursuant to this Agreement and shall provide Sephora with such information as Sephora may require.
In any case, the Company shall immediately inform Sephora and the Supplier of any issue that may affect consumers’ health and/or any event that may affect the Product’s compliance with the Regulation.
Article 7. Duration and termination
7.1. This Agreement shall come into effect on its date of signature and shall remain in force for an indefinite period of time unless terminated in accordance with the present Article 7.
7.2. Any Party may terminate this Agreement with a written notice period of six months given by registered letter to the two other Parties. The notice period shall begin on the sending date of the registered letter. Such notice period will allow Sephora to enter in a new mandate agreement with a responsible person. It is agreed between the Parties that Sephora will be allowed to sell all the remaining stock of Products bearing the name and address of the Company until the stocks are exhausted. During such period, the Supplier and the Company warrant that the Company will continue to be the Responsible Person for the remaining stock of Products.
Confidential | 20 | SEPHORA – MILK MAKEUP |
Sephora may terminate this Agreement if the Company breaches this Agreement and does not cure such breach within ten (10) days after written notice thereof by Sephora.
The termination or expiration of the Agreement shall not affect any of the provisions of this Agreement which are expressly or by implication to come into or to remain in force after such termination or expiration. In particular, the provisions of Articles 2, 3 and 8 shall survive the expiration or termination of this Agreement howsoever occasioned.
7.3. The Agreement will be automatically terminated in case of termination of the Exclusive Distribution Agreement, howsoever occasioned. No indemnity or any form of compensation shall be due in such case.
7.4. Upon termination of the Agreement for any reason whatsoever, the Company shall immediately return by registered mail to the Supplier all the Product Information File set up in accordance with the Agreement.
Article 8. Liability/lnsurance
8.1 Pursuant to the Regulation, the Company shall act as the “responsible person” and shall be accordingly responsible before consumers and authorities.
8.2 The Company shall indemnify and keep indemnified Sephora in respect of any loss, claim cost by a third party/authorities or any damage suffered by or against Sephora arising in connection with this Agreement, absent Sephora’s negligence or intentional misconduct. In particular, the Company shall indemnify and hold Sephora harmless from and against any claims, actions, demands, fines, judgements, costs and expenses (including reasonable legal fees) arising from any claim issued by a customer or authorities in connection with the performance of the Agreement, unless such claims result from Sephora’s own actions.
8.3. The Company shall maintain in full force and effect, at the Company’s own expense, insurance coverage which shall cover any claim for which the Company may be held liable hereunder for the services provided under this Agreement. The minimum amount of such insurance coverage shall be one million euros per year. A copy of the insurance certificate is annexed in Appendix 2.
Article 9. Confidentiality
The Company shall not either during or up to ten years after the expiry of this Agreement, except to the extent required by law or the Regulation, disclose, authorize the duplication or disclosure of any Confidential information provided by or belonging to Sephora and/or the Supplier to a third party nor use the same in any way other than to perform its obligations under Agreement unless such duplication, use or disclosure is specifically authorized by Sephora and/or the Supplier.
Article 10. Miscellaneous provisions
1) | This Agreement shall be governed by and construed in accordance with the laws of France. The courts of Paris shall have exclusive jurisdiction for all claims arising out of and in connection with this Agreement. |
2) | Neither party may assign any of its rights nor obligations under this Agreement to a third party without the written consent of the other Party. |
Confidential | 21 | SEPHORA – MILK MAKEUP |
3) | Any notice or other communication required to be given hereunder shall be given by post or facsimile addressed to the party to receive such notice at its address contained in this Agreement or such other address as shall have been notified by either Party to the other for the purposes of this Agreement. |
4) | Any modification of this Agreement shall be effective only if agreed in writing and signed by the Parties hereto and the intention to amend this Agreement is clearly expressed. |
5) | The waiver of any right herein contained by either party shall not be construed as a waiver of the same right at a future date or as a waiver of any other right herein contained. |
6) | The invalidity of any provision in the Agreement shall not affect the continuing enforceability of the remaining provisions thereof. |
In Neuilly-sur-Seine
On _____________
In three copies
Sephora | The Company |
|
|
The Supplier | |
|
Alex fotheringham
on behalf of MSL 20/06/2019 |
Appendix 1 - List of the Products and list of EEA countries and fees for each Product
Appendix 2 - Insurance certificate
Confidential | 22 | SEPHORA – MILK MAKEUP |
Appendix 1
List of the Products and list of EEA countries and fees for each Product
UPC Code | Product Description |
One-Shot /
Catalogue |
814333026473 | BLUR STICK | CATALOGUE |
814333025476 | BLUR LIQUID MATTE FOUNDATION / IVORY | CATALOGUE |
814333025483 | BLUR LIQUID MATTE FOUNDATION / FAIR | CATALOGUE |
814333025490 | BLUR LIQUID MATTE FOUNDATION / LIGHT | CATALOGUE |
814333025506 | BLUR LIQUID MATTE FOUNDATION / GOLDEN LIGHT | CATALOGUE |
814333025513 | BLUR LIQUID MATTE FOUNDATION / MEDIUM LIGHT | CATALOGUE |
814333025520 | BLUR LIQUID MATTE FOUNDATION / MEDIUM | CATALOGUE |
814333025537 | BLUR LIQUID MATTE FOUNDATION / WARM MEDIUM | CATALOGUE |
814333025544 | BLUR LIQUID MATTE FOUNDATION / GOLDEN SAND | CATALOGUE |
814333025551 | BLUR LIQUID MATTE FOUNDATION / HONEY | CATALOGUE |
814333025568 | BLUR LIQUID MATTE FOUNDATION / MEDIUM TAN | CATALOGUE |
814333025575 | BLUR LIQUID MATTE FOUNDATION / CARAMEL | CATALOGUE |
814333025582 | BLUR LIQUID MATTE FOUNDATION / TAN | CATALOGUE |
814333025599 | BLUR LIQUID MATTE FOUNDATION / TOFFEE | CATALOGUE |
814333025605 | BLUR LIQUID MATTE FOUNDATION / GOLDEN DEEP | CATALOGUE |
814333025612 | BLUR LIQUID MATTE FOUNDATION / WARM DEEP | CATALOGUE |
814333025629 | BLUR LIQUID MATTE FOUNDATION / DEEP | CATALOGUE |
814333025971 | BLUR LIQUID MATTE FOUNDATION / PORCELAIN | CATALOGUE |
814333025988 | BLUR LIQUID MATTE FOUNDATION / CREME | CATALOGUE |
814333025995 | BLUR LIQUID MATTE FOUNDATION / GOLDEN HONEY | CATALOGUE |
814333026510 | BLUR LIQUID MATTE FOUNDATION / BISQUE | CATALOGUE |
814333026527 | BLUR LIQUID MATTE FOUNDATION / CINNAMON | CATALOGUE |
814333026534 | BLUR LIQUID MATTE FOUNDATION / MOCHA | CATALOGUE |
814333026541 | BLUR LIQUID MATTE FOUNDATION / COCOA | CATALOGUE |
814333026558 | BLUR LIQUID MATTE FOUNDATION / ESPRESSO | CATALOGUE |
814333025209 | COOLING WATER | CATALOGUE |
814333025322 | TATTOO STAMP / BLACK HEART | CATALOGUE |
814333025339 | TATTOO STAMP / BLACK STAR | CATALOGUE |
814333025797 | TATTOO STAMP / MOON | CATALOGUE |
Confidential | 23 | SEPHORA – MILK MAKEUP |
UPC Code | Product Description |
One-Shot /
Catalogue |
914333023021 | TATTOO STAMP / LIGHTENING BOLT | CATALOGUE |
814333025353 | FLEX CONCEALER / FAIR | CATALOGUE |
814333025360 | FLEX CONCEALER / LIGHT | CATALOGUE |
814333025377 | FLEX CONCEALER / LIGHT MEDIUM | CATALOGUE |
814333025384 | FLEX CONCEALER / MEDIUM | CATALOGUE |
814333025391 | FLEX CONCEALER / MEDIUM TAN | CATALOGUE |
814333025407 | FLEX CONCEALER / TAN | CATALOGUE |
814333025414 | FLEX CONCEALER / WARM DEEP | CATALOGUE |
814333025421 | FLEX CONCEALER / DEEP | CATALOGUE |
814333026565 | FLEX CONCEALER / PORCELAIN | CATALOGUE |
814333026572 | FLEX CONCEALER / CREME | CATALOGUE |
814333026589 | FLEX CONCEALER / VANILLA | CATALOGUE |
814333026084 | FLEX CONCEALER / MEDIUM BEIGE | CATALOGUE |
814333026091 | FLEX CONCEALER/CARAMEL | CATALOGUE |
814333026107 | FLEX CONCEALER / CINNAMON | CATALOGUE |
814333026114 | FLEX CONCEALER / COCOA | CATALOGUE |
814333026121 | FLEX CONCEALER / ESPRESSO | CATALOGUE |
814333025117 | GEL BROW/PALE ALE | CATALOGUE |
814333025124 | GEL BROW/PILSNER | CATALOGUE |
814333025131 | GEL BROW / DARK BREW | CATALOGUE |
814333025186 | HIGHLIGHTER/LIT | CATALOGUE |
814333025315 | HOLOGRAPHIC STICK / SUPERNOVA | CATALOGUE |
814333025438 | HOLOGRAPHIC STICK / MARS | CATALOGUE |
814333025674 | HOLOGRAPHIC STICK / STARDUST | CATALOGUE |
814333025216 | HYDRATING OIL | CATALOGUE |
814333025148 | LIP & CHEEK/PERK | CATALOGUE |
814333025155 | LIP & CHEEK / RALLY | CATALOGUE |
814333025162 | LIP & CHEEK/SWISH | CATALOGUE |
814333025179 | LIP & CHEEK/QUICKIE | CATALOGUE |
814333025773 | LIP + CHEEK/WERK | CATALOGUE |
814333026213 | LIP COLOR/SKILLZ | CATALOGUE |
814333026220 | LIP COLOR / C.R.E.A.M. | CATALOGUE |
814333026237 | LIP COLOR / LOW KEY | CATALOGUE |
814333026244 | LIP COLOR/DEUCES | CATALOGUE |
814333026251 | LIP COLOR/WIFEY | CATALOGUE |
814333026268 | LIP COLOR / HYPE | CATALOGUE |
814333026275 | LIP COLOR / NAME DROP | CATALOGUE |
814333026282 | LIP COLOR/O.G RED | CATALOGUE |
814333026299 | LIP COLOR/NEW WHIP | CATALOGUE |
814333026305 | LIP COLOR/WAVY | CATALOGUE |
814333025735 | KUSH MASCARA / BOOM | CATALOGUE |
814333025902 | KUSH CLEAR BROW GEL / HYDRO | CATALOGUE |
Confidential | 24 | SEPHORA – MILK MAKEUP |
814333025919 | KUSH FIBER BROW GEL / HAZE | CATALOGUE |
814333025926 | KUSH FIBER BROW GEL / DUTCH | CATALOGUE |
814333025933 | KUSH FIBER BROW GEL / GRIND | CATALOGUE |
814333026398 | KUSH FIBER BROW GEL / MJ | CATALOGUE |
814333026404 | KUSH FIBER BROW GEL / DUB | CATALOGUE |
814333026411 | KUSH FIBER BROW GEL / HERB | CATALOGUE |
814333026428 | KUSH FIBER BROW GEL / DIESEL | CATALOGUE |
814333026435 | KUSH FIBER BROW GEL / CYPHER | CATALOGUE |
814333025841 | LONG WEAR GEL EYELINER / BOSS | CATALOGUE |
814333025858 | LONG WEAR GEL EYELINER / CEO | CATALOGUE |
814333025865 | LONG WEAR GEL EYELINER / BONUS | CATALOGUE |
814333025872 | LONG WEAR GEL EYELINER / BIZ | CATALOGUE |
814333025889 | LONG WEAR GEL EYELINER 1 PTO | CATALOGUE |
814333025896 | LONG WEAR GEL EYELINER / BCC | CATALOGUE |
814333025940 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT LIGHT | CATALOGUE |
814333025957 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT MEDIUM | CATALOGUE |
814333025964 | BLUR + SET MATTE LOOSE SETTING POWDER / TRANSLUCENT DEEP | CATALOGUE |
814333025193 | MATTE BRONZER/BAKED | CATALOGUE |
814333025346 | MATTE BRONZER / BLAZE | CATALOGUE |
814333026596 | WATERMELON BRIGHTENING SERUM | CATALOGUE |
814333025445 | MATCHA TONER | CATALOGUE |
814333025452 | MATCHA CLEANSER | CATALOGUE |
814333025650 | LUMINOUS BLUR STICK | CATALOGUE |
814333026183 | KUSH LIP BALM / GREEN DRAGON | CATALOGUE |
814333026312 | KUSH LIP BALM / NUG | CATALOGUE |
814333026329 | KUSH LIP BALM / BUBBLE | CATALOGUE |
814333026336 | KUSH LIP BALM / CANNATONIC | CATALOGUE |
814333026343 | KUSH LIP BALM / PLUSHBERRY | CATALOGUE |
814333026176 | KUSH LIP GLAZE / CHRONIC | CATALOGUE |
814333026169 | WATERMELON BRIGHTENING FACE MASK | CATALOGUE |
814333026152 | MATCHA DETOXIFYING FACE MASK | CATALOGUE |
814333026442 | CANNABIS HYDRATING FACE MASK | CATALOGUE |
814333026190 | COOLING WATER EYE PATCHES | CATALOGUE |
814333026350 | HYDRO GRIP PRIMER | CATALOGUE |
814333026367 | KUSH WATERPROOF MASCARA / ACES | CATALOGUE |
814333026374 | KUSH LASH PRIMER / WHITE WIDOW | CATALOGUE |
81433302490-5 | GLOW OIL LIP + CHEEK / GLIMMER | CATALOGUE |
81433302491-2 | GLOW OIL LIP + CHEEK / FLARE | CATALOGUE |
81433302492-9 | GLOW OIL LIP + CHEEK / HALO | CATALOGUE |
81433302493-6 | GLOW OIL LIP + CHEEK / ASTRO | CATALOGUE |
81433302448-6 | FLEX HIGHLIGHTER / LIT | CATALOGUE |
81433302449-3 | FLEX HIGHLIGHTER/ICED | CATALOGUE |
Confidential | 25 | SEPHORA – MILK MAKEUP |
81433302450-9 | FLEX HIGHLIGHTER / BLITZED | CATALOGUE |
81433302451-6 | FLEX HIGHLIGHTER / GLAZED | CATALOGUE |
81433302407-3 | FLEX FOUNDATION STICK / PORCELAIN | CATALOGUE |
81433302408-0 | FLEX FOUNDATION STICK / SNOW | CATALOGUE |
81433302409-7 | FLEX FOUNDATION STICK / CREME | CATALOGUE |
81433302410-3 | FLEX FOUNDATION STICK / FAIR | CATALOGUE |
81433302411-0 | FLEX FOUNDATION STICK / SHELL | CATALOGUE |
81433302412-7 | FLEX FOUNDATION STICK / BUFF | CATALOGUE |
81433302413-4 | FLEX FOUNDATION STICK / VANILLA | CATALOGUE |
81433302414-1 | FLEX FOUNDATION STICK / LIGHT BEIGE | CATALOGUE |
81433302501-8 | FLEX FOUNDATION STICK / LIGHT SAND | CATALOGUE |
81433302415-8 | FLEX FOUNDATION STICK / LIGHT | CATALOGUE |
81433302416-5 | FLEX FOUNDATION STICK / NUDE | CATALOGUE |
81433302417-2 | FLEX FOUNDATION STICK / SAND | CATALOGUE |
81433302418-9 | FLEX FOUNDATION STICK / LIGHT MEDIUM | CATALOGUE |
81433302502-5 | FLEX FOUNDATION STICK / GOLDEN NUDE | CATALOGUE |
81433302419-6 | FLEX FOUNDATION STICK / CASHMERE | CATALOGUE |
81433302420-2 | FLEX FOUNDATION STICK / MEDIUM | CATALOGUE |
81433302421-9 | FLEX FOUNDATION STICK / MEDIUM BEIGE | CATALOGUE |
81433302503-2 | FLEX FOUNDATION STICK / GOLDEN SAND | CATALOGUE |
81433302504-9 | FLEX FOUNDATION STICK / GOLDEN HONEY | CATALOGUE |
81433302422-6 | FLEX FOUNDATION STICK / ALMOND | CATALOGUE |
81433302423-3 | FLEX FOUNDATION STICK / HONEY | CATALOGUE |
81433302424-0 | FLEX FOUNDATION STICK / MEDIUM TAN | CATALOGUE |
81433302505-6 | FLEX FOUNDATION STICK / PRALINE | CATALOGUE |
81433302425-7 | FLEX FOUNDATION STICK / AMBER | CATALOGUE |
81433302426-4 | FLEX FOUNDATION STICK / GOLDEN TAN | CATALOGUE |
81433302427-1 | FLEX FOUNDATION STICK / CARAMEL | CATALOGUE |
81433302428-8 | FLEX FOUNDATION STICK / MAPLE | CATALOGUE |
81433302429-5 | FLEX FOUNDATION STICK / CINNAMON | CATALOGUE |
81433302430-1 | FLEX FOUNDATION STICK / TAN | CATALOGUE |
81433302506-3 | FLEX FOUNDATION STICK / GOLDEN DEEP | CATALOGUE |
81433302431-8 | FLEX FOUNDATION STICK / WARM DEEP | CATALOGUE |
81433302432-5 | FLEX FOUNDATION STICK / HAZELNUT | CATALOGUE |
81433302433-2 | FLEX FOUNDATION STICK / DEEP | CATALOGUE |
81433302435-6 | FLEX FOUNDATION STICK / COCOA | CATALOGUE |
81433302436-3 | FLEX FOUNDATION STICK / ESPRESSO | CATALOGUE |
81433302434-9 | FLEX FOUNDATION STICK / RICH | CATALOGUE |
81433302669-6 | MEET THE FAM 2.0 | CATALOGUE |
814333025810 | MINI HOLOGRAPHIC STICK / SUPERNOVA | CATALOGUE |
Confidential | 26 | SEPHORA – MILK MAKEUP |
UPC Code | Product Description |
One-Shot /
Catalogue |
814333025834 | MINI BLUR STICK | CATALOGUE |
814333025681 | MINI COOLING WATER | CATALOGUE |
814333025711 | MINI HIGHLIGHTER/LIT | CATALOGUE |
814333025742 | MINI KUSH MASCARA / BOOM | CATALOGUE |
814333025728 | MINI WATERMELON BRIGHTENING SERUM | CATALOGUE |
814333026138 | MINI LIP + CHEEK/WERK | CATALOGUE |
814333026480 | MINI MATCHA TONER | CATALOGUE |
814333025827 | MINI HOLOGRAPHIC STICK / MARS | CATALOGUE |
814333025698 | MINI HOLOGRAPHIC STICK / STARDUST | CATALOGUE |
KIT 1 S3 | CATALOGUE | |
Kush trio set | OS |
Alex fotheringham
20/06/2019
Confidential | 27 | SEPHORA – MILK MAKEUP |
Appendix 2
Insurance certificate
[***]
Confidential | 28 | SEPHORA – MILK MAKEUP |
Barlow House
Minshull Street Manchester M1 3DZ |
T:
F:
E:
W:
|
0161 236 2532 0161 236 2583 info@m-f-I co uk www m-f-I co uk |
PRODUCT & SERVICE PROFESSIONAL
LIABILITY AND
|
The INSURED: | Microbiological Solutions Ltd |
Principal Address of the INSURED: | Gollinrod |
Walmersley Bury Lancashire BL9 5NB |
BUSINESS of the INSURED: |
Microbiological Testing and Consultancy Services including Manufacturing, method validation, Virology & Biocide testing and bespoke testing. Chemical Analysis, Batch Testing, New Product Development Testing and Consumer Testing Trials, Project Work around manufacturing processes. Consultancy and regulatory services associated with cosmetics, personal care, cleaning and biocidal products, including acting as EU ‘Responsible Person’, (as per EC 1223/2009) undertaking Toxicological Safety Assessments and multi-region regulatory services. Consultancy and regulatory services, including ‘Only Representative’ service, relating to the European REACH chemical Regulation EC 1907/2006. |
INSURERS: | Nucleus Underwriting Ltd — for and on behalf of various Underwriters at Lloyds |
We, the Insurance Brokers, hereby certify that the above named Insured is currently insured for the period ending 09/11/2019.
We confirm that the present Limit of Indemnity is not less £5,000,000 Any One Claim & in the Annual Aggregate
The amount of excess carried by the insured for each claim is £1,000 increasing to £2,500 in respect of claims brought in the USA/Canada, Each and Every Claim
The policy is subject to the insuring agreements, exclusions, terms, conditions and declaration contained therein. The above is accurate at the date of signature and no obligation is imposed herein on the signatory to advise of any alterations.
Signed: |
|
Name of Broker: |
McParland Finn Limited
27/11/2018 |
APPENDIX 4
1 – LABELLING COMPULSORILY EXPRESSED IN NATIONAL LANGUAGE
Country | Language |
Austria | German |
Belgium | Dutch and French and German |
Bulgaria | Bulgarian |
Czech Republic | Czech |
Cyprus | Greek/English |
Denmark | Danish |
Estonia | Estonian |
Fintand | Finnish and Swedish |
France | French |
Germany | German |
Greece | Greek |
Hungary | Hungarian |
Ireland | English |
Italy | Italian |
Latvia | Latvian |
Litmuania | Lithuanian |
Luxemburg | French or German or Luxemburgish |
Malta | Maitese/English |
Netherlands | Dutch |
Norway | Norwegian |
Poland | Polish |
Portugal | Portuguese |
Romania | Romanian |
Slovakia | Slovak |
Slovenia | Slovenian |
Spain | Spanish |
Sweden | Swedish |
United kingdom | English |
Confidential | 29 | SEPHORA – MILK MAKEUP |
2 — LABELLING REQUIREMENTS
Requirements | Container | Packaging | Comments |
Name and address of the RP | Yes | Yes | |
Country of origin | No* | No* | * except for imported cosmetic products (from outside the EU) |
Nominal content | Yes | Yes | except in the case of packaging containing less than five grams or five millilitres, free samples and single-application packs |
Date of minimum durability if minimum durability ≤ 30 months
|
Yes | Yes | or the sentence: ‘Best used before the end of followed by the date (Month. Year) or (Day. Month. Year) |
fvfinimum durability > 30 months and
PAO if relevant |
PaO to be
labelled
|
PaO to be
labelled
|
Months and/or years
(usually in months as “x M”) |
Particular precautions to be observed in use | Yes | Yes |
Where it is impossible for practical reasons to label, the information shall be mentioned on an enclosed or attached leaflet, label, tape, tag or card and shall be referred to by |
Batch number | Yes* | Yes | * Except where this is impossible for practical reasons because the cosmetic products are too small |
Function of the product | Yes* | Yes* | * unless it is clear from its presentation |
Ingredients list | No* | Yes |
* except if there is no packaging
Where it is impossible for practical reasons to Label, the information shall be mentioned on an enclosed or attached leaflet, Libel, tape, tag or card and shall be referred to by
For small products, when the above solutions are not possible, this information shall
appear on a notice in the immediate proximity of the product at the point of sale.
|
Confidential | 30 | SEPHORA – MILK MAKEUP |
APPENDIX 5
POST- MARKETING SURVEILLANCE CONTACTS
Main contact: Sara Rehart @ milk makeup
Name: Rehart
First name: Sara
Quality: Regulatory and Compliance Manager
Address: 450 W. 15th St, Floor 2 New York, NY 10011
Telephone: 1 (917) 699-6442
Email address: srehart@milkmakeup.com
In case of absence of the Main Contact: Jessica Blanco
Name: Blanco
First Name: Jessica
Quality: VP; Product Development & Packaging
Address: 450 W. 15th St, Floor 2 New York, NY 10011
Telephone: 1 (718) 404-5071
Email address: jess@milkmakeup.com
Confidential | 31 | SEPHORA – MILK MAKEUP |
MILK MAKEUP, LLC | |
To the attention of Steve Nguyen 450 W 15TH Street |
|
NEW YORK NY 10011 | |
Neuilly-sur-Seine, on February, 26th, 2021 |
Registered letter with return receipt requested
RE: 2021 Trade Terms & Conditions - MILK MAKEUP (the “Supplier”)
Dear Sir,
Further to our last exchanges, we are very pleased to have reached an agreement on the trade terms and conditions relating to our collaboration for 2021, as follows:
The negotiation has been carried out in good faith between SEPHORA and your company (the “Parties”) based on your [two-period] price list (the “Price List”) for 2021 as detailed in the Appendix “Products’ price list”.
The price set in the present letter is the price agreed upon for 2021.
Any modification of the Price List that is planned, must be communicated to SEPHORA by registered mail with acknowledgement of receipt at least two (2) months before its desired date of application. In every case, it must be justified by unbiased and verifiable elements.
In the event that Sephora accepts this modification of the Price List, the Parties must sign an amendment for this modification to be applicable between them.
Any modification of the Price List may lead to the renegotiation of the present as a whole in order to preserve its general economy.
It is specified that the applicable agreed price is the one in force on the date on which SEPHORA orders the Products.
SEPHORA shall purchase your products (the “Products”) in Euros and pay its orders in Euros. The payment terms for the Products agreed upon between the Parties is 45 days end of month, date of invoice. Any payment delay shall give rise to penalties equal to three times the legal interest rate and to the payment of a fixed compensation of 40€ for recovery costs.
The trade terms are applicable to the following territory: France, Luxembourg, Monaco, Italy, Spain, Portugal, Greece, Romania, Serbia, Bulgaria, Czech Republic, Poland, Turkey, Denmark, Sweden, Switzerland and Germany (hereafter, the “Territory”).
Exclusivity is granted to SEPHORA in the Territory.
However, the Supplier reserves the right to sell his products in the Territories through its own Milk stores and Milk website, as well as travel retail, being defined as sales outlets located in restricted areas of various transport hubs, including airports, sea ports, railway stations, cruise liners, as well as in free zones and areas subject to a specific status, such as diplomatic and military zones and through commercial partnership proposing products via boxes (Birchbox, Blissim, Glossybox…)
SEPHORA SAS Société par actions simplifiée au capital de 78 256 500 euros - R.C.S Nanterre B 393 712 286 Adresse de correspondance : 240, rue du Champ Rouge - 45770 Saran - France - Tél. +33 (0)2 38 70 69 00 - Fax. +33 (0)2 38 70 68 90 Siège Social: 41, rue Ybry - 92576 Neuilly-sur-Seine Cedex - France - Tél. +33 (0)1 41 88 50 00 - Fax. +33 (0)1 41 88 50 01 |
Consequently, the Supplier shall refrain from appointing any third party as distributor or agent for the Products in the Territory and shall refrain from making direct sales of the Products in the Territory.
In the event that, during the year, SEPHORA lists new Products proposed by the Supplier, the terms and conditions of the present letter shall apply automatically.
The Parties agree that, during the year, they may set up new obligations which shall give rise to the execution of an amendment.
In case of contradiction between the present letter and the distribution agreement signed on June 19th, 2019, the present provisions shall prevail.
In accordance with the law (Article L. 441-4 of the Commercial Code), the Parties have specified the following estimated turnover:
3 000 000 excluding VAT, equating to the turnover of year N-1.
It is specified that the estimated turnover shall under no circumstances constitute a Product volume purchasing commitment on the part of SEPHORA.
1° | CONDITIONS APPLICABLE TO THE SALE OF THE PRODUCTS AND OTHER OBLIGATIONS INTENDED TO FACILITATE THE COMMERCIAL RELATIONSHIP BETWEEN THE PARTIES |
A. | INVOICE DISCOUNTS: |
These discounts are applicable to all purchases made by SEPHORA.
Discount for the stimulation of the sell-in turnover on specific references
In order to stimulate its purchasing turnover, on mutually agreed dates the Supplier will grant SEPHORA an occasional discount of [***]
A turnover stimulation discount may be negotiated by the Parties if new products are developed during the year. As applicable, the Parties may formalize their agreement by signing an amendment.
2° | COMMERCIAL COOPERATION SERVICES PROVIDED BY SEPHORA FOR PRODUCT RESALE |
This covers any service suitable for developing the sale of the Products that is distinct from the purchase and sale obligations (the “Marketing Event(s)”).
A global budget of “Marketing Contribution” linked to these Marketing Events will be discussed each year by the Parties and expressed either as an absolute value or as a percentage of the 2021 Sell Out. SEPHORA shall invoice the global amount to Supplier without any possibility for the latter to pay by providing free Products.
If the details of each Marketing Event (i.e. the purpose, performance date, duration, remuneration and Products concerned) are not specified in the present letter, such details shall be defined during the year, in implementation agreements entered into by SEPHORA and the Supplier.
After each Marketing Event, SEPHORA shall send to the Supplier an invoice for an amount equal to the remuneration that corresponds to said Marketing Event(s).
Said invoice shall be paid to SEPHORA within forty-five (45) days end of month, date of invoice.
Any payment delay shall give rise to penalties equal to three times the legal interest rate and to the payment of a fixed compensation of 40€ for recovery costs.
If the remuneration of the Marketing Event is expressed as a percentage of the Sell Out, SEPHORA shall issue, at the beginning of 2021, a corrective invoice stating the total remuneration payable in consideration of the Marketing Events performed in 2021, as well as any payments made during said year. The balance set forth in the corrective invoice shall be paid by the Supplier within 45 days end of month, date of invoice.
If the payments made by the Supplier are above the amount to be paid by it, SEPHORA shall issue a corrective credit note.
The Parties acknowledge that these Marketing Events benefit all Products generally and without distinction.
It is understood that setting up these Marketing Events does not generate any purchase obligation for SEPHORA.
The Supplier undertakes to comply with the undertakings described in Annex “Warranties/Mandate”.
[***]
The Marketing Contribution will only be used for direct costs (e.g specific in-store animations / promotions /online campaign & support endcaps, launch pads, pop-up areas, beauty bars, internet campaigns, CRM actions, etc.) associated with the Marketing Events of the Products at Sephora in the Territory and/or the PR plan to the exclusion of any indirect costs (such as gate fees).
This covers any service suitable for developing the sale of the Products that is distinct from the purchase and sale obligations and are likely to include:
● | Sales Events | |
● | Co Advertising Media / OP Traffic | |
● | CRM | |
● | Training Services | |
● | Staff Training | |
● | Conventions | |
● | Challenge | |
● | Market Week Participation | |
● | In-store Animations | |
● | PR Events |
Exact spend per activity can be reviewed throughout the year in agreement between both parties and in function of business needs and re-attributed to other activities.
The details of each Marketing Event and/or PR plan (i.e. the purpose, performance date, duration, remuneration and Products concerned) shall be defined during the year, in separate agreements to be entered into between SEPHORA and the Supplier.
After each Marketing Event or PR plan, SEPHORA shall send to the Supplier an invoice for an amount equal to the remuneration that corresponds to said Marketing Event/PR plan. Subject to a prior written agreement between the Parties, the Supplier shall be entitled to pay directly third parties for the performance of certain Marketing Event/PR plans provided that Sephora receives a quotation at least 10 business days before the Marketing Event/PR plan and gives it prior written approval. The amount paid directly by the Supplier to the third party shall be deducted from the Marketing Contribution.”
Said invoice shall be paid to SEPHORA within forty-five (45), date of invoice. Any payment delay shall give rise to penalties equal to three times the legal interest rate and to the payment of a fixed compensation of 40€ for recovery costs.
The Parties acknowledge that these Marketing Events benefit all Products generally or specific Products as agreed between the Parties.
It is understood that setting up these Marketing Events/PR plans does not generate any purchase obligation for SEPHORA.
Merchandising Costs:
The Merchandising costs relating to MILK’s Gondolas set up will be as follows:
- | Costs related to the manufacture (production, transportation, installation & customs) of Gondolas: [***] | |
- | Other costs related to Gondolas (updates, adaptation): t[***] |
COMMUNICATION PLAN
As part of the communications on the Products performed by the Supplier within the Territory, the Supplier undertakes to use the hashtags provided by SEPHORA and more generally to associate SEPHORA with these communications.
In addition, as part of the communication actions carried out by the Supplier with its influencers on the Products, the Supplier undertakes to propose and encourage its influencers to use the hashtags provided by SEPHORA in accordance with the laws and regulations in force.
OTHER LEVERS OF COLLABORATION
● | STATISTICAL DATA |
In consideration of the exclusivity granted by the Supplier, SEPHORA shall provide the Supplier, free of charge, with the monthly statistical data mentioned below.
Exchange of weekly statistical data “Sales per axis per country (Report 5 1)”:
SEPHORA shall, on a monthly basis, send to the Supplier statistical data “Sales per axis per country, enabling it to improve its business management. The communication methods shall be defined mutually.
Exchange of monthly statistical data “Sales per axis per distribution channel per country (Report 1)”:
SEPHORA shall, on a monthly basis, send to the Supplier statistical data “Sales per axis per country, enabling it to improve its business management. The communication methods shall be defined mutually.
Exchange of monthly statistical data “Sales per region and per store” (Report 2 2)”:
SEPHORA shall, on a monthly basis, send to the Supplier statistical data “Sales per region and per store, enabling it to improve its business management. The communication methods shall be defined mutually.
Exchange of monthly statistical data “Sales, Quantity by Department, Franchise and SKU per country (Report 4 3)”:
SEPHORA shall, on a monthly basis, send to the Supplier statistical data “Sales, Quantity, by Department, Franchise and SKU per country”, enabling it to improve its business management. The communication methods shall be defined mutually.
● | SALES REPRESENTATIVES |
The Supplier certifies that the sales representatives and make-up staff (hereinafter referred to jointly as the “Representatives”) assigned by it provide services in SEPHORA stores work under its subordination or that of the enterprise hired by the Supplier, and are employed in compliance with the regulations in force in each country of the Territory. In the event of a breach of this obligation, the Supplier undertakes to indemnify and hold harmless SEPHORA from and against any consequences that result therefrom for SEPHORA.
The Supplier must ensure that it only uses service providers or temporary workers under the conditions or circumstances authorized by the regulations in force in each country of the Territory.
The Supplier was informed beforehand of the safety and risk prevention measures applicable to Representatives and implemented by SEPHORA (For Representatives present in Sephora stores in France, cf. Appendix “Risk Prevention and Safety Plan Applicable to Sales Representatives”). In this respect, it has been agreed that the Representatives must report to a Manager of the store to which they are assigned so that such Manager may ensure that they are fully aware of all applicable health and safety rules, measures and policies. The Supplier undertakes to cause the Representatives to comply with this prerequisite before the performance of any in-store services.
Regarding the Representatives present in Sephora stores in France, the Supplier shall ensure that the Representatives assigned by it comply with the General Terms and Conditions for Representatives that Sephora provided to the Supplier (cf. Appendix “General Terms and Conditions for Representatives”).
● | PROMOTIONAL MEANS MANAGEMENT |
The Parties have agreed on the conditions set out below relative to the following Products:
☐ | Samples, GWPs, Free Products |
The Supplier shall deliver at its own expenses promotional means (Samples, GWP Free Products). Quantities will be discussed and validated between both Parties prior to each action plan.
☐ | Testers |
The Supplier authorizes SEPHORA to present, in the Territory points of sales, MILK Products as testers.
The Supplier agrees to grant a rebate amounting to [***] of the Milk Sell Out excluding VAT realized from January 1st to December 31st of each concerned year in the Territory.
This % is subject to change according annual returns, 2021 returns + DIF [***]
In case of incomplete year, the rebate will apply on the turnover of the months during which the contract was in effect.
The remuneration to be paid shall give rise to discounts in the form of credit notes issued on a monthly basis by the Supplier.
The amount of the credit notes shall be calculated on the basis of the MILK Sell Out excluding VAT realized by Sephora during the previous month.
The credit note will be issued not later than 30 days after the end of each month for which the credit note applies.
Such credit notes shall be set-off from amounts owed by Sephora to the Supplier.
In accordance with Article L441-6 I 8° of the French Commercial Code, any payment delay shall give rise to penalties equal to three times the legal interest rate and to the payment of a fixed compensation of 40€ for recovery costs.
QUALITY POLICY
For the implementation of the SEPHORA quality policy, SEPHORA and the Supplier shall work in partnership with each other in order to monitor the quality of the Supplier’s production sites and the Products distributed through SEPHORA stores. In this respect, SEPHORA and the Supplier shall agree on an annual quality control plan that is defined in the quality requirements letter signed at the start of the partnership and concerning the Supplier’s production sites and the Products, as detailed in the Appendix “Annual Cost of Quality”. This plan shall make it possible for the Supplier, in particular, through the implementation of quality controls, to have information on the quality of the Products, once the transportation and/or storage phase for said Products have been completed.
In the context of quality audits and controls conducted by Sephora, the findings will be shared by SEPHORA and the Supplier. Any non-conformities will give rise to an action plan and specific monitoring.
The Supplier undertakes to pay the costs of quality detailed in the appendix entitled “Annual Costs of Quality” for the implementation of the SEPHORA Quality Policy for 2021.
SEPHORA shall send the Supplier invoice for an amount equal to the remuneration that corresponds to said quality control(s). Said invoice shall be paid to SEPHORA within 45 days end of month, date of invoice. Any payment delay shall give rise to penalties equal to three times the legal interest rate in force and to the payment of a fixed indemnity of €40 for recovery costs.
COMPENSATION
The Supplier authorizes SEPHORA to set off the amounts payable by SEPHORA against any amounts payable by the Supplier, pursuant to the performance of the present letter, for any reason whatsoever.
RETURN MANAGEMENT
The Parties agree that Products (i) discontinued by the Supplier(ii) whose packaging has been modified by the Supplier; (iii) the “one-shot” and “limited editions” Products shall be returned, subject to the Supplier’s prior consent, without discount and deduction of the return value of the Products from the sell-in base of the current year.
In other cases, the Parties may agree during the year on unsold Products which shall be returned, it being specified that these returns shall only concern one part of the stocks and be subject to the Supplier’s consent in accordance with the terms and conditions agreed upon by both Parties. The Supplier acknowledges that said returns will allow it to improve the quality of its stocks.
It has been agreed, MILK will take back approx. 2,5% of its SO excl VAT for 2021. This % is subject to change according DIF consumption, 2021 returns + DIF combined being capped at 5% of SO excl VAT.
Should the present letter be terminated for any reason whatsoever, the Parties shall meet in order to define the modalities of possible Product returns.
CUSTOMS REGULATIONS AMENDMENTS
In the event of any modification in customs regulation applicable to the imported Products (ex.: increase of import customs duties, setting up of import customs barriers) which was not known when the Agreement was entered into, the Party in charge of customs clearance of the Products may inform the other Party thereof by registered letter with return receipt.
In this case, in order to take into account this modification in customs regulation, the Parties agree to meet within one (1) month of the receipt of the aforementioned registered letter to renegotiate the Agreement.
In the absence of an agreement between the Parties concerning the continued performance of the Agreement within two (2) months following their meeting, each Party may terminate the Agreement by registered letter with the return receipt
RISK PREVENTION AND SAFETY PLAN APPLICABLE TO SALES REPRESENTATIVES
The Supplier shall be informed of the safety and risk control measures implemented by SEPHORA and applicable to the Supplier’s Representatives (cf. Appendix “Risk prevention and safety plan applicable to sales representatives”), and undertakes to comply therewith.
PERSONAL DATA
Each Party undertakes to collect and process personal data in full compliance with applicable personal data-protection provisions and European regulations, in particular the French Act no. 78-17 of 6 January 1978 on Information Technology, Data Files and Civil Liberties as amended, and, the EU Regulation 2016/679 of 27 April 2016 (GDPR) (hereinafter the « Applicable Law »).
Within performance of the Agreement, the Supplier will access, receive, use and/or enrich information and data, including personal data as defined by the Applicable Law (hereinafter referred as the « Data »). Such Data include any personal DataFOR within the meaning of Applicable Law which the Supplier process on behalf of SEPHORA and that are related to customers, prospects, employees and service providers and/or subcontractors (whether or not such personal Data have been collected by SEPHORA).
In light of the above, the Supplier may process:
(i) | Data from SEPHORA employees, service providers or subcontractors for the following purposes: for management of performance under the Agreement and for commercial cooperation services; | |
(ii) | Data from SEPHORA customers and/or prospects for the following purposes: (a) in the context of determined promotional contests, (b) for the provision of services by the Supplier in stores, (c) execution of trade cooperation services, (d) sampling platforms and (e) provision of digital tools or services to Sephora’s customers and/or prospects (for example: integration of digital functionality on the website and/or in Sephora’s stores, Sephora’s customers solicitation within the context of an event, etc....); | |
(iii) | Data from SEPHORA customers to comply with its regulatory obligations in the field of cosmetovigilance. |
The Parties acknowledge that, in compliance with the Applicable Law, the Supplier will hold the position of data controller for processing the Data referred to in point (i), of data processor within the processing referred to in point (ii); each Party will hold the position of data controller for the part of the processing it carries out referred to in point (iii).
In addition, in the event of data processing carried out by either Party on their sole and exclusive behalf and under their own responsibility, the Party carrying out such processing shall alone have the status of Data controller. On the date of signature of this Agreement, Sephora will use the Data for products recalls, for the provision sales representatives in store, in the context of customer service, management of performance under the Agreement and for the execution of commercial cooperation services.
Any further Data process realized for purposes other than those provided in this section shall require a specific agreement between the Parties.
Under all circumstances, Data belonging to and previously owned by each Party before entering into the Agreement remain the sole property of the owning Party. In particular, all files, documents, contents created and/or used by SEPHORA within performance of the Agreement, Data including any kind of information of provided by SEPHORA to the Supplier, are and shall remain in any event the property of SEPHORA and the Supplier will keep those confidential in accordance with provisions of the article « Confidentiality».
Under Applicable Law, each Party undertakes to carry out under its own responsibility, Privacy by Default and/or Privacy by Design formalities and actions that might be necessary thought its involvement in the performance of the Agreement.
The Parties acknowledge that, in compliance with the Applicable Law, SEPHORA will hold the position of Data controller and the Supplier will hold the position of Data processor for all Data process provided in this Article with exception for any other Data process realized by the Supplier for its own behalf. In this latter case, the Supplier shall hold solely the position of Data controller on the Data concerned.
In accordance with Applicable Law, the Supplier undertakes, within performance of the Agreement, to take all due precautions in order to insure the personal Data security and notably to prevent the latter from being altered, damaged or communicated to unauthorized persons.
Therefore, the Supplier undertakes to comply, and to enforce compliance of its employees, subcontractors and in general terms of any third party acting at its request, with the following obligations:
- not to take any copy of the Data including notably the documents and information materials the latter is entrusted with, except those required for the performance of the Agreement, subject to SEPHORA’s prior consent;
- not to use the Data, documents and information processed for purposes other than those specified in the Agreement;
- not to disclose the Data, documents or information to third parties, whether being private or public bodies, natural persons or legal entities;
- not to assign, transfer or disclose the Data, free of charge or against payment, to any third party, nor to use it for business purpose or make it use on the Supplier behalf, unless upon request or express authorization from SEPHORA;
- take all measures in order to avoid any misuse or fraudulent use of the Data including computer files in the course of execution of the Agreement;
- implement all security measures, especially technical and organizational, in order to insure storage and integrity of the Data, documents and information processed throughout the Agreement term; and
- upon termination of the business relationship for any reason whatsoever, carry out destruction of every manual or computerized files storing SEPHORA’s Data.
Should personal Data be transferred outside the European Union, the Parties state that the Supplier will provide SEPHORA with the necessary guarantees for this transfer in accordance with Applicable Law. Notably, SEPHORA will sign with the Supplier the standard contractual clauses of the European Commission or any other document that might be useful with regard to the processing in question and the country to which the data is exported.
SEPHORA may itself or by way of an appointed provider, conduct audits to verify the Supplier’s compliance with its obligations under provisions of the present article. Such audit may occur at any time, subject to at least a forty-eight (48) hours prior notice.
Should the terms of the present article be infringed, SEPHORA may rightfully terminate the Agreement, with immediate effect and without compensation for the Supplier.
FORCE MAJEURE
The Parties’ obligations shall automatically and mutually be suspended if an event of force majeure occurs, as defined by Article 1218 of the French Civil Code and the case law of the French “Cour de Cassation” (i.e. French supreme court).
It is specified that an event of force majeure includes, but is not limited to: riots, wars, uprisings, acts of terrorism, major disturbances of public order, floods, fires, health crises including major epidemics and pandemics, earthquakes, hurricanes, but also political and governmental decisions including export bans.
On the contrary, an internal strike within the company of one of the Parties shall under no circumstances be considered as an event of force majeure.
In such case, the Party ascertaining the event of force majeure must immediately notify the other Party by any appropriate mean of its inability to perform partially or totally its obligations. Then the defaulting Party shall confirm it by registered letter with acknowledgement of receipt or, failing this, by e-mail with the option of acknowledgement of receipt to the other Party.
The defaulting Party will finally be required to do its utmost to mitigate the consequences arising from this partial or total impossibility, which shall in any event not engage its liability for failure to fulfill its obligations or involve paying damages.
Following the cessation of the force majeure event, the Parties shall do their best efforts to resume, as soon as possible, the normal course of their obligations’ performance. To this end, the Party prevented or the most diligent Party shall notify as soon as possible the other Party of the resumption of its obligations by registered letter with acknowledgement of receipt or, failing this, by e-mail with the acknowledgement of receipt option.
In the event that the Parties’ obligations are suspended for more than thirty (30) days from the occurrence of the force majeure event, the Parties shall enter into discussions in order to consider alternative measures and agree together on possible adjustments to the present agreement.
In any event, in case the suspension of the Parties’ obligations lasts for a period of more than three (3) months from the occurrence of the event of force majeure, the present agreement may be terminated automatically by either of the Parties via the sending of a registered letter with acknowledgement of receipt to the other Party.
HARDSHIP CLAUSE
If, during the performance of the present agreement, one of the Parties encounters a change in circumstances that was unforeseeable when the agreement was entered into, which makes the performance thereof excessively costly, without that Party having agreed to assume the associated risk, it may inform the other Party thereof by registered letter with acknowledgment of receipt or email with acknowledgment of receipt. The Parties agree to meet within one (1) month of receipt of the aforementioned registered letter or email in order to renegotiate the present agreement. Each Party shall continue to perform its obligations during the renegotiation.
The Parties expressly intend to exclude the provisions of Article 1195 of the French Civil Code which do not apply to the present agreement. In particular, in the absence of agreement between the Parties on the element justifying a possible renegotiation and/or on the adaptations of the agreement, the Parties expressly waive the right to have recourse to a judge to request the adaptation, revision or termination of the agreement on the date and under the conditions set by the judge.
In such a case, in the absence of agreement between the Parties on the adaptations to the agreement within three (3) months from receipt of the registered letter with acknowledgement of receipt or the email with acknowledgement of receipt requesting to initiate renegotiation under this Article, each Party may terminate the present by registered letter with acknowledgement of receipt stating the default of agreement, and the agreement shall terminate automatically and ipso jure (except for orders in progress which shall continue to apply until their term) [notice period] upon receipt of such letter by the other Party, without either Party being entitled to any compensation.
CONFIDENTIALITY
Subject to any disclosure obligations vis-à-vis competent administrations, the Parties agree that the present letter, the negotiated terms and, more generally, any information or documents which may be exchanged between them within the framework of their contractual relationship are strictly confidential.
APPLICABLE LAW / SETTLEMENT OF DISPUTES
The present letter is governed by French law.
In the event of a dispute concerning directly or indirectly the negotiation, existence, validity, performance, execution, interpretation, termination and/or consequences of the present letter and more generally the relations between the Parties. The latter shall strive, as a priority, to settle their dispute amicably. If an amicable agreement cannot be found within one (1) month as from the dispute arising, the PARIS COMMERCIAL COURT shall be the exclusive jurisdiction for hearing the dispute between the Parties, even in the event of third party notice or multiple defendants.
In order to formalize our annual agreement in accordance with Article L441-4 of the French Commercial Code, please return to us the present letter, duly signed and bearing the handwritten statement “Signed as agreed”.
We remind you that the present letter comes into effect on January 1st, 2021 and is applicable until December 31st, 2021. In the absence of an agreement between the Parties on December 31st, 2021, the present letter will continue to apply until the coming into force of a new trade terms letter for 2022 or at the latest until March 1, 2022. The present letter may be terminated by either Party, upon reasonable notice notified to the other Party by registered letter with acknowledgment of receipt. The present letter may also be terminated as of right, in the event of a serious breach of one or more of its obligations under the present letter by one of the Parties, after formal notice to perform sent by the other Party, via registered letter with return receipt, has remained without effect for thirty (30) days.
This Agreement may be signed manually in two (2) original copies or electronically.
In the event of an electronic signature, the present will be treated as an original document having the same binding force as a manually signed original, in accordance with article 1367 of the French Civil Code.
Sincerely yours,
Vianney DUBOIS | Steve NGUYEN |
EME Negotiation Director | CFO |
[Signature + handwritten statement “Signed as agreed”] |
Signed as Agreed |
|
|
LIST OF APPENDICES
APPENDIX – “Products price list”
APPENDIX – “Customs”
APPENDIX – “Annual Cost of Quality”
APPENDIX – “Specifications and fee schedule materials 2020”
APPENDIX – “Guarantees/Mandates”
APPENDIX – Master Data Articles
APPENDIX – “Risk Prevention and Safety Plan Applicable to Sales Representatives”
APPENDIX– “General Terms and Conditions for Representatives”
APPENDIX
PRODUCTS PRICE LIST
Unless otherwise agreed upon between the Parties in writing, prices are firm and non-revisable and are exclusive of Customs duties, VAT and any other taxes and duties levied at the time of the importation in accordance with FCA incoterm. Prices include Customs clearance costs at the time of export and the insurance to the address set forth on the purchase order (Santa Cristina, Italy, Saran, France or any other warehouse specified on the delivery note). The obligations of each Party are set out in the Appendix “Customs”.
EAN code |
SKU DESCRIPTION |
PURCHASE PRICE in euros€ applicable from 01 Jan 2021 to 31 March 2021 |
PURCHASE PRICE in euros€ applicable from 01 April 2021 to 31 Dec 2021 |
814333026442 | CANNABIS HYDRATING FACE MASK | [***] | [***] |
814333025209 | COOLING WATER | [***] | [***] |
814333025216 | HYDRATING OIL | [***] | [***] |
814333026350 | HYDRO GRIP PRIMER | [***] | [***] |
814333026374 | KUSH LASH PRIMER | [***] | [***] |
814333025735 | KUSH MASCARA | [***] | [***] |
814333026367 | KUSH WATERPROOF MASCARA | [***] | [***] |
814333025681 | MINI COOLING WATER | [***] | [***] |
814333025711 | MINI HIGHLIGHTER LIT | [***] | [***] |
814333026145 | MINI HIGHLIGHTER TURNT | [***] | [***] |
814333026138 | MINI LIP & CHEEK WERK | [***] | [***] |
814333025728 | MINI WATERMELON BRIGHTENING SERUM | [***] | [***] |
814333026596 | WATERMELON BRIGHTENING SERUM | [***] | [***] |
814333027241 | MINI LIP & CHEEK PERK | [***] | [***] |
814333026800 | MINI VEGAN MILK MOISTURIZER | [***] | [***] |
814333027432 | MINI LIP & CHEEK - FLIP | [***] | [***] |
814333027449 | MINI LIP & CHEEK - QUIRK | [***] | [***] |
814333027463 | MINI LIP & CHEEK - RALLY | [***] | [***] |
814333027470 | MINI LIP & CHEEK - QUICKIE | [***] | [***] |
814333028408 | KUSH LIQUID EYELINER | [***] | [***] |
814333027777 | KUSH LIP SCRUB - SNOWCAP | [***] | [***] |
814333027753 | VEGAN MILK CLEANSER | [***] | [***] |
814333026466 | MINI HYDRO GRIP PRIMER | [***] | [***] |
814333025940 | BLUR+SET POWDER LIGHT | [***] | [***] |
814333025957 | BLUR+SET POWDER MEDIUM | [***] | [***] |
814333025964 | BLUR+SET POWDER DEEP | [***] | [***] |
814333025476 | BLUR LIQUID MATTE FOUNDATION - IVORY | [***] | [***] |
814333025483 | BLUR LIQUID MATTE FOUNDATION - FAIR | [***] | [***] |
814333025490 | BLUR LIQUID MATTE FOUNDATION - LIGHT | [***] | [***] |
814333025506 | BLUR LIQUID MATTE FOUNDATION - GOLDEN LIGHT | [***] | [***] |
814333025513 | BLUR LIQUID MATTE FOUNDATION - MEDIUM LIGHT | [***] | [***] |
814333025520 | BLUR LIQUID MATTE FOUNDATION - MEDIUM | [***] | [***] |
814333025537 | BLUR LIQUID MATTE FOUNDATION - WARM MEDIUM | [***] | [***] |
814333025544 | BLUR LIQUID MATTE FOUNDATION - GOLDEN SAND | [***] | [***] |
814333025551 | BLUR LIQUID MATTE FOUNDATION - HONEY | [***] | [***] |
814333025568 | BLUR LIQUID MATTE FOUNDATION - MEDIUM TAN | [***] | [***] |
814333025575 | BLUR LIQUID MATTE FOUNDATION - CARAMEL | [***] | [***] |
814333025582 | BLUR LIQUID MATTE FOUNDATION - TAN | [***] | [***] |
814333025599 | BLUR LIQUID MATTE FOUNDATION - TOFFEE | [***] | [***] |
814333025605 | BLUR LIQUID MATTE FOUNDATION - GOLDEN DEEP | [***] | [***] |
814333025612 | BLUR LIQUID MATTE FOUNDATION - WARM DEEP | [***] | [***] |
814333025629 | BLUR LIQUID MATTE FOUNDATION - DEEP | [***] | [***] |
814333025971 | BLUR LIQUID MATTE FOUNDATION - PORCELAIN | [***] | [***] |
814333025988 | BLUR LIQUID MATTE FOUNDATION - CREME | [***] | [***] |
814333025995 | BLUR LIQUID MATTE FOUNDATION - GOLDEN HONEY | [***] | [***] |
814333026510 | BLUR LIQUID MATTE FOUNDATION - BISQUE | [***] | [***] |
814333026527 | BLUR LIQUID MATTE FOUNDATION - CINNAMON | [***] | [***] |
814333026534 | BLUR LIQUID MATTE FOUNDATION - MOCHA | [***] | [***] |
814333026541 | BLUR LIQUID MATTE FOUNDATION - COCOA | [***] | [***] |
814333026558 | BLUR LIQUID MATTE FOUNDATION - ESPRESSO | [***] | [***] |
814333026473 | BLUR STICK | [***] | [***] |
814333026190 | COOLING WATER UNDEREYE PATCHES | [***] | [***] |
814333025353 | FLEX CONCEALER - FAIR | [***] | [***] |
814333025360 | FLEX CONCEALER - LIGHT | [***] | [***] |
814333025377 | FLEX CONCEALER - LIGHT MEDIUM | [***] | [***] |
814333025384 | FLEX CONCEALER - MEDIUM | [***] | [***] |
814333025391 | FLEX CONCEALER - MEDIUM TAN | [***] | [***] |
814333025407 | FLEX CONCEALER - TAN | [***] | [***] |
814333025414 | FLEX CONCEALER - WARM DEEP | [***] | [***] |
814333025421 | FLEX CONCEALER - DEEP | [***] | [***] |
814333026565 | FLEX CONCEALER - PORCELAIN | [***] | [***] |
814333026572 | FLEX CONCEALER - CREME | [***] | [***] |
814333026589 | FLEX CONCEALER - VANILLA | [***] | [***] |
814333026084 | FLEX CONCEALER - MEDIUM BEIGE | [***] | [***] |
814333026091 | FLEX CONCEALER - CARAMEL | [***] | [***] |
814333026107 | FLEX CONCEALER - CINNAMON | [***] | [***] |
814333026114 | FLEX CONCEALER - COCOA | [***] | [***] |
814333026121 | FLEX CONCEALER - ESPRESSO | [***] | [***] |
814333024219 | FLEX FOUNDATION MEDIUM BEIGE | [***] | [***] |
814333024158 | FLEX FOUNDATION LIGHT | [***] | [***] |
814333024202 | FLEX FOUNDATION MEDIUM | [***] | [***] |
814333024233 | FLEX FOUNDATION HONEY | [***] | [***] |
814333024172 | FLEX FOUNDATION SAND | [***] | [***] |
814333024271 | FLEX FOUNDATION CARAMEL | [***] | [***] |
814333024189 | FLEX FOUNDATION LIGHT MEDIUM | [***] | [***] |
814333024141 | FLEX FOUNDATION LIGHT BEIGE | [***] | [***] |
814333024295 | FLEX FOUNDATION CINNAMON | [***] | [***] |
814333024264 | FLEX FOUNDATION GOLDEN TAN | [***] | [***] |
814333024127 | FLEX FOUNDATION BUFF | [***] | [***] |
814333024240 | FLEX FOUNDATION MEDIUM TAN | [***] | [***] |
814333024226 | FLEX FOUNDATION ALMOND | [***] | [***] |
814333024196 | FLEX FOUNDATION CASHMERE | [***] | [***] |
814333024097 | FLEX FOUNDATION CREME | [***] | [***] |
814333024165 | FLEX FOUNDATION NUDE | [***] | [***] |
814333024073 | FLEX FOUNDATION PORCELAIN | [***] | [***] |
814333024332 | FLEX FOUNDATION DEEP | [***] | [***] |
814333024110 | FLEX FOUNDATION SHELL | [***] | [***] |
814333024301 | FLEX FOUNDATION TAN | [***] | [***] |
814333024103 | FLEX FOUNDATION FAIR | [***] | [***] |
814333024257 | FLEX FOUNDATION AMBER | [***] | [***] |
814333024325 | FLEX FOUNDATION HAZELNUT | [***] | [***] |
814333024134 | FLEX FOUNDATION VANILLA | [***] | [***] |
814333024080 | FLEX FOUNDATION SNOW | [***] | [***] |
814333024318 | FLEX FOUNDATION WARM DEEP | [***] | [***] |
814333024349 | FLEX FOUNDATION RICH | [***] | [***] |
814333024288 | FLEX FOUNDATION MAPLE | [***] | [***] |
814333024363 | FLEX FOUNDATION ESPRESSO | [***] | [***] |
814333024356 | FLEX FOUNDATION COCOA | [***] | [***] |
814333025018 | FLEX FOUNDATION LIGHT SAND | [***] | [***] |
814333025025 | FLEX FOUNDATION GOLDEN NUDE | [***] | [***] |
814333025032 | FLEX FOUNDATION GOLDEN SAND | [***] | [***] |
814333025049 | FLEX FOUNDATION GOLDEN HONEY | [***] | [***] |
814333025056 | FLEX FOUNDATION PRALINE | [***] | [***] |
814333025063 | FLEX FOUNDATION GOLDEN DEEP | [***] | [***] |
814333024486 | FLEX HIGHLIGHTER LIT | [***] | [***] |
814333024493 | FLEX HIGHLIGHTER ICED | [***] | [***] |
814333024509 | FLEX HIGHLIGHTER BLITZED | [***] | [***] |
814333024516 | FLEX HIGHLIGHTER GLAZED | [***] | [***] |
814333025124 | GEL BROW-PILSNER | [***] | [***] |
814333025131 | GEL BROW-DARK BREW | [***] | [***] |
814333025117 | GEL BROW-PALE ALE | [***] | [***] |
814333024905 | GLOW OIL GLIMMER | [***] | [***] |
814333024912 | GLOW OIL FLARE | [***] | [***] |
814333024929 | GLOW OIL HALO | [***] | [***] |
814333024936 | GLOW OIL ASTRO | [***] | [***] |
814333025087 | GLOW OIL SOLAR | [***] | [***] |
814333025186 | HIGHLIGHTER-LIT | [***] | [***] |
814333025315 | HOLOGRAPHIC STICK - SUPERNOVA | [***] | [***] |
814333025674 | HOLOGRAPHIC STICK - STARDUST | [***] | [***] |
814333025438 | HOLOGRAPHIC STICK - MARS | [***] | [***] |
814333025902 | KUSH BROW HYDRO | [***] | [***] |
814333025919 | KUSH BROW HAZE | [***] | [***] |
814333025926 | KUSH BROW DUTCH | [***] | [***] |
814333025933 | KUSH BROW GRIND | [***] | [***] |
814333026411 | KUSH BROW HERB | [***] | [***] |
814333026398 | KUSH BROW MJ | [***] | [***] |
814333026428 | KUSH BROW DIESEL | [***] | [***] |
814333026435 | KUSH BROW CYPHER | [***] | [***] |
814333026404 | KUSH BROW DUB | [***] | [***] |
814333026183 | KUSH LIP BALM GREEN DRAGON | [***] | [***] |
814333026329 | KUSH LIP BALM BUBBLE | [***] | [***] |
814333026312 | KUSH LIP BALM NUG | [***] | [***] |
814333026336 | KUSH LIP BALM CANNATONIC | [***] | [***] |
814333026343 | KUSH LIP BALM PLUSHBERRY | [***] | [***] |
814333026176 | KUSH LIP GLAZE CHRONIC | [***] | [***] |
814333025148 | LIP & CHEEK-PERK | [***] | [***] |
814333025155 | LIP & CHEEK-RALLY | [***] | [***] |
814333025179 | LIP & CHEEK-QUICKIE | [***] | [***] |
814333025162 | LIP & CHEEK-SWISH | [***] | [***] |
814333025773 | LIP & CHEEK - WERK | [***] | [***] |
814333026251 | LIP COLOR WIFEY | [***] | [***] |
814333026213 | LIP COLOR SKILLZ | [***] | [***] |
814333026244 | LIP COLOR DEUCES | [***] | [***] |
814333026268 | LIP COLOR HYPE | [***] | [***] |
814333026220 | LIP COLOR C.R.E.A.M. | [***] | [***] |
814333026237 | LIP COLOR LOW KEY | [***] | [***] |
814333026275 | LIP COLOR NAME DROP | [***] | [***] |
814333026282 | LIP COLOR O.G. RED | [***] | [***] |
814333026305 | LIP COLOR WAVY | [***] | [***] |
814333026299 | LIP COLOR NEW WHIP | [***] | [***] |
814333025841 | LONGWEAR GEL EYELINER BOSS | [***] | [***] |
814333025858 | LONGWEAR GEL EYELINER CEO | [***] | [***] |
814333025865 | LONGWEAR GEL EYELINER BONUS | [***] | [***] |
814333025872 | LONGWEAR GEL EYELINER BIZ | [***] | [***] |
814333025889 | LONGWEAR GEL EYELINER PTO | [***] | [***] |
814333025896 | LONGWEAR GEL EYELINER BCC | [***] | [***] |
814333025650 | LUMINOUS BLUR STICK | [***] | [***] |
814333025452 | MATCHA CLEANSER | [***] | [***] |
814333026152 | MATCHA DETOXIFYING FACE MASK | [***] | [***] |
814333025445 | MATCHA TONER | [***] | [***] |
814333025193 | MATTE BRONZER-BAKED | [***] | [***] |
814333025346 | MATTE BRONZER - BLAZE | [***] | [***] |
814333025834 | MINI BLUR STICK | [***] | [***] |
814333025810 | MINI HOLOGRAPHIC STICK SUPERNOVA | [***] | [***] |
814333025827 | MINI HOLOGRAPHIC STICK MARS | [***] | [***] |
814333025698 | MINI HOLOGRAPHIC STICK STARDUST | [***] | [***] |
814333025742 | MINI KUSH MASCARA | [***] | [***] |
814333026480 | MINI MATCHA TONER | [***] | [***] |
814333025322 | TATTOO STAMP -BLACK HEART | [***] | [***] |
814333025339 | TATTOO STAMP -BLACK STAR | [***] | [***] |
814333025797 | TATTOO STAMP MOON | [***] | [***] |
814333025803 | TATTOO STAMP X | [***] | [***] |
814333023021 | TATTOO STAMP - LIGHTENING BOLT | [***] | [***] |
814333023014 | TATTOO STAMP - DOLLAR SIGN | [***] | [***] |
814333026169 | WATERMELON BRIGHTENING FACE MASK | [***] | [***] |
814333026770 | TATTOO STAMP - WEED LEAF | [***] | [***] |
814333026787 | MELATONIN SERUM STICK | [***] | [***] |
814333026794 | VEGAN MILK MOISTURIZER | [***] | [***] |
814333027371 | MELATONIN OVERNIGHT LIP MASK | [***] | [***] |
814333028101 | HYDRO GRIP MAKEUP SETTING SPRAY | [***] | [***] |
814333027296 | FLEX CONCEALER - BUFF | [***] | [***] |
814333027302 | FLEX CONCEALER - LIGHT SAND | [***] | [***] |
814333027319 | FLEX CONCEALER - GOLDEN NUDE | [***] | [***] |
814333027326 | FLEX CONCEALER - GOLDEN SAND | [***] | [***] |
814333027333 | FLEX CONCEALER - GOLDEN HONEY | [***] | [***] |
814333027340 | FLEX CONCEALER - GOLDEN TAN | [***] | [***] |
814333027357 | FLEX CONCEALER - GOLDEN DEEP | [***] | [***] |
814333027364 | FLEX CONCEALER - RICH | [***] | [***] |
814333027517 | COLOR CHALK - SKATEBOARD | [***] | [***] |
814333027524 | COLOR CHALK - TRAMPOLINE | [***] | [***] |
814333027531 | COLOR CHALK - FREEZE | [***] | [***] |
814333027548 | COLOR CHALK - TAG | [***] | [***] |
814333027555 | COLOR CHALK - HOPSCOTCH | [***] | [***] |
814333027562 | COLOR CHALK - KICKBALL | [***] | [***] |
814333027579 | COLOR CHALK - JUMP | [***] | [***] |
814333027586 | COLOR CHALK - DOUBLE DUTCH | [***] | [***] |
814333027593 | COLOR CHALK - GREEN LIGHT | [***] | [***] |
814333027609 | COLOR CHALK - YO-YO | [***] | [***] |
814333027616 | COLOR CHALK - HULA HOOP | [***] | [***] |
814333027623 | COLOR CHALK - DODGEBALL | [***] | [***] |
814333027630 | COLOR CHALK - SKIP IT | [***] | [***] |
814333027647 | COLOR CHALK - BOUNCE | [***] | [***] |
814333027487 | KUSH LIP GLAZE - NOVA | [***] | [***] |
814333027494 | KUSH LIP GLAZE - ROSE BUD | [***] | [***] |
814333027678 | KUSH TRIPLE BROW PEN - HAZE | [***] | [***] |
814333027685 | KUSH TRIPLE BROW PEN - MJ | [***] | [***] |
814333027692 | KUSH TRIPLE BROW PEN - DUB | [***] | [***] |
814333027708 | KUSH TRIPLE BROW PEN - HERB | [***] | [***] |
814333027715 | KUSH TRIPLE BROW PEN - DUTCH | [***] | [***] |
814333027722 | KUSH TRIPLE BROW PEN - GRIND | [***] | [***] |
814333027739 | KUSH TRIPLE BROW PEN - CYPHER | [***] | [***] |
814333027746 | KUSH TRIPLE BROW PEN - DIESEL | [***] | [***] |
814333027920 | ELECTRIC GLOSSY LIP PLUMPER - CLEAR | [***] | [***] |
814333027937 | ELECTRIC GLOSSY LIP PLUMPER - NUDE | [***] | [***] |
814333027944 | ELECTRIC GLOSSY LIP PLUMPER - ROSY MAUVE | [***] | [***] |
814333027951 | ELECTRIC GLOSSY LIP PLUMPER - CORAL | [***] | [***] |
814333027968 | ELECTRIC GLOSSY LIP PLUMPER - WARM PINK | [***] | [***] |
814333027975 | ELECTRIC GLOSSY LIP PLUMPER - PLUM/BERRY | [***] | [***] |
814333028279 | MINI HYDRO GRIP MAKEUP SETTING SPRAY | [***] | [***] |
814333027760 | MINI VEGAN MILK CLEANSER | [***] | [***] |
814333028118 | SUNSHINE SKIN TINT SPF 30 - FAIR - INTL | [***] | [***] |
814333028125 | SUNSHINE SKIN TINT SPF 30 - LIGHT - INTL | [***] | [***] |
814333028132 | SUNSHINE SKIN TINT SPF 30 - LIGHT MEDIUM - INTL | [***] | [***] |
814333028149 | SUNSHINE SKIN TINT SPF 30 - SAND - INTL | [***] | [***] |
814333028156 | SUNSHINE SKIN TINT SPF 30 - MEDIUM - INTL | [***] | [***] |
814333028163 | SUNSHINE SKIN TINT SPF 30 - HONEY - INTL | [***] | [***] |
814333028170 | SUNSHINE SKIN TINT SPF 30 - GOLDEN HONEY - INTL | [***] | [***] |
814333028187 | SUNSHINE SKIN TINT SPF 30 - MEDIUM TAN - INTL | [***] | [***] |
814333028194 | SUNSHINE SKIN TINT SPF 30 - CARAMEL - INTL | [***] | [***] |
814333028200 | SUNSHINE SKIN TINT SPF 30 - CINNAMON - INTL | [***] | [***] |
814333028217 | SUNSHINE SKIN TINT SPF 30 - TAN - INTL | [***] | [***] |
814333028224 | SUNSHINE SKIN TINT SPF 30 - DEEP - INTL | [***] | [***] |
814333028231 | SUNSHINE SKIN TINT SPF 30 - HAZELNUT - INTL | [***] | [***] |
814333028248 | SUNSHINE SKIN TINT SPF 30 - MOCHA - INTL | [***] | [***] |
APPENDIX – CUSTOMS [FCA INCOTERM]
1. | SCOPE |
The purpose of the present appendix is to define the obligations of each Party with regard to deliveries of Products from outside the European Union into the European Union.
2. | INCOTERMS |
Incoterms reflect roles and transfer of risks between the Supplier and SEPHORA. Incoterms mentioned in this letter are those established by the International Chamber of Commerce – 2010 version.
The Incoterms are negotiated by the Parties.
Unless otherwise agreed upon between the Parties in writing, the Incoterm that applies to this letter is FCA (Free Carrier). The place must be specified on the order (Santa Cristina, Italy, France, Saran or any other warehouse specified on the delivery note) in accordance with the incoterm definition.
In accordance with the Incoterms definition, the transfer of risks shall occur upon receipt of the Products by the carrier appointed by SEPHORA, knowing that the export Customs clearance in the country of departure is performed by the Supplier.
The place which gives its meaning to the incoterm shall be specified on the delivery note.
3. | DOCUMENTS |
In accordance with FCA incoterm, import Customs formalities in the country of arrival are performed by SEPHORA.
For the purpose of the import Customs clearance in the country of arrival, the Supplier undertakes to provide SEPHORA, at the earliest after Customs clearance at the time of export, by email, to the following email address bmerlin@sephora.fr, for each delivery with the following documents:
■ | in duplicate, a delivery note containing enough details about delivered Products for SEPHORA’s Customs agent to determine Customs value of the Products such as: |
○ | Incoterm, | |
○ | total value, | |
○ | total weight, etc. |
■ | the invoices specifying: |
○ | reference of the Product, | |
○ | country of origin, | |
○ | tariff heading (HS code 6 digits), | |
○ | if the Supplier is an approved exporter, the mention of the Product’s preferential origin if applicable, |
■ | certificate of preferential origin if the origin is not specified on the invoice (FORM A, EUR 1, EURMED or any other relevant document), | |
■ | the transport documentation (Air Way Bill, Bill of Lading etc.) and insurance documentation, | |
■ | when applicable, a certificate specifying that the Products contain volatile organic compounds and the percent of it, | |
■ | a certificate specifying if the Products are subject to the Convention on International Trade of Endangered Species, | |
■ | a certificate specifying if the Products contain a surfactant substance. |
The Supplier shall be liable for any financial consequences caused by the late communication of all relevant information and documents required to perform the import Customs clearance.
If the Products are delivered with free samples, the quantity and value of the free samples shall be clearly indicated on the invoice or any other relevant document in order to be identified at the time of Customs clearance.
If the Supplier only delivers free samples to SEPHORA, pro forma invoices shall be provided and accompany the shipment.
For Customs value purposes, any discounts granted by the Supplier to SEPHORA shall be clearly specified on the invoice, based on contractual provisions and mentioned at the time of Customs clearance.
SEPHORA may request any additional documents such as technical data sheets of the Products, reports of laboratory tests and any other relevant documents that may be requested by Customs authorities in case of audit.
The Supplier undertakes to save the documents used for Customs purposes, for a period of five (5) years.
4. | SHIPMENT |
This provision shall apply only if the Supplier performs and is liable for a part of the shipment of the delivered Products.
Products shall be shipped with the delivery note containing all information and documents listed in clause 3.
The Supplier shall inform SEPHORA of any delays or Customs audit occurring during the shipment of the Products.
The Supplier informs SEPHORA of the alleged date of arrival of the Products at the agreed place. If the Products are shipped by sea, the supplier undertakes to inform SEPHORA about the date of arrival 10 days before the alleged date.
The Supplier undertakes to request from its carrier to comply with requirements involved by ICS (Import Control System). The Supplier shall be liable for all financial consequences of any damage caused by the late communication of the Entry Summary Declaration (ENS) to Customs authorities.
5. | TARIFF HEADING |
The Supplier shall quote the HS code (6 digits) of the Products on his invoices.
If the HS code (6 digits) appears to be wrong, the Supplier shall bear the difference of Customs duties which becomes due.
6. | PREFERENTIAL ORIGIN |
When applicable, the Supplier agrees to certify preferential origin of the Products and to establish the relevant document (i.e. EUR.1, ATR, FORM A,1).
The Supplier undertakes, when he is an approved exporter, to specify the preferential origin of the Products on the invoice.
When applicable, the Supplier declares that the Products covered by this letter are eligible for preferential origin under:
1 Or ATR Certificate in case of flow with Turkey
■ | Additional protocol of the Free Trade Agreement ratified with the European Union with regards to the definition of “originating products”, | |
■ | Generalized System of Preference. |
The reference of the additional protocol and the relevant Free Trade Agreement shall be specified. Evidence of this preferential origin must be presented at the time of Customs clearance.
All documents provided by the applicable regulation shall be communicated, if necessary, such as Costs Break Down and the invoice.
Evidence of preferential origin must be provided by the Supplier to SEPHORA and/or Customs authorities, at their first request.
The Supplier shall also provide SEPHORA, within seven (7) days from its request, a long-term supplier’s declaration attesting of the Products’ preferential origin. This declaration shall be renewed every year.
The Supplier shall be liable if Customs authorities reject the declared preferential origin of the Products. The Supplier shall reimburse SEPHORA, upon first request, and upon justification, of duties, taxes, penalties and related costs that SEPHORA had to pay in this regard.
7. | NON PREFERENTIAL ORIGIN |
The Supplier undertakes to provide SEPHORA, upon formal request of SEPHORA and/or Customs authorities, with a non-preferential certificate of origin.
The Supplier undertakes to provide, upon request of SEPHORA or/and Customs authorities, with any additional proof in order to justify the origin of the Products.
If the Products are subject to origin-marking, this latter shall comply with the non-preferential rules of origin provided by the World Customs Organization, the European Union and French authorities.
If any antidumping duties shall apply, the Supplier undertakes to inform SEPHORA at the earliest.
8. | CUSTOMS AUDITS |
8.1 | Customs audits at the time of export in the country of departure |
The Supplier undertakes to inform SEPHORA without delay of any Customs audit carried out by the Customs authorities of the country of export, inform SEPHORA about the alleged time of delivery of the concerned Products and provide SEPHORA with a duplicate of any relevant document related to the audit.
8.2 | Customs audits at the time of import in the country of arrival |
SEPHORA undertakes to inform the Supplier of any Customs audit carried out by the Customs authorities of the country of import.
The Supplier undertakes to provide SEPHORA, upon first request, of any information and/or documents related to the concerned Products and the Customs clearance operations performed.
In case of Customs audit related to the preferential origin of the Products, the Supplier undertakes to provide SEPHORA with the updated “Cost Break Down” regarding the controlled Products within seven (7) days from the request.
SEPHORA undertakes to inform the Supplier of the audit at the earliest.
SEPHORA shall not accept Customs authorities’ position and the payment of Customs duties and penalties without first informing the Supplier and being informed of this latter’s position.
APPENDIX
ANNUAL COST OF QUALITY
QUALITY APPENDIX MILK
2021 |
1) Social audit
Name and address of the factory | Cost |
NA | NA |
2) Controls of the products
Costs (microbiological tests) =
TOTAL COSTS 2021
If your brand has been launched in the Sephora Europe network before 2021, an invoice will be issued by Sephora at the end of March 2021 to charge you of 50% of the total costs mentioned above in the Appendix. A second invoice will be sent to you at the end of October 2021 in order to invoice you for the remaining 50%.
If your brand is launched in the Sephora Europe network in 2021, you will be invoiced with 100% of the cost, following the placing of the first order.
Steve NGUYEN |
||||
For the Supplier | ||||
[Name, title of the person in charge], | CFO | |||
Date : | ||||
Signature: | 26 February 2021 | 07:28:43 PST | |||
|
APPENDIX
SPECIFICATIONS AND FEE SCHEDULE MATERIALS POS 2021
Aluminium Display
Endcap:
Linear Column
APPENDIX
GUARANTEES / MANDATES
- The Supplier is responsible for any proposed promotional event developed by it (including games/contests organized by it).
The Supplier represents and warrants to SEPHORA that its promotional events, as well as all the communication materials relating thereto, comply with all applicable regulations (including but not limited to regulations relating to advertising, competition, sales promotions, intellectual property, use of the local language and personal data collection and protection), and that such promotional events do not breach any third-party rights. Accordingly, the Supplier is responsible for the legal validation of any promotional events and/or promotional offers proposed to SEPHORA and organized in SEPHORA stores, as well as for all the content it provides to SEPHORA for the promotion of the Products.
- Thus, the Supplier shall indemnify and hold SEPHORA harmless from and against any disorder, litigation, claim, legal action or loss of right which may be brought or asserted against it (due to the use of the communications, promotional resources, press advertisements, etc.) and any sanctions which might be imposed on SEPHORA in connection therewith.
This guarantee shall apply, in particular, to the use of photographs, texts, contest/games rules, graphic materials and claims based on documents transmitted by the Supplier.
- In its capacity as principal, the Supplier may decide to entrust SEPHORA, acting as agent and which remains free to accept it, with the task of presenting, in the name and on behalf of the Supplier, promotional offers to consumers in some SEPHORA points of sale. Such promotional offers may, in particular, involve delivering, in the name and on behalf of the Supplier, a product offered to consumers that qualifies for the relevant offer. For each of the promotional offers thus organized, the Supplier and SEPHORA shall formalize and execute a mandate.
APPENDIX
MASTER DATA ARTICLES
In order to enable SEPHORA, on the one hand, to ensure the security of its warehouses and, on the other hand, to be able to meet its logistical and environmental obligations in accordance with the regulations in force, the Supplier undertakes to send to SEPHORA the following information for each item of its catalogue referenced at SEPHORA, without delay after the signature of the present and each time it is updated:
- VOC - Volatile Organic Compound.
- Customs nomenclature or HS code
Language composed of eight to ten digits.
Each nomenclature indicates the applicable duties and taxes as well as the documentary specificities.
- Origin or Made in
The origin of a product, written on the packaging.
Data used to determine the applicable duties and taxes.
- UN Product Code
Mandatory logistic data to determine the storage and transport requirements for the Products.
- Material Safety Data Sheet (MSDS or MSDS)
Data sheet to be systematically provided by the brand for hazardous products containing data on the properties of a chemical substance concerning risks and hazards.
Safety data sheets for non-hazardous products may be requested from time to time. The Safety Data Sheet also includes the UN code.
- Weight
- Volume
APPENDIX
RISK PREVENTION AND SAFETY PLAN
APPLICABLE TO SALES REPRESENTATIVES
CONCERNED TERRITORY: FRANCE
CHARTER
“RISK PREVENTION AND SAFETY PLAN APPLICABLE TO SALES REPRESENTATIVES
Human Resources Department –
The activities carried out by Supplier’s Representatives are similar to those performed by SEPHORA Sale Consultants. Therefore, the Supplier’s Representatives’ employers acknowledge that the presence of such Supplier’s Representatives in the stores does not trigger specific risks, distinct from those identified with respect to Sephora’s employees and for which a whole set of measures relating to risk control and safety was already defined.
In accordance with Article R.4512-5 of the French Employment Code, SEPHORA Management transmitted to the Supplier’s Representatives’ employers all information necessary as regards risk control (cf. Appendix “General Terms and Conditions for Representatives”).
Only enterprises that benefit from an agreement entered into in compliance with the provisions of law are authorized to make their employees work in evenings or on Sundays. The presence of Representatives in evenings or on Sundays in SEPHORA stores therefore requires the signature of an agreement by the Supplier or the service provider company used by the Supplier.
* * * * *
Sephora Management shall be responsible for the health and safety of the premises of SEPHORA (hereafter referred to as the “Company”) where the Supplier’s Representatives are to carry out their mission.
Accordingly, the Company shall implement, and ensure compliance with, any laws and regulations to be applied due to the characteristics of its business and organization. The Management shall disclose the provisions of applicable regulations by any appropriate means.
In addition, due to its general safety obligation and failing any relevant regulation, the Management must take all appropriate and independent measures requested by the specific characteristics of the business or organization of the Company. In this respect, special and occasional measures may be disclosed by means of internal memoranda.
Risk assessment and relevant specific prevention measures
The Supplier’s Representatives must get acquainted with the document named “Document Unique d’Evaluation des Risques” applicable to the store in which they operate, in order to be familiar with the identified hazards to which they may be exposed, as well as the existing prevention measures and remaining risks.
Store safety rules
All the rules relating to safety, including the provisions of the rules of procedure related to the health and safety internal policy, are posted in the store. Such rules relating to health and safety are binding upon any Supplier’s Representatives who must strictly abide thereby.
In accordance with the instructions given by his/her employer and the rules applicable to the store, each Supplier’s Representative shall be responsible for ensuring his/her own safety and health, as well as the safety and health of any other persons concerned due to his/her actions in connection with his/her work.
Health rules
Personal effects
The Supplier’s Representatives determine with the Store Manager the place where their personal effects shall be safely stored.
Meals
Meals may not be eaten outside the designated space.
It is also forbidden to introduce, distribute or drink alcohol in the work place, unless prior authorized by the Management.
In addition, it is strictly forbidden to introduce, distribute or use any drugs whose use is prohibited by law in the work place.
It is forbidden to enter the premises or remain therein while under the influence of alcohol or drugs.
Application of rules, measures and policies relating to health and safety
Before taking any other action, the Supplier’s Representatives must report to the Manager of the Store in which they are to carry out their mission, so that such Manager may ensure that they are perfectly aware of the rules, measures and policies applicable in connection with health and safety issues.
APPENDIX
GENERAL TERMS AND CONDITIONS FOR REPRESENTATIVES
AGREED BY SEPHORA AND THE SUPPLIER
CONCERNED TERRITORY: FRANCE
I/ | Conditions precedent to the provision of sales representatives | |
A. | Regular employment of the representatives |
The Supplier declares that the representatives it engages to work at SEPHORA stores do so under the Supplier’s direct authority, or that of a third party company it has specially engaged for this purpose, and that they are employed in a legal and regular manner with regard to applicable regulations, notably relating to sub-contracting, if applicable.
The Supplier undertakes to engage its representatives to work during evenings or Sundays at SEPHORA stores in compliance with applicable regulations. The Supplier therefore confirms:
■ | That it applies agreements covering work in the evenings or on Sundays duly concluded in accordance with statutory provisions, or | |
■ | In the event of personnel being provided by a third party, that it has verified prior to the scheduling of any work that such agreements have been applied by the third-party company in question. |
In the event of failing to comply with the aforementioned conditions precedent, the Supplier shall indemnify SEPHORA against any consequences it may encounter, notably on occurrence of any event contrary to regulations that is not directly attributable to SEPHORA.
B. | Scheduling of promotions and representatives |
SEPHORA requires the Supplier to incorporate its promotional requirements within the Synchroteam system at least ten (10) weeks prior to the beginning of the month in question. Beyond this deadline, SEPHORA cannot guarantee validation of said requirements nor the availability of sufficient stock.
Similarly, the Offre France department of SEPHORA undertakes to validate promotions seven (7) weeks at the latest prior to the beginning of the month in question.
The Supplier undertakes to conduct all scheduling in accordance with the following:
■ | As required for internal organization purposes relating to the promotion, the supplier shall enter only the following information into the system; the surname and first name of the representative, their break duration(s) and the working hours of the day’s campaign. For security reasons, it is specified that only representatives scheduled by name may enter SEPHORA stores for the purposes of performing their engagement. | |
■ | The Supplier shall schedule just one representative per SEPHORA store. | |
■ | The Supplier shall schedule working times that are consistent with the commercial activity and, notably, the customer flows of the store in question (station stores, seaside stores, etc.) after having contacted the Offre France department of SEPHORA for advice, if required. | |
Regarding the Sephora store on the Champs-Elysées: for organizational purposes given the specific nature of the store, notably the store size and the number of representatives present, SEPHORA and the Supplier shall agree specific working times. The Offre France department of SEPHORA regularly reviews the working hours to ensure that they remain consistent with the store’s business activity. | ||
■ | In the event of an initially scheduled representative or their replacement being delayed or unexpectedly unavailable, for reasons relating to logistics and internal centralisation of data the Supplier undertakes to enter any difficulty into the Synchroteam system and to directly notify the Offre France department of SEPHORA (and not the store scheduled to host the promotion) as soon as said delay or absence of the representative or their replacement becomes known. |
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C. | Representatives provided |
The Supplier undertakes to provide SEPHORA stores with representatives meeting all of the following criteria:
1/ They shall solely benefit from the status of employee (excluding head office personnel, apart from employees meeting criteria 2/ and 3/ below.
2/ They shall have a profile that is consistent with the promotional and sales mission in question (expertise, notably in basic sales techniques).
3/ They shall have received prior training in the Supplier’s products.
In the event of the representative having had prior employment with SEPHORA as a representative, the Supplier undertakes to acquire a reference from the Offre France department of SEPHORA in order to verify compatibility with the undertakings defined by the Parties within the specifications.
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D. | Prior notification of safety rules |
The supplier has received prior notification of the safety and risk prevention measures applicable to everyone working at SEPHORA stores (see appendix, Representative Safety and Risk Prevention Plan) and undertakes to make representatives aware of said measures prior to any mission.
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E. | Provision of equipment required for promotional purposes |
The Supplier undertakes that the representatives will have available the following equipment required for the assignment in question prior to their arrival at the store:
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■ | The Supplier’s uniform, previously approved by the Offre France department of SEPHORA, which is mandatory unless agreed otherwise by said department at least five (5) weeks prior to the beginning of the month in question. |
The representative’s footwear shall also conform with the SEPHORA image and concept: black leather footwear, closed front and back, without adornment and maintained in perfect condition. Heels are acceptable if also comfortable (minimum width 2cm) and of reasonable height (1cm minimum – 4cm maximum). Stilettos are prohibited for safety reasons. Flat shoes and ankle boots are acceptable if they meet the aforementioned conditions. Training shoes, platform shoes and wooden heels or soles are prohibited.
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■ | A badge stating the Supplier’s name, for security reasons. |
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■ | A promotional kit constituted as specified by the Offre France department of SEPHORA. |
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F. | Communication of the contact details of the Supplier’s representative responsible for sales representatives |
The supplier undertakes to forward to the Offre France department of SEPHORA the contact details of the person responsible for the representatives provided to SEPHORA stores and to notify said department of any changes.
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II/ | Terms of performance of the promotional assignment |
For organizational, safety, confidentiality and/or strategic reasons, the Supplier undertakes to ensure that the representatives it assigns comply with the terms of performance of promotional assignments agreed by the Parties, as set out below. This shall apply to each day of any promotional assignment.
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A. | Arrival of the representative and material organization of the promotional assignment |
The Supplier shall ensure that, on arrival at the store, the representative presents themself to the store manager and provides the following information:
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■ | A list of the equipment in their possession required for performance of the assignment, as specified in I. E above. |
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■ | Their precise schedule for the day, including their working hours and breaks. |
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■ | A list of the personal cosmetics in their possession (six (6) maximum) to enable them to be labelled and identified as such. |
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■ | The samples in their possession required for performance of their assignment, which they undertake on notification to put away and retain in the drawer of their display. |
The Supplier also undertakes to ensure that the assigned representative has produced an inventory of their requirements (quantity of products and testers) for the entire day of the assignment in question within forty-five (45) minutes of their scheduled arrival time.
The SEPHORA store on the Champs-Elysées has its own Operations Department that takes store inventory and is therefore not subject to this provision.
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B. | Performance of the promotional assignment |
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1. | Access to the premises |
The Supplier shall ensure that its representatives are aware that they may access the following areas of the store: the sales floor, cloakrooms, toilets and break room.
The Supplier shall ensure, however, that assigned representatives do not access the storeroom of the management offices of the store and should contact the store manager or their contact person should they have any questions or encounter any difficulty.
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2. | Sales representative information sessions |
The Supplier shall ensure that any representative assigned to a store that conducts specific “representative information sessions” on Saturdays actually attends such sessions. The purpose of the session is to welcome the assigned representative and to provide any information they might require for the successful performance of their assignment.
A list of the Sephora stores conducting such information sessions is forwarded to the Supplier by the Offre France department of SEPHORA. The latter undertakes to notify the supplier should said list be modified.
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3. | Maintaining the brand display stand and position |
The Supplier, is responsible for maintaining the quality of the brand display stand and for ensuring that the assigned representative manages the display in accordance with the following:
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- | The existing merchandising of the display must be maintained (no modifications must be made); |
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- | Arrange and maintain the quality of the display such that it remains clean (notably throwing away disposable accessories, cotton wool, etc.). |
Furthermore, the Supplier authorizes the store manager or the representative contact person to advise the assigned representative regarding the position on the sales floor.
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4. | General presentation, behavior, customer service and approach |
For each day of the promotional assignment, the Supplier undertakes to ensure that the representative adopts a general presentation and conduct that comply with the undertakings agreed by the Parties, and delivers a rate of customer service and approach that is both professional and compliant with effective selling, in accordance with the rules and principles set out below.
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a. | General presentation |
The supplier undertakes to ensure that the representative complies with the following presentation rules, defined in accordance with the SEPHORA image and concept:
Hairstyling: Hair shall always be clean and tidy, with style maintained. The face and back of the neck shall be free of hair, and long hair (touching the shoulders or longer) shall be pulled up and fixed in place (ponytail, pigtail or bun). Black accessories acceptable. For men, any beard shall be clean and regularly maintained.
Makeup: Makeup must be fully applied before taking up post, namely foundation, eyeliner, eye shadow, lipstick and lip contour. Nails shall be neat and well cared for.
Accessories: Necklaces are permitted if they are covered by the T-shirt. Rings and bracelets are not recommended for safety reasons, but are acceptable if they are small and understated. Discrete and minimalist earrings are permitted. Drop earrings are prohibited for safety reasons.
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b. | Behavior, customer service and approach |
The Supplier undertakes to make every effort to ensure that the representative performs their promotional assignment in compliance with the terms of the Single Convention. The supplier shall notably ensure that the representative adopts behavior that complies with the legitimate expectations of SEPHORA regarding in-store personnel (both internal and external staff) and maintains absolute discretion regarding any information of which they become aware concerning the activities of SEPHORA during the course of their assignment.
Furthermore, the Supplier shall ensure that the assigned representative always acts in a polite, friendly and responsive manner towards customers (in particular, no idle chatter or inappropriate behavior towards customers, employees or the staff of other brands).
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5. | Turnover achieved by the Supplier |
The Supplier asks SEPHORA to notify total turnover in value achieved by the assigned representative on two (2) occasions per day of the promotional assignment.
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III/ | Consequences of breach of specifications |
Should the service delivered be non-compliant with regard to these specifications, SEPHORA shall ensure that the store manager notifies the Supplier’s representative responsible for sales representatives, whose contact details must be forwarded in advance to the Offre France department of SEPHORA (see I.F above).
Should any representative commit a breach of their professional obligations, notably in terms of II. B above (Performance of the promotional assignment), duly noted on three (3) separate days of the promotional assignment, successive or otherwise, and where each occurrence is notified by the store manager to the Supplier via e-mail on the same day (with a copy to the regional HR Manager), the Supplier undertakes to replace said representative within a maximum period of two (2) weeks and to no longer schedule the representative in question to work at SEPHORA stores.
It is agreed by the Parties that, within eight (8) business days, the Supplier may request a review meeting with the store manager and the representative in question after notification of the 2nd breach in order to discuss the observed failings and to seek a solution.
In the event of any such review meeting being requested, and awaiting its implementation, SEPHORA undertakes not to issue any 3rd notification of breach.
Any period of six (6) consecutive months not giving rise to a further notification of breach shall nullify the previous notifications, such that the total of three (3) promotional assignment days giving rise to a notification of breach shall be reset to zero (0).
Regardless of the circumstances, on occurrence of a serious confirmed breach by a representative regarding their professional obligation, notably those resulting from II. B above (Performance of the promotional assignment), such as, but not being limited to, insulting or violent conduct towards any personnel operating in the store, direct or indirect participation in misappropriation of products or confirmed non-compliance with safety procedures, duly observed and notified to the Supplier via e-amil on the day of occurrence (with a copy to the regional HR Manager), the Supplier undertakes to immediately suspend the activities of the representative in question and to provide a replacement without undue delay.
(1) |
WALDENCAST ACQUISITION CORP., an exempted company incorporated under the laws of the Cayman Islands with registered office at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the "Company"); and
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(2) |
Aaron Chatterley ("Indemnitee").
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(A) |
Highly competent persons have become more reluctant to serve publicly-held companies as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such companies;
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(B) |
The board of directors of the Company (the "Board") has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole
expense, liability insurance to protect persons serving the Company and any of its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among publicly traded companies
and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers
and other persons in service to companies or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the
Company or business enterprise itself. The amended and restated memorandum and articles of association of the Company (the "Articles") provide for the indemnification of the officers and directors of
the Company. The Articles expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification, hold harmless, exoneration, advancement and reimbursement rights;
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(C) |
The uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
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(D) |
The Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's shareholders and that the Company should act to assure such persons that there will be
increased certainty of such protection in the future;
|
(E) |
It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law and the
Articles so that they will serve or continue to serve the Company free from undue concern that they will not be so protected against liabilities;
|
(F) |
This Agreement is a supplement to and in furtherance of the Articles and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
|
(G) |
Indemnitee may not be willing to serve as an officer or director, advisor or in another capacity without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve
and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified; and
|
1 |
SERVICES TO THE COMPANY
|
2 |
DEFINITIONS
|
2.1 |
References to "agent" shall mean any person who is or was a director, officer or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in
such capacity as a director, officer, employee, advisor, fiduciary or other official of another company, corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of,
or to represent the interests of the Company or a subsidiary of the Company.
|
2.2 |
The terms "Beneficial Owner" and "Beneficial Ownership" shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below)
as in effect on the date hereof.
|
2.3 |
A "Change in Control" shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
|
|
(a) |
Acquisition of Shares by Third Party. Other than an affiliate of Waldencast Long-Term Capital LLC, any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative
Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares entitled to vote generally in the election of directors, or (2) such acquisition was approved in
advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (c) of this definition;
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|
(b) |
Change in Board of Directors. Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in office who were directors on the date hereof or whose election or nomination for election was previously so approved (collectively, the "Continuing Directors"), cease for any reason to constitute at least a majority of the members of the Board;
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|
(c) |
Corporate Transactions. The effective date of a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, involving the Company and one or more
businesses (a "Business Combination"), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of
securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty-one percent (51%) of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a company or corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote
generally in the election of directors; (2) other than an affiliate of Waldencast Long-Term Capital LLC, no Person (excluding any company or corporation resulting from such Business Combination) is the Beneficial Owner, directly or
indirectly, of fifteen percent (15%) or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the surviving company or corporation except to the extent that such
ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the company or corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the
initial agreement, or of the action of the Board of Directors, providing for such Business Combination;
|
|
(d) |
Liquidation. The approval by the shareholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than factoring the Company's current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one
transaction or a series of related transactions); or
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|
(e) |
Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any
similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement.
|
2.4 |
"Corporate Status" describes the status of a person who is or was a director, director nominee, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the
Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the Company.
|
2.5 |
"Delaware Court" shall mean the Court of Chancery of the State of Delaware.
|
2.6 |
"Disinterested Director" shall mean a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
|
2.7 |
"Enterprise" shall mean the Company and any other company, corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company
(or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director,
officer, trustee, general partner, manager, managing member, fiduciary, employee or agent.
|
2.8 |
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
|
2.9 |
"Expenses" shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all attorneys' fees and costs, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission
charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or
otherwise participating in, a Proceeding, including reasonable compensation for time spent by Indemnitee for which Indemnitee is not otherwise compensated by the Company or any third party. Expenses also shall include Expenses incurred in
connection with any appeal resulting from any Proceeding, including, without limitation, the principal, premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
|
2.10 |
"Independent Counsel" shall mean a law firm or a member of a law firm with significant experience in matters of corporate law and neither presently is, nor in the past five years has been, retained
to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii)
any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
|
2.11 |
References to "fines" shall include any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
|
2.12 |
The term "Person" shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that "Person" shall exclude: (i) the Company;
(ii) any Subsidiaries (as defined below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary of the Company or of any corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of shares of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary of the Company or of a company or
corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
|
2.13 |
The term "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or
completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, or investigative or related nature, in which Indemnitee was,
is, will or might be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act)
on Indemnitee's part while acting as a director, director nominee or officer of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, director nominee or officer, trustee, general
partner, manager, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or
advancement of expenses can be provided under this Agreement.
|
2.14 |
The term "Subsidiary," with respect to any Person, shall mean any company, corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of the voting
power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
|
3 |
INDEMNITY IN THIRD-PARTY PROCEEDINGS
|
4 |
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY
|
5 |
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL
|
6 |
INDEMNIFICATION FOR EXPENSES OF A WITNESS
|
7 |
ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS
|
7.1 |
Notwithstanding any limitation in Section 3, 4, or 5, except for Section 27, the Company shall, to the fullest extent permitted by applicable law and the Articles, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party
to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the
Proceeding. No indemnification, hold harmless or exoneration rights shall be available under this Section 7.1 on account of Indemnitee's conduct which constitutes a breach of Indemnitee's duties to the Company or its shareholders or is an act
or omission not in good faith or which involves intentional misconduct or a knowing violation of applicable law.
|
7.2 |
Notwithstanding any limitation in Section 3, 4, 5 or 7.1, except for Section 27, the Company shall, to the fullest extent permitted by applicable law and the Articles, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a
party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection
with the Proceeding.
|
8 |
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
|
8.1 |
To the fullest extent permissible under applicable law and the Articles, if the indemnification, hold harmless and/or exoneration rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason
whatsoever, the Company, in lieu of indemnifying, holding harmless or exonerating Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts paid or to
be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against
Indemnitee.
|
8.2 |
The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims
asserted against Indemnitee.
|
8.3 |
The Company hereby agrees to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable
with Indemnitee.
|
9 |
EXCLUSIONS
|
|
(a) |
for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision and which payment has not subsequently been returned, except with respect to any excess
beyond the amount actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;
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|
(b) |
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (or any successor rule) or similar provisions of state
statutory law or common law; or
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|
(c) |
prior to a Change in Control, other than as provided in Sections 14.5 and 14.6 hereof, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding)
initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, hold harmless or exoneration payment, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
|
10 |
ADVANCES OF EXPENSES; DEFENSE OF CLAIM
|
10.1 |
Notwithstanding any provision of this Agreement to the contrary except for Section 27, and to the fullest extent not prohibited by applicable law or the Articles, the Company shall pay the Expenses incurred by Indemnitee (or reasonably
expected by Indemnitee to be incurred by Indemnitee within three months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement or statements requesting such advances from time to time, prior to
the final disposition of any Proceeding. Advances shall, to the fullest extent permitted by law, be unsecured and interest free. Advances shall be made without regard to Indemnitee's ability to repay the Expenses and without regard to
Indemnitee's ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of
advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. To the fullest extent required by applicable law, such payments of Expenses in advance of the final disposition of
the Proceeding shall be made only upon the Company's receipt of an undertaking, by or on behalf of Indemnitee, to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the
Company under the provisions of this Agreement, the Articles, applicable law or otherwise. This Section 10.1 shall not apply to any claim made by Indemnitee for which an indemnification, hold harmless or exoneration payment is excluded
pursuant to Section 9.
|
10.2 |
The Company will be entitled to participate in the Proceeding at its own expense.
|
10.3 |
The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on Indemnitee without Indemnitee's prior written consent.
|
11 |
PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION
|
11.1 |
Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to
indemnification, hold harmless or exoneration rights, or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this
Agreement, or otherwise.
|
11.2 |
Indemnitee may deliver to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee
deems appropriate in Indemnitee's sole discretion. Following such a written application for indemnification by Indemnitee, Indemnitee's entitlement to indemnification shall be determined according to Section 12.1 of this Agreement.
|
12 |
PROCEDURE UPON APPLICATION FOR INDEMNIFICATION
|
12.1 |
A determination, if required by applicable law, with respect to Indemnitee's entitlement to indemnification shall be made in the specific case by one of the following methods, which shall be at the election of Indemnitee: (i) by a majority
vote of the Disinterested Directors, even though less than a quorum of the Board (ii) by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (iii) by vote of the shareholders by ordinary
resolution. The Company will promptly advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been
denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the person, persons or entity making
such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby agrees to indemnify and to hold Indemnitee harmless
therefrom.
|
12.2 |
In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12.1 hereof, the Independent Counsel shall be selected as provided in this Section 12.2. The Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and
certifying that the Independent Counsel so selected meets the requirements of "Independent Counsel" as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice to
Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of "Independent Counsel" as defined in Section 2 of this Agreement. In either
event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements
of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as
Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has
determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11.2 hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment
as Independent Counsel of a person selected by the Delaware Court, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12.1 hereof. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section 14.1 of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
|
12.3 |
The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
|
13 |
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
|
13.1 |
In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 11.2 of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any
determination contrary to that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
|
13.2 |
If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall, to the fullest extent permitted by applicable law and the Articles, be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a
final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may
be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the
obtaining or evaluating of documentation and/or information relating thereto.
|
13.3 |
The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful.
|
13.4 |
For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the directors, managers, managing members, or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise, its Board, any committee of the Board or any director,
trustee, general partner, manager or managing member or on information or records given or reports made to the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member by an
independent certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member. The provisions of this Section
13.4 shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.
|
13.5 |
The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, manager, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
|
14 |
REMEDIES OF INDEMNITEE
|
14.1 |
In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law
and the Articles, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12.1 of this Agreement within thirty (30) days after receipt by
the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 5, 6, 7 or the last sentence of Section 12.1 of this Agreement within ten (10) days after receipt by the Company of a written
request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless or exoneration rights under this Agreement or otherwise is not made within ten (10) days after receipt by
the Company of a written request therefor, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification, hold harmless, exoneration, contribution or advancement rights. Alternatively, Indemnitee, at
Indemnitee's option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association. Except as set forth herein, the
provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee's right to seek any such adjudication or award in arbitration.
|
14.2 |
In the event that a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14,
Indemnitee shall be presumed to be entitled to be indemnified, held harmless, exonerated and to receive advances of Expenses under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to be indemnified,
held harmless, exonerated and to receive advances of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 12.1 of this Agreement adverse to Indemnitee for any purpose.
If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to
Indemnitee's entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
|
14.3 |
If a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification,
or (ii) a prohibition of such indemnification under applicable law.
|
14.4 |
The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate
in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
|
14.5 |
The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law and the Articles against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company's receipt of
such written request) pay to Indemnitee, to the fullest extent permitted by applicable law and the Articles, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee (i) to
enforce Indemnitee's rights under, or to recover damages for breach of, this Agreement or any other indemnification, hold harmless, exoneration, advancement or contribution agreement or provision of the Articles now or hereafter in effect; or
(ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless of the outcome and whether Indemnitee ultimately is determined to be entitled to such indemnification, hold harmless
or exoneration right, advancement, contribution or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not brought by Indemnitee in good faith).
|
14.6 |
Interest shall be paid by the Company to Indemnitee at a rate to be agreed between the Company and Indemnitee for amounts which the Company indemnifies, holds harmless or exonerates, or is obliged to indemnify, hold harmless or exonerate
for the period commencing with the date on which Indemnitee requests indemnification, to be held harmless, exonerated, contribution, reimbursement or advancement of any Expenses and ending with the date on which such payment is made to
Indemnitee by the Company.
|
15 |
SECURITY
|
16 |
NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION
|
16.1 |
The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Articles, any agreement, a vote of shareholders or a
resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when such
Proceeding is first threatened, commenced or completed) arising out of, or related to, any action taken or omitted by such Indemnitee in Indemnitee's Corporate Status prior to such amendment, alteration or repeal. To the extent that a change
in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Articles or this Agreement, then this
Agreement (without any further action by the parties hereto) shall automatically be deemed to be amended to require that the Company indemnify Indemnitee to the fullest extent permitted by law. No right or remedy herein conferred is intended
to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
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16.2 |
The Articles permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond ("Indemnification Arrangements") on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director, officer, employee or agent of the Company,
or arising out of Indemnitee's status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement, as it may then be in effect. The purchase, establishment,
and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery
of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.
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16.3 |
To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers, managing members, fiduciaries, employees, or agents of the Company or of any
other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director,
officer, trustee, partner, manager, managing member, fiduciary, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant
(as a witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
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16.4 |
In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
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16.5 |
The Company's obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, fiduciary,
employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement of expenses from such Enterprise. Notwithstanding any other
provision of this Agreement to the contrary except for Section 27, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or
insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company's satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under
this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any person or entity other than the Company.
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17 |
DURATION OF AGREEMENT
|
18 |
SEVERABILITY
|
19 |
ENFORCEMENT AND BINDING EFFECT
|
19.1 |
The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.
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19.2 |
Without limiting any of the rights of Indemnitee under the Articles as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
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19.3 |
The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent of the Company or a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of any other Enterprise at the Company's request, and shall inure to the benefit of Indemnitee
and Indemnitee's spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
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19.4 |
The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
|
19.5 |
The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable
harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm
and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. The Company and Indemnitee further agree that Indemnitee
shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection
therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a Court of competent jurisdiction and the Company hereby waives any such requirement of such a bond or undertaking.
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20 |
MODIFICATION AND WAIVER
|
21 |
NOTICES
|
|
(a) |
If to Indemnitee, at the address indicated on the signature page of this Agreement or such other address as Indemnitee shall provide in writing to the Company.
|
|
(b) |
If to the Company, to:
|
22 |
APPLICABLE LAW AND CONSENT TO JURISDICTION
|
23 |
IDENTICAL COUNTERPARTS
|
24 |
MISCELLANEOUS
|
25 |
PERIOD OF LIMITATIONS
|
26 |
ADDITIONAL ACTS
|
27 |
WAIVER OF CLAIMS TO TRUST ACCOUNT
|
28 |
INTERPRETATION
|
|
(a) |
"written" and "in writing" include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
|
|
(b) |
"shall" shall be construed as imperative and "may" shall be construed as permissive;
|
|
(c) |
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced;
|
|
(d) |
any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;
|
By:
|
/s/ Aaron Chatterley
|
|
Name:
|
Aaron Chatterley
|
|
Address: c/o Waldencast Acquisition Corp. 10 Bank Street, Suite 560 White Plains, NY 10606
|
||
WALDENCAST ACQUISITION CORP.
|
||
By:
|
/s/ Michel Brousset
|
|
Name:
|
Michel Brousset
|
|
Title:
|
Authorized Signatory
|
/s/ WithumSmith+Brown, PC
|
|
|
|
New York, New York
|
|
February 11, 2022
|
/s/ Simon Dai
|
|
Simon Dai
|
|
Security Type
|
Security Class
Title
|
Fee Calculation or
Carry Forward Rule
|
Amount
Registered (1) (2)
|
Proposed Maximum
Offering Price Per Unit
|
Maximum Aggregate
Offering Price
|
Fee Rate
|
Amount of
Registration Fee
|
|
Fees to be Paid
|
Equity
|
Waldencast plc Class A ordinary shares, $0.0001 par value
|
457(f)
|
43,125,000
|
$9.96
|
$429,525,000
|
.0000927
|
$39,816.97
|
Fees to be Paid
|
Other
|
Waldencast plc warrants
|
457(f)
|
17,433,333
|
$12.30
|
$214,429,996
|
.0000927
|
$19,877.66
|
Fees to be Paid
|
Equity
|
Waldencast plc Class A ordinary shares issuable upon exercise of the warrants
|
457(f); 457(i)
|
17,433,333
|
__
|
__
|
__
|
__
|
Fees to be Paid
|
Equity
|
Ordinary shares
|
457(f)
|
59,126,449
|
$9.96
|
$588,899,432
|
.0000927
|
$54,590.98
|
Total Offering Amounts
|
$1,233,844,428
|
$114,377.38
|
||||||
Total Fees Previously Paid
|
$0.00
|
|||||||
Net Fee Due
|
$114,377.38
|
(1)
|
Immediately prior to the consummation of the Merger described in the proxy statement/prospectus forming part of this registration statement (the “proxy statement/prospectus”), Waldencast Acquisition Corp., a Cayman
Islands exempted company (“Waldencast”), intends to effect a deregistration under Section 206 of the Cayman Islands Companies Act (as Revised) and a domestication by way of continuance under Part 18C of the Companies (Jersey) Law 1991,
pursuant to which Waldencast’s jurisdiction of incorporation will be changed from the Cayman Islands to Jersey (the “Domestication”). All securities being registered will be issued by Waldencast (after the Domestication), the continuing
entity following the Domestication, which will be renamed “Waldencast plc” (“Waldencast plc”), as further described in the proxy statement/prospectus. As used herein, “Waldencast plc” refers to Waldencast after the Domestication, including
after such change of name.
|
(2)
|
Pursuant to Rule 416(a) of the Securities Act, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
|